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Here’s the Music Industry News Roundup for the week ending on April 21st, 2017. Spotify was much in the news this week, but there were a lot of other significant news stories as well. Let’s get into it.
Is the end of the free streaming tier near? It might be coming soon, especially if the music industry has its way.
Now indie labels can window releases too. Universal Music got its way with holding back star releases for the paid tier only, but the indie association Merlin just signed a similar deal with Spotify.
You’re the real product when you consume free music. It’s really your data that Spotify and other streaming services want.
Spotify had $2 billion in revenue last year, but still lost a bunch. And that’s why investors want that IPO as soon as possible.
YouTube is making it hard to be an artist on the platform. It’s shifting algorithms are really hurting creators, especially the outspoken ones.
Universal may go back on its deal with the Prince estate. Apparently the company doesn’t feel like it’s getting its money’s worth.
The nature of the music business has changed. It used to be major versus indie, but now it’s “quick versus slow” according to this interview.
Facebook’s Instant Articles may end up being a flop. Publishers are pulling out, saying that they get a better rate of return with direct links to their sites.
Believe it or not, the “golden age” of UK radio is upon is. There are more listeners than ever before, proving that radio doesn’t have to be old and stogy like in the U.S.
LiveNation is partnering with Mercedes for a VIP ticketing program. I guess it’s smart to go where the money is, but this won’t make concert tickets go anywhere but up.
That’s the Music News Roundup of what went on in the music industry last week. Have a great week ahead!
As I’ve written in other posts, Spotify wants to do a public offering this year but won’t be able to do that until it signs new licensing agreements with each of the major labels. It looks like the first of those agreements has come to pass with the reported signing of Universal Music.
The fact is that Spotify was not in a particular position of power here, so had to make some concessions that under other circumstances (like not having an impending IPO to think about) it would probably not agree to. One of the biggest is that it has agreed to make new album releases available only on its paid tier, something that the company has stated it would never acquiesce to in the past. This “windowing” is for two weeks and begins today. New singles will still be available across both the free and paid tiers.
One of the more interesting reported terms is that Spotify is said to have set subscriber growth targets in return for a reduced royalty payment. No one is saying exactly what those subscriber milestones are, but the company must feel very comfortable with them in order to place it in the agreement. It’s presumed that the payments will increase if Spotify doesn’t meet those goals, but there could also be a penalty involved or maybe even an increased staked in the company.
This is only the first of the agreements that Spotify has to have in place prior to its IPO. There’s still Sony and Warners as well as Merlin for indie content. That said, one would think that the other agreements would be similar to the one with Universal Music, as most labels require a “favored nations” clause that requires everyone to get the same terms.
If Spotify can’t get these agreements in order, it could shoot down its IPO, as there would be too much future financial uncertainty for investors or underwriters to sign on. This is a good first step.