Music streaming company Spotify is close to agreeing a new licensing pact with music label Warner Music Inc, sources tell Reuters. Mia Womersley reports.
Music-streaming company Spotify is close to agreeing a new licensing pact with major label Warner Music, sources tell Reuters. The Swedish start-up has grown in less than a decade into the world's most popular streaming music service. It's now valued at $13 billion. Warner Music is home to such artists as Ed Sheeran and Muse. Reuters media and technology correspondent Sophie Sassard says the clock is ticking for the streaming service. SOUNDBITE (ENGLISH) SOPHIE SASSARD, REUTERS MEDIA AND TECHNOLOGY CORRESPONDENT, SAYING: "Spotify is under pressure from its creditors to go to the market to raise money so that they can recoup part of their investment. Before they can do that, they first need to wrap up these licensing deals with the three majors, Sony, Universal and Warner Music. They've done it with Universal and Sony so now the remaining guys are Warner Music. So if they can now come to terms with Warner that would allow them to go to the market potentially by the end of the year." The parties have not yet agreed on the precise revenue split. Spotify wants 50-50. But Warner Music is demanding it keeps at least 52 percent of the royalties. Basic Spotify services are free and supported by advertising. Subscribers who pay get unlimited ad-free listening. Spotify pays a share of royalties to record companies who then pass them on to artists. SOUNDBITE (ENGLISH) SOPHIE SASSARD, REUTERS MEDIA AND TECHNOLOGY CORRESPONDENT, SAYING: "The music industry has been in a recession for over a decade and streaming platforms like Spotify have really helped revive the music industry. Now while they grow and they become more prominant they are asking for more, that is why there is this ongoing fight around royalties." Warner is also pushing to receive a guaranteed upfront payment - regardless of subscription growth. Both parties are positive a deal could be signed by September.