Sony Music Group has announced a new licensing deal with Spotify, which is mainly of note because it includes a direct licensing agreement covering the Sony Music Publishing songs catalogue in the US, circumventing the compulsory licence administered by the MLC.
All three majors now have Spotify deals that include their song catalogues in the US, a move prompted by the streaming service exploiting a bundling discount that is available in the MLC-administered licence, which allows it to reduce what it pays to music publishers and songwriters under that licence.
An official statement declares that, “Spotify’s agreement with Sony Music Publishing includes a new direct licensing arrangement in the US, ensuring songwriters share more directly in the growth of streaming”.
Obviously no information is provided about what that actually means in practical or financial terms, with Spotify boss Daniel Ek and Sony Music CEO Rob Stringer instead digging deep into their respective bags of corporate bullshit when constructing their official statements.
Stringer hails the “futuristic approaches” that the two companies are developing together, while Ek reckons this deal is “a catalyst for building a more dynamic and prosperous music ecosystem for everyone”.
Yeah, maybe. I mean, at least when he’s busy focusing on “futuristic approaches” and “dynamic ecosystems” in music, Ek is momentarily distracted from pumping more cash into AI-powered weapons. Take the pluses where you can, I say.
“Our partnership with Sony is built on a shared drive to shape the future of music”, Ek waffles on. “Together, we’re accelerating the pace of innovation to create powerful new opportunities and increasing revenue for artists and songwriters”.
Sony and Spotify “have long been mutually committed to advancing music streaming and growing the marketplace for all”, adds Stringer.
“This is further reflected in our new agreements", he reckons, insisting that those “futuristic approaches” Sony and Spotify are now developing will “ensure our artists and songwriters remain appropriately compensated for their work, and audiences are getting a high-quality experience that’s ever evolving”.
Sony Music, and the other majors, already have direct licensing agreements with Spotify covering their Anglo-American song catalogues in many other markets. However, in the US, in recent years, Spotify has relied on the MLC-administered compulsory licence to cover the mechanical rights in songs, and separate licences from collecting societies like BMI and ASACP to cover the performing rights.
That was all fine until Spotify reclassified its premium subscription service as a music and audiobooks bundle in order to qualify for the bundling discount in the compulsory licence, allowing it to reduce its payments to writers and publishers.
That move was hugely controversial within the music industry, with the MLC suing Spotify, and the National Music Publishers Association proposing that copyright law should be changed so the publishers could opt out of the compulsory licence.
That opt-out is not currently available, meaning the publishers can’t stop Spotify from relying on the compulsory licence within the US. However, the majors began work trying to persuade Spotify to voluntarily enter into better direct deals covering song rights.
It’s thought the majors were able to exploit the fact Spotify is looking to evolve its service in ways that go beyond the compulsory licence, making a direct licensing scenario more attractive.
Universal Music announced back in January that it had agreed a new licensing deal with Spotify which included the direct licensing of songs in the US. Warner followed in February. When it comes to music publishing, Sony is the biggest, which is possibly why its deal took longer to get across the line.
It’s not just the majors doing these deals, independent Kobalt also announced a new deal with Spotify last month. It remains to be seen if any of other indies - which continue to be paid royalties with the bundling discount applied via the MLC - can also secure a direct deal.