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Spotify and Merlin Sign Multi-Year Licensing Deal

Spotify cleared another hurdle in the route to its IPO this morning when it announced a multi-year licensing deal with Merlin, the global digital rights agency for the independent label sector.

Coming on the heels of the company’s recent licensing deal with Universal, the world’s largest label group, it leaves two more label licensing deals for the company to complete — with Sony Music and Warner Music Group — to clear the way for its IPO, which is anticipated later this year.

The deal also continues the windowing policy that began with the Universal deal, whereby artists can withhold their releases from its free, ad-supported service for up to two weeks: “Merlin member labels can also participate in Spotify’s recently announced flexible release policy,” the release reads.

“Indie music has been a huge part of our success since day one and I am super happy to say we have a new, multi-year deal with Merlin Network,” co-founder and CEO Daniel Ek tweeted on Thursday.

Merlin CEO Charles Caldas said in a statement: “Merlin was a launch partner to Spotify back in 2008, and our partnership has thrived ever since. This new agreement lays the path to future sustainable growth for us both, and we look forward to remaining an integral part in the service’s continued success.”

Beggars Group founder and Merlin chairman Martin Mills added, “We’ve been great partners for each other, and this updated arrangement allows independents in the Merlin community the comfort of knowing they have a highly competitive deal and parity of access to the service, whilst creating a commercial environment in which Spotify can grow to the benefit of all of us.”

Streaming now accounts for 51% of U.S. recorded music revenue, according to a recent RIAA report. Merlin, which includes more than 20,000 independent labels from 50-plus countries, is essentially considered a fourth major: its members include Beggars Group, Domino, Entertainment One, Epitaph/Anti, Kobalt, Mad Decent, [PIAS], Secretly Group, Sub Pop, and many others.

The organization, which claims to represent more than 12% of the digital recorded music market, first licensed Spotify in 2008. Spotify, which has been valued at $8.5 billion, is now available in 60 markets globally and claims to have more than 100 million active users and more than 50 million paying subscribers. It is under significant pressure to go public in short order or face penalties stemming from its March 2016 convertible debt arrangement.

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