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Rumor Fact(ory): Spotify nearing major label deals with some surprising propositions

spotify logo March2016 canvasFinancial Times is the source of the latest Spotify speculation, reporting that the streaming service is close to final licensing deals with the major labels. The core of those arrangements, is that Spotify would pay a lower royalty fee to the labels, but in exchange would temporarily gate major album releases for paying customers. FT’s sources said that the negotiations had gained momentum, but cautioned that nothing was finalized yet and could still come to a halt.

The developments of this potential deal, as currently reported, would mark some big shifts in strategy for both parties. Spotify has doubled down time and time again in the past on its policy to make any music on its platform available to all users, regardless of whether they are subscribers. The rumor wheel often cycles around to Spotify reversing this rule, but it has not yet wavered from that stance.

On the record industry side, the major labels have been advocating for bigger royalty fees from digital platforms over the years. It’s unclear whether the possible concession of windowed releases is the reason why they would consider relaxing that push for increased licensing rates.

If Spotify does successfully land these deals, it could help the streaming service to achieve financial stability. The latest financial results for Spotify date back to 2015, but even as its revenue and subscriber numbers grow, it has yet to announce turning a profit. Spotify has also pushed back its IPO plans several times; the security of label deals is likely the last hurdle before the company takes that leap at last.

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Anna Washenko

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