Spotify Signs Sony Royalty Deal While Warner Holds Out: Reports

Spotify Signs Sony Royalty Deal While Warner Holds Out: Reports

Spotify has reached a licensing deal with a second major label, Sony Music Entertainment, according to media reports, setting the stage for a US stock market listing by the music streaming leader.

Recently valued at $13 billion (roughly Rs. 83,810 crores), Sweden’s Spotify is planning a direct listing on the New York Stock Exchange later this year or in early 2018, sources told Reuters in May.

Sony agreed to reduce royalties that Spotify must pay in return for the streaming service restricting new albums to paying subscribers for two weeks before offering access to free users, the Financial Times reported, citing a single source.

Sony’s top artists include Adele, Beyonce and Shakira.

Spotify is also in talks with Warner Music Group , Billboard reported.

Favourable royalty terms are crucial for Spotify to attain profitability and to make it a viable long-term holding for investors.

The company reported a EUR 349 million ($400 million) operating loss, a 47 percent increase on a year earlier, even as revenue grew 50 percent to EUR 2.93 billion.

In April, it signed a multi-year licensing deal with Vivendi’s Universal Music Group, with a similar two-week release window for new albums and a break on the royalties Spotify pays Universal.

It also signed up digital agency Merlin, on behalf of more than 20,000 independent labels.

Last year, Universal held a 28.9 percent share of global music label revenue, Sony Music generated 22.4 percent and Warner 17.4 percent. Independent labels made up the remaining 31.3 percent, MIDiA Research data showed.

Spotify has fended off competition from rival Apple Music, with nearly double the number of paying subscribers.

In March, Spotify said it had more than 50 million paying subscribers and 140 million active users, including free listeners. Apple reported 27 million music subscribers last month, up from 20 million in December.

The company has faced boycotts from some top music artists who have complained its free services undercut the value of their work but the major label licensing deals have gone some way toward easing these tensions, according to analysts.

Spotify declined to comment. Sony Music Entertainment and Warner Music Group did not respond to requests for immediate comment.

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Spotify CEO Daniel Ek Becomes Chairman as Co-Founder Steps Down

Spotify CEO Daniel Ek Becomes Chairman as Co-Founder Steps DownSpotify CEO Daniel Ek Becomes Chairman as Co-Founder Steps Down
Spotify co-founder and Chief Executive Officer Daniel Ek is consolidating power over the world’s largest music streaming service, taking on the role of chairman ahead of a planned initial public offering as soon as next year.

Martin Lorentzon, a co-founder of Spotify, is stepping down from his role as chairman after 10 years, a Spotify spokeswoman said in an e-mail. Lorentzon will become vice chairman, he said Thursday on his Twitter feed.

(Also see: Spotify Debuts in Japan, Complete With Karaoke Lyrics)

“I look forward to another 10 years at Spotify as vice chairman,” Lorentzon said.

Ek is leading the company as it prepares to make its case to public-market investors and takes on a growing list of rivals, including Apple, Amazon and Pandora. He’s taking a page from other technology industry founders such as Facebook’s Mark Zuckerberg – who maintain tight control over the leadership and direction of their companies – as he oversees a growing staff spread across Stockholm, London, New York and Los Angeles.

The company is in the midst of critical negotiations with record companies that will determine how much Spotify pays to carry music on its service. The outcome will help determine whether the company can bend itself toward profitability, as it currently pays most of its revenue back out in the form of royalties to labels and publishers.
Spotify last month surpassed 40 million paying customers, and has 100 million monthly users including its free, ad-supported product. It generated more than $2 billion in revenue last year but remains unprofitable.

(Also see: Spotify Said to Be in Advanced Talks to Buy SoundCloud)

Earlier this year, Lorentzon joined venture capitalist and Skype founder Niklas Zennstrom, former Finance Minister for Sweden Anders Borg and several other business leaders in signing an open letter calling for reforms in Sweden’s education, tax and housing industries, and warned that failure to do so could force businesses from the Nordic region’s biggest economy.

© 2016 Bloomberg L.P.

Tags: Spotify, Music Streaming Service, Music, Internet, Home Entertainment, Apps

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Spotify Free Users Complain of Malware-Infested Ads; Company Addresses Issue

Spotify Free Users Complain of Malware-Infested Ads; Company Addresses Issue

Some Spotify Free users were treated to malware-infested ads with their ad-supported music streaming service. Some users have reported on the company’s forum that random, malicious ads pop-up on the default browser while running Spotify’s freemium service.

The Next Web reports that while the original report was based on a Windows 10 machine, the malware also seems to pop up on other operating systems as well including Linux and macOS. Spotify has acknowledged the malvertising issue and told Engadget that the issue is an isolated on and has since “shut it down”.

(Also see: Spotify Debuts in Japan, Complete With Karaoke Lyrics)

“If you have Spotify Free open, it will launch – and keep on launching – the default Internet browser on the computer to different kinds of malware / virus sites,” wrote user Tonyonly on the company’scommunity page. “Some of them do not even require user action to be able to cause harm,” he added.

In a reply to the user’s complaint, Spotify said, “We’ve identified an issue where a small number of users were experiencing a problem with questionable website pop-ups in their default browsers as a result of an isolated issue with an ad on our Free tier. We have now identified the source of the problem and have shut it down. We will continue to monitor the situation. If you see this issue again, please let us know the exact date and time in this thread.”

In 2011, Spotify faced a similar issue where it displayed malicious ads to some users. The company rectified the problem and issued a public apology.

While Spotify confirms to have fixed the issue, users should still maintain caution and download ad-blockers if running Spotify Free, or shift to the company’s ad-free version instead.

Tags: Spotify, Music Streaming, Streaming, Malware, PC, Laptops, Virus
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Apple Fires Back at Spotify Over Music Streaming Claims

Apple Fires Back at Spotify Over Music Streaming Claims

HIGHLIGHTS

  • Spotify had accused Apple of being ‘anticompetitive’
  • Apple says Spotify is looking for preferential treatment
  • Spotify competes with Apple Music

Apple Inc fought back on Friday against Spotify’s claims that the US tech giant had hampered competition in music streaming by rejecting an update to the Swedish service’s iPhone app.

The two companies have gone head to head in the battle for music streaming customers since Apple Music was launched in more than 100 countries last year.

Apple’s entry into the field sparked concerns from music streaming companies such as Spotify, which have argued that the 30 percent cut Apple takes of subscriptions in its App Store give its own service an unfair advantage. Spotify General Counsel Horacio Gutierrez reiterated those concerns in a letter to Apple first reported on Thursday as he protested the rejection of the latest version of the Spotify app.

But Apple General Counsel Bruce Sewell countered that the company deserves a cut of transactions in the App Store for its work operating the marketplace, according to a copy of a letter to Gutierrez seen by Reuters. Sewell insisted that Apple was treating Spotify as it would any other app maker, in keeping with antitrust law.

“We understand that you want special treatment and protections from competition, but we simply will not do that because we firmly adhere to the principle of treating all developers fairly and equitably,” Sewell wrote.

Gutierrez claimed Apple’s rejection of Spotify’s app raised “serious concerns” under competition law in the United States and Europe and the move was causing “grave harm to Spotify and its customers,” according to technology publication Recode.

A Spotify spokeswoman confirmed the accuracy of the report. A spokesman for Apple declined to comment.

Launched a decade ago, Spotify is the world’s biggest paid music streaming service with about 30 million paying users in 59 markets while Apple Music has some 13 million.

Companies such as Spotify have sought to sidestep Apple’s App Store cut by encouraging consumers to sign up for their services online. Apple forbids developers from promoting alternative payment methods within their apps.

In late May, Spotify submitted a version of its app that removed the in-app purchase feature, which triggers Apple’s cut, and included an account sign-up feature that violated Apple’s rules, Sewell wrote. Apple rejected the app and asked Spotify to submit again, but the new version had the same problems, Sewell said.

Music streaming is a crowded field. Alphabet’s Google Music and YouTube also compete with Spotify and Apple Music to attract users prepared to pay for music, as does Pandora Media Inc and rapper Jay Z’s Tidal.

Amazon.com Inc is also preparing a standalone streaming service, sources have told Reuters.

© Thomson Reuters 2016

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Tags: App Store, Apple, Spotify
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