Under the deal, UMG will “deepen its leading role as an early adopter of future products” on Spotify’s platform and “provide valuable feedback to Spotify’s development team,” the companies said. Universal Music also will collaborate on “new, state-of-the-art marketing campaigns across Spotify’s platform” — in other words, the music company will be stepping up payments to Spotify to promote its artists.
The two companies are said to have been out of contract for more than a year, although that is not an uncommon situation for streaming services and music companies: In such situations the terms of the last agreement are extended and usually are retroactively adjusted when a new deal is reached.
Spotify had 286 million users — including 130 million Spotify Premium subscribers — as of the end of March 2020. It’s available in 92 markets across the globe, after launching in Russia and a dozen other European markets earlier this month.
Universal Music’s artist roster includes Drake, The Weeknd, Lady Gaga, Billie Eilish, Ariana Grande, Taylor Swift, Post Malone, Queen and The Beatles.
“From their early experimentation with Marquee, to testing new experiences like Canvas, Universal Music Group has been an important partner in helping to shape the development of our marketing tools,” Spotify chairman/CEO Daniel Ek said in a statement. “With today’s announcement, we will expand on this level of early stage innovation and further strengthen our partnership and shared vision for helping advance artists at all stages of their careers.”
Lucian Grainge, chairman/CEO of Universal Music Group, said, “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. 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.”
UMG is majority-owned by France’s Vivendi, which disclosed earlier this year that Universal Music Group is planning to launch an IPO within the next three years. Late last year, Vivendi sold 10% of UMG to a consortium led by Tencent Holdings for $3.3 billion, valuing the company at $33 billion.
Spotify is scheduled to release Q2 2020 results next Wednesday, July 29, before the market opens.
Jem Aswad contributed to this report.