Under the terms of the new agreement, artists would be able to make their new records available exclusively on Spotify’s paid premium service for two weeks, though singles from that album would be available to all users. As part of the partnership, Spotify will also give UMG greater access to the service’s troves of data to reportedly help the label better expand and engage listeners.
“We will be working together to help break new artists and connect new and established artists with a broadening universe of fans in ways that will wow them both,” said Spotify CEO Daniel Ek. “We know that not every album by every artist should be released the same way, and we’ve worked hard with UMG to develop a new, flexible release policy.”
As The New York Times reports, the new deal with UMG will also make it easier for Spotify to finally go public. The company has been valued at more than $8 billion and boasts a user base of approximately 50 million paid subscribers and 50 million free listeners, but it has held off on going public as it has renegotiated its long-expired contracts with the three major labels, Universal, Sony and Warner. Without deals ensuring the presence of their vast catalogs, Spotify likely wouldn’t have been able to attract public investors. The agreement with UMG should help push ongoing negotiations with Sony and Warner.
UMG’s deal with Spotify also marks a major move for the label, which announced last year that it would no longer offer streaming exclusives. UMG Chairman/CEO Lucian Grainge made the decision after a wave of exclusive album releases that found artists like Rihanna, Kanye West and Drake delivering albums exclusively to Tidal or Apple Music, partly as a way to attract Spotify users, but effectively cutting out an enormous swath of listeners. For Grainge, the turning point came after Frank Ocean released his visual album, Endless, on Apple Music – fulfilling his contractual obligations to UMG and Def Jam – then releasing a full LP, Blonde, 24 hours later also on Apple Music, but under his own label Boys Don’t Cry.
While UMG will likely continue its policy prohibiting exclusives on one streaming service, the deal notably marks a major change in the way Spotify will do business. Unlike Apple Music and Tidal, Spotify has refrained from offering exclusives, but as Billboard has reported, industry executives have been pushing for some form of “windowing” that would make certain releases only available to paid subscribers. Spotify remains the only major streaming service with a free, ad-supported option, which – to the music industry’s chagrin – has regularly paid out lower royalties.