Warner Music Group and Spotify have signed a new multi-year licensing deal.
And before you ask… yes, sources have confirmed that it supersedes the ‘bundling’ payment structure that last year saw Spotify dramatically cut the rate of mechanical royalties being paid to publishers and songwriters in the US.
Warner’s new agreement with SPOT follows an announcement from Universal Music Group last month, which also included a new royalty agreement that overrode the prior mechanical royalties situation in the States.
Explaining this all is complicated and kind of gets in the way of reporting today’s news, but just for factual completists, here’s a short version:
- In 2022 the US Copyright Board ruled on a set of statutory precepts (‘Phonorecords IV’) by which mechanical royalty payments from streaming services to rightsholders must be calculated;
- Within these precepts was guidance on a lower mechanical royalty rate for ‘bundled’ services vs. ‘music-only’ services;
- Spotify subsequently added audiobooks to its main Premium music service. It then claimed this qualified as a ‘bundle’ (i.e. audiobooks plus music) and therefore entitled them to cut the mechanical royalty rate via which it paid pubcos and songwriters in the US;
- Universal Music Group and Warner Music Group now each have new private direct deals in the US with Spotify that override those statutory CRB rules going forward. However, within these private agreements, it’s understood that both music rights companies (a) Will continue to recognize a difference between ‘bundled’ and ‘music-only’ listeners on Spotify, yet (b) Have substantially improved the mechanical royalty payments expected to flow from SPOT.
- These private, direct agreements are between Spotify and each music firm’s in-house publishing companies (Universal Music Publishing Group and Warner Chappell Music), in both the US and other territories. In addition, Spotify has signed new global licensing agreements with each firm’s recorded music operations.
Phew.
A press release announcing the new SPOT/WMG agreement today reads: “The new deal will help deliver new fan experiences, a deeper music and video catalog, further paid subscription tiers, and differentiated content bundles.
“The agreement also builds on the companies’ existing alignment around ‘artist centric’ royalty models that reward and protect the power of artists to attract and engage audiences.
“Importantly, the new publishing agreement introduces a direct licensing model with Warner Chappell Music in several additional countries including the U.S., reinforcing songwriters’ benefit in this evolving landscape.”
Robert Kyncl, CEO, WMG, said: “This major agreement delivers new benefits for artists, songwriters, and fans, while unlocking further collaboration that expands the music ecosystem. It’s a big step forward in our vision for greater alignment between rights holders and streaming services. Together with Spotify, we look forward to increasing the value of music, as we drive growth, impact, and innovation.”
Daniel Ek, Spotify’s Founder and CEO, said: “For Spotify, 2025 is a year of accelerated execution, and our partners at Warner Music Group share our commitment to rapid innovation and sustained investment in our leading music offerings.
“Together, we’re pushing the boundaries of what’s possible for audiences worldwide—making paid music subscriptions more appealing while supporting artists and songwriters alike.”
It’s a busy day for Warner, which issues its latest quarterly earnings announcement today (February 6).
Earlier today, Warner confirmed that it had acquired a majority stake in Tempo Music, in a deal believed to value the latter company at north of USD $450 million.Music Business Worldwide
