Spotify is trying out new business models that test its relationship with major labels. Just a year after renegotiating licensing deals with major labels, Spotify is pushing back against what got them into the industry’s good graces in the first place. The Swedish streaming giant and the record companies that produce its content continue to publicize their tumultuous relationship.
Spotify has already expressed interest in acquiring music by licensing directly from independent artists. They rely heavily on Universal, Warner, and Sony to supply their 35-million-song catalog and recently have been paying advances to management firms and other artist-representation groups in order to obtain direct deals. The major labels see this as Spotify cutting into their territory, and with the current licensing deal, Spotify is not allowed to compete in a substantial or meaningful way with labels’ main businesses. CEO Daniel Ek said “We are not acting like a record label;” however, industry veterans told The New York Times they are growing weary.
Another strain on the relationship comes from music videos. Spotify has started offering video with audio on mobile devices, and they have to pay majors to publish their videos. This has caused disputes over how much the streaming behemoth owes for using those videos. Universal Music Publishing executive Marc Cimino told Bloomberg they want “to allow our digital partners to experiment and at the same time make sure our songwriters are paid properly.” On the other hand, Spotify is arguing their platform’s method of distribution is worth more than what’s credited.
As the methods of distribution shift, this contentious relationship between music licensincing and publishing appears natural. It’s highly unlikely labels or publishers will ever abandon Spotify entirely; however, labels are making it clear they’re restricting Spotify’s leverage in the industry.
H/T: Rolling Stone