Less than a year after signing licensing deals with the majors, Spotify is stirring the pot once again

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Less than a year after signing licensing deals with the majors, Spotify is stirring the pot once againSpotify Major Labels Min

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

YouTube solidifies deal with Sony and Universal, moves closer towards paid service launch

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Earlier this month, Bloomberg reported that YouTube‘s music streaming service could arrive as early as March. The service, which has tentatively been titled Remix, has been experiencing delays in its launch due to its failure to negotiate agreements with major music publishers.

Negotiations with Sony Music Entertainment and Universal Music Group have been ongoing for quite some time, and until now had been stunting the new service’s launch. Now, Bloomberg reports that both of the music labels have signed long-term agreements with YouTube.

Sony and Universal’s contracts set an aggressive policing of user-uploaded copyrighted songs. Additionally, the deal means that both companies set the royalty rates for music video rights holders. Ultimately, YouTube will now be able to move towards a Spotify-like subscription model. The paid service will also feature content under a paywall, akin to Spotify’s premium subscription.

Historically, YouTube’s believed to have inadequately policed the misuse of copyrighted material. Many believe their failure to do so has held back the music industry’s growth, and while the Universal and Sony partnership will see out that the paid service is able to launch quite soon, it’s still unclear just how long the contracts are for, or how another new streaming service from a mogul like YouTube will affect the industry.

Source: Bloomberg

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Facebook and Universal Music Group strike music licensing deal allowing users to share videos

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As if constant sharing wasn’t exasperating enough, Facebook and Universal Music Group have struck a deal regarding music licensing that will make is easier for music enthusiasts to bombard family members with videos of the latest Gorillaz album or the newest Martin Garrix single.

The two companies have officially announced a global, multi-year agreement allowing Facebook users to share videos containing music licensed by UMG. “In time,” states a press release regarding the partnership, “functionality will expand to enable access to a vast library of music across a series of social features.” In the past, Facebook has worked to remove videos containing content from UMG licensed artists. Terms of the deal were not disclosed in the joint press release.

The move comes fresh off the heels of Universal’s deal with Soundcloud back in 2016 and, more recently, their global agreement with YouTube a mere week ago.

Their deal with Facebook licenses music and publishing catalogs for video and social platforms, including Instagram and Oculus.

“There is a magnetic relationship between music and community building.” says Tamar Hrivnak, head of music business development and partnerships at Facebook “We are excited to bring that to life on Facebook, Instagram, Oculus and Messenger in partnership with UMG. Music lovers, artists and writers will all be right at home as we open up creativity, connection and innovation through music and video.”

The deal addresses major copyright issues around music licensing, and its tumultuous relationship to social media. While the agreement is only the first step in solving the enigmatic relationship between social media and music licensing, Facebook states that it will work with UMG to launch “music based products” on its platforms, including a music based messenger app.

“Together, Facebook and UMG are creating a dynamic new model for collaboration between music companies and social platforms to advance the interests of recording artists and songwriters while enhancing the social experience of music for their fans,” Michael Nash, Universal’s Vice President of digital strategy states in the joint press release. “This partnership is an important first step demonstrating that innovation and fair compensation for music creators are mutually reinforcing — they thrive together.”

Barring the duo’s joint press release, neither Facebook nor Universal provided information regarding their digital product strategy.

“As with our deal with Spotify earlier this year and our license renewal with YouTube,” said UMG’s Chief Executive Officer Lucian Grainge in an internal company memo, “our deal with Facebook leverages the experience we’ve gained and the wealth of data we’ve amassed to win both greater flexibility as to how our music is offered to the public as well as fairer compensation for our artists — as we continually refine the balance between direct promotion and monetization.”

Universal is the first label to sign an agreement with Facebook, but the Verge reports that they are also in talks with Warner Music Group and Sony regarding licensing deals.

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