Spotify Inks Multi-Year Agreements Including Direct Licensing Deal With Universal Music Group: Retail Relishes Development

Spotify Technology S.A. (SPOT) and Dutch-American music company Universal Music Group N.V. ($UMGNF) announced new multi-year agreements on Sunday, perking up retail investors' sentiment.

The companies said the agreements are for recorded music, and music publishing focused on growth, innovation, and advancement of artists’ and songwriters’ success. Under the new contracts, Universal Music Group (UMG) and Spotify will collaborate closely to advance the next era of streaming innovation.

The new collaboration seeks to benefit artists, songwriters and consumers with new and evolving offers, new paid subscription tiers, bundling of music and non-music content and a richer audio and visual content catalog.

The companies expect the deal to position the industry for continued subscriber growth and retention.

The new publishing agreement between the companies establishes a direct license between Spotify and UMG across Spotify’s current product portfolio in the U.S. and several other countries. 

According to Digital Music News, this is a pushback for Spotify, which has been driving its subscribers to its bundled package, touting cost savings, even as it fights publishers. The report said the direct deal is the first of its kind since the 2018 Music Modernization Act and also signals a significant shift in the dynamics between streaming platforms and music publishers.

Daniel Ek, Spotify’s Founder and CEO, said, “This partnership ensures we can continue to deliver on this promise by embracing the certainty that constant innovation is key to making paid music subscriptions even more attractive to a broader audience of fans around the world.”

Spotify is scheduled to release its fourth-quarter results before the market opens on Feb. 4.

On Stocktwits, sentiment toward Spotify improved to ‘bullish’ (61/100) from ‘neutral,’ with message volume remaining at ‘normal’ levels.

Spotify stock ended Friday’s session 1.78% higher at $510.43. The stock has gained 14% since the start of the year.

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