Spotify To Ante-Up $1B In Universal Music Group Deal

Spotify believes Universal Music Group has a billion reasons to renew its song-licensing deal, according to The NY Post.

The streaming music service expects to pay Universal, the No. 1 record label in the world, $1 billion over the next two years to cover music royalties, ad revenue and subscription fees, according to Spotify projections of its growth rate and Universal’s market share, contained in an internal e-mail, a copy of which was obtained by The Post.

The $1 billion number — equal to the global revenue generated by all companies in the fast-growing streaming sector in 2013 — underscores the extent to which Spotify and other streaming services will drive digital revenue for the world’s biggest record company.

Spotify’s payments to Universal, home to Taylor Swift, Nick Jonas and Madonna, are projected to account for 16 percent of the music giant’s recorded music revenue by March 2017 — up from 11 percent for the April 2015 to March 2016 period.

In addition, Universal, which owns a stake in Spotify, will get 39 percent of its pretax earnings from Spotify by 2017, up from 28 percent over the next 12 months, according to the e-mail, which factored in Spotify estimates for Universal’s growth.

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