Spotify and Universal Music Group Ink Licensing Deal, Expanding Label's Role as "Early Adopter" of Tools

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UMG CEO Sir Lucian Grainge

"With UMG's commitment to being an early adopter," Daniel Ek tells Billboard, "we expect to create more opportunities to connect both frontline and catalog artists with new and existing fans."

Spotify and Universal Music Group have finalized a new and expanded multi-year global licensing agreement. As part of the arrangement, announced Wednesday, the label group deepens its role as an early adopter of Spotify's marketing tools and other tech features that both parties hope will foster more impactful connections between fans and artists in innovative ways.

"With this agreement, UMG and Spotify are more aligned than ever in our commitment to ensuring the entire music ecosystem thrives and reaches new audiences around the globe," said Sir Lucian Grainge, UMG chairman and CEO, in a statement. "Given our commitment to innovation and early adoption of music technologies, and Spotify's leadership in the development of forward-thinking tools, our new partnership will provide our artists with new and powerful opportunities to connect with fans on Spotify's growing platform.

With the pact, Spotify now has licensing agreements with all three major labels and Merlin, the indie sector's global digital rights licensing agency. The music streaming leader last renewed with UMG in April 2017.

In a statement to Billboard, Spotify chairman and CEO Daniel Ek explained that his company's mission is to "give creative artists the opportunity to live off their art, and fans the opportunity to enjoy and be inspired by it," adding, "our Marketplace strategy — and the tools and services we build to help creator teams engage with, grow, and better monetize their fanbase — are critical to this mission."

Ek said, "Unlike other music promotion options, ours are native to our platform. So not only are artists reaching listeners when and where they are actively choosing to engage with music, but they are reaching listeners who've shown interest in the artist's music and have the potential to listen more. These tools present an opportunity to reach the right audience at the right time in ways artists can't with other platforms.

"With UMG's commitment to being an early adopter, and to providing valuable input on our marketing tools, we expect to create more opportunities to connect both frontline and catalog artists with new and existing fans around the world."

Ek said that he and Grainge have spoken extensively on the ways they can work together on continuing the streaming-fueled resurgence of the once-ailing recording industry.

"Our teams both understand technology and innovation are crucial to the future of music," he said. "With this pioneering agreement and UMG's input, Spotify will continue developing unparalleled, forward-thinking, artist-focused technology that will help inspire more connections between artists and fans at the right time in ways that other platforms cannot."

One of Spotify’s newest artist-centric tools, Marquee, was recently migrated out of beta and into wide release. The sponsored recommendation tool allows labels like UMG to target an artist’s existing fanbase with pop-up banner ads for new releases. According to internal numbers provided to Billboard in late June, over one-fifth of users who were served a Marquee ad streamed the release in its first two weeks.

The UMG agreement comes at a busy time of expansion for Spotify, which recently announced that it is setting up shop in Russia and 12 other European nations. Since its last licensing pact with UMG, Spotify has also introduced the platform in India, over a dozen markets in the Middle East and Africa, and Vietnam. It is now operating in 92 total markets globally and is reportedly close to expanding to South Korea.

As of March 31, the streaming service had some 130 million paying subscribers and 286 million total monthly active users. Total revenue in the first quarter of 2020 was €1.85 billion, and the company said that business remained “very healthy” despite the global uncertainty caused by the COVID-19 pandemic.

This article was originally published by Billboard