(CelebrityAccess) — Spotify's long term contracts with all three major label groups appear to have expired even as the streaming music service enters contentious negotiations over revenue splits.
According to Music Business Worldwide, the Swedish streaming company has been out of a long-term deal with Universal Music Group for more than a year. Their deal with Warners expired in early 2016 and the timer on their contract with Sony expired several months ago.
However, Spotify continues to be licensed by all three majors on a rolling month-by-month basis, and it appears unlikely that any of the majors would pull catalog from Spotify as streaming has now become a prime source of revenue for the labels and Spotify remains a dominant player in the streaming market.
According to MBW, potential negotiations for new contracts have been complicated by Spotify's aggressive pricing strategies for paid subscriptions, with the company recently offering six user 'family' deals for the same $14.95 price point Apple charges for a single user, particularly without long-term licensing agreements in place.
At the same time, Spotify is trying to move towards and IPO, and the lack of long-term contracts with the majors may make that a hard sell for investors, incentivizing Spotify to want to resolve its disputes with the labels.
However, according to MBW, previous contract negotiations with the labels might make that challenging for Spotify. MBW reported that many of the deals the majors struck with Spotify offered more generous revenue sharing plans than they might have, predicated upon the idea that Spotify would use the additional revenue to expand their business footprint into other markets. Unfortunately, such expansions have been slow to materialize, potentially throwing a spanner into future negotiations. – Staff Writers