Spotify closing in on licensing deal with Warner Music: Report

Spotify could have the full house of indies and music majors on board by September as Warner Music Group reportedly inches closer to ending its licensing holdout.

The streaming music company and WMG, the label home to Ed Sheeran, Coldplay and many more, are at a “crossroads” in negotiations, according to Reuters, as a bunch of sticking points are yet to be resolved.

Among the big items on the table is Spotify’s request for a more favourable revenue split in return for making some new albums available only to paying subscribers for a determined window of time.

Universal Music Group, the world’s biggest music company, has already fought that battle. After a bruising round of talks, Spotify struck a multi-year global license deal with UMG which allows the music giant’s artists to window their albums to its paid users only for the first two weeks of a release. “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,” explained Daniel Ek, Chairman and CEO of Spotify, in a statement announcing that deal earlier this year.

Spotify is, of course, eyeing a listing on the New York Stock Exchange. The market-leading music streaming business is expected to go public later this year or early next year, but its aspirations of hinge greatly on tying up content deals. The streamer announced a deal with the indies’ rights agency Merlin in April, and with Sony Music in June.

Spotify, which boasts more than 50 million paid subscribers (and 140 million total active users) and is valued at around US$13 billion, is said to be pushing for a 50-50 revenue split with WMG, though the music major is said to want a greater cut (at least 52 percent) similar to what its rival content providers get, sources tell Reuters.

“There are still a number of key points that remain to be agreed,” sources familiar with the WMG-Spotify talks tell Reuters. “If we manage to come to terms on these points, then it could lead to a very quick transaction. If not, any deal would remain at bay.”

Another told the wire service, “Given the way talks are progressing, I would be surprised if we don’t have a deal in September.”

As previously reported, Spotify has tapped Morgan Stanley, Goldman Sachs and Allen & Co to advise on a possible listing. The tech firm also acquired the Brooklyn-based blockchain startup Mediachain in an arrangement that could help the streaming giant better track online works and help pay artists what they deserve.

This article originally appeared on The Industry Observer, which is now part of The Music Network.