Spotify and Universal Music Group announced a new licensing partnership Wednesday that could align the world’s biggest music label with the streaming service’s long-awaited “two-sided marketplace” — which would funnel additional money back from the record industry into Spotify’s pockets.
The new multiyear global contract “further aligns [our] efforts to foster groundbreaking new features providing value for artists and great experiences for music fans,” the companies said. UMG’s previous licensing deal with Spotify expired in early 2019; the music company — which reportedly owns a 3.5 percent stake in the streaming company’s stock — had been the lone major label not in a renewed contract with Spotify following Warner Music’s new licensing deal in April.
According to the Wall Street Journal, the partnership will serve as a litmus test of sorts for Spotify’s long-planned “two-sided marketplace,” in which it charges labels money in addition to paying regular royalties to them for using their music. As Rolling Stone previously reported, the new marketplace could see record companies doling out money for advertising and other promotional programs on the streaming service, as well as access to Spotify’s granular data tools for marketing purposes. Some of these services are already in play, like Spotify’s paid Marquee ads launched last year.
“Our plan is to be chief experimental officer,” said Universal CEO Lucian Grainge to the Journal. “We’ll take this experimentation and really drive it forward now with what we know about consumers and what we know about each other’s data.”
“We’re joined at the hip and speaking pretty much daily with each other,” Spotify Chief Executive Daniel Ek said. “This is all about driving discovery and connecting more artists and fans on a scale that’s never happened before.”
Ek added of the “Marketplace”: “We’ve said all along, the goal of our Marketplace strategy is to harness Spotify’s ability to connect artists with fans on a scale that has never before existed and bring new opportunities to the industry. Together, we look forward to reinvesting in and building new tools and offerings for artists around the world.”
In recent months, Spotify has shifted its focus toward the world of podcasting, inking exclusive deals with Bill Simmons, Joe Rogan, Kim Kardashian and Michelle Obama, as well as expanding into video podcasts.