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.


HBO Now Streaming Service Nears 1 Million Subscribers: Time Warner

HBO Now Streaming Service Nears 1 Million Subscribers: Time Warner

Time Warner Inc. said its HBO Now streaming service is nearing 1 million subscribers, up from the 800,000 at year end.

Chief Executive Officer Jeff Bewkes announced the new tally Tuesday at a Deutsche Bank investor conference in Palm Beach, Florida. The previous year-end total came in a February 10 conference call.

HBO charges $15 (roughly Rs. 1,000) a month for the online service, part of the company’s effort to counteract so-called cord-cutting and compete with Internet services including Netflix and Hulu. HBO is increasing its original programming by 50 percent to 600 hours annually. Bewkes said Tuesday. The online product isn’t taking viewers from its conventional pay-TV service, which signed up about 2.7 million new domestic subscribers last year, he said.

Bewkes said he didn’t expect the online HBO service to contribute to profit this year. The company is reinvesting in new markets and programming, he said.

“It’s a successful product,” Bewkes said. “We’re going to push on it.”

The surge in spending is part of a broader industry trend in which programmers like New York-based Time Warner, also the owner of Turner Broadcasting and Warner Bros., are having to increase production of original shows to combat viewer losses to Internet services and satisfy existing cable and satellite TV audiences.

Time Warner’s TNT and TBS networks, part of the Turner division, plan to double their production budgets to $1 billion (roughly Rs. 6,745 crores), Bewkes said.

As part of the effort to reach new viewers, Time Warner is considering offering other networks online outside the U.S. The HBO streaming service is expanding to Mexico, Brazil, Spain and Argentina this year, Bewkes said.

Time Warner fell 1.2 percent to $68.72 at 12:25pm in New York. The stock had gained 7.6 percent this year as of Monday.

© 2016 Bloomberg L.P.

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Tags: Apps, HBO, HBO Now, Home Entertainment, Hulu, Internet, Netflix, Time Warner Cable