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On Sunday (Jan. 26), news broke that Universal Music Group and Spotify had struck a direct deal affecting both the company’s recorded music and publishing royalty payments. The recorded music side of the deal marked an important step forward in UMG’s so-called “Streaming 2.0” plan, but the publishing side of it is even more noteworthy.
This agreement represented the first direct deal between a music publisher and Spotify since the passage of the Music Modernization Act in 2019, and it effectively overrides the government-regulated statutory rate for mechanical royalties in the U.S. with a private deal between the two companies. While the jointly issued press release about it was vague on details, sources close to the deal say it offers better pay to UMPG and its songwriters than before, and it signals that Spotify might be ready to bury the hatchet with U.S. publishers overall. But it’s not over yet.
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First, the context: In March 2024, Spotify added audiobooks to its platform and reclassified its premium, duo and family subscription tiers as “bundles” in the U.S., a classification streamers can use to pay discounted mechanical royalty rates for musical works. This means that Spotify started splitting the money it once only paid to U.S. music rights holders to pay for both music and books, leading to a sudden and dramatic drop in mechanical streaming royalties. (At the time, Billboard estimated a decrease of $150 million in U.S. mechanical royalties for songwriters and publishers over the first 12 months of the new classification, compared to what they would have made had the tiers never been reclassified.)
This led to a nearly year-long war between the publishers and Spotify, led vigorously by the National Music Publishers’ Association (NMPA), which launched a multi-pronged retaliation against Spotify. In the months that followed, the NMPA sent Spotify cease and desist notices for podcast and video content on its platform that were allegedly infringing on music IP; submitted a legislative proposal, asking for the overhaul of the statutory license; sent complaints to the FTC and nine state attorneys general; and more. The Mechanical Licensing Collective jumped in too, suing Spotify in May for allegedly “unlawfully” changing its subscriptions to bundles.
Then, in a surprisingly-timed announcement, the MLC’s lawsuit against Spotify was dismissed this morning (Jan. 29) with a federal judge saying that Spotify’s move to bundling was supported by “unambiguous” regulations. This timing was good for Spotify. Had the ruling come down before the direct deal with UMPG, the outcry from publishers about it would have been far worse (not to say there won’t still be some outcry). The judge is not giving the MLC a chance to refile the case, saying the law is clear and that amending the accusations would be futile, although the MLC can challenge the ruling at the federal appeals court.
But since this ruling came after the UMPG news became public, publishers now have hope for another way out of the Spotify bundle: direct deals. Although sources close to the situation say they are not aware of any other negotiations going on between Spotify and other publishers to date, the other major publishers now have precedence to argue for similar deals with Spotify. The bigger question is what happens to the small indie players. Will they be subjected to the original bundle rate while the majors get better terms? Does this further the monetary divide between indie and major publishers? UMG is the world’s largest music company and the world’s second largest publisher, after all. Not everyone has that kind of leverage.
The NMPA told Billboard at the time of the UMG-Spotify deal that it was not making any changes to the moves it had already set in motion against Spotify — and neither was the MLC. (Of course, this all came before the MLC’s lawsuit was dismissed.) The NMPA struck a somewhat hopeful tone in a statement about the UMG-Spotify deal, saying it was “good news for the entire industry” and that “a rising tide lifts all boats, and this signals that Spotify is coming back to the table.”
The question remains, however, why Spotify came back to the table with UMG for a new publishing deal in the first place. Spotify had found a way to pay less for songs. Why did Spotify make this concession?
There are a few possible answers to that. For starters, the NMPA had essentially promised that, until Spotify relented on bundling, it would make any future moves the streamer wanted to make difficult. The NMPA’s cease and desist letter cited a Wall Street Journal report that Spotify eventually wanted to offer a “remix” feature to speed up, mash up and otherwise edit sound recordings; the NMPA warned that if Spotify released “any such feature … without the proper licenses in place from our members” it “may constitute additional direct infringement.” Given the NMPA’s overall tone throughout this letter, it seems clear that this was a warning to Spotify that it needed publishers’ cooperation for remix features.
Spotify has also teased other features that would require the platform to get new, voluntary licensing approval from the publishers. In October, Spotify began hosting music videos in 97 countries — but, notably, not in the United States. In November, Spotify CEO Daniel Ek teased the idea of a higher cost ultra-premium tier, including more offerings for top fans such as high fidelity listening and, vaguely, “a bunch of other things.” A few weeks ago, Spotify partnered with The Weeknd to stream his Billions Club Live show exclusively on the platform. By developing a solution with UMPG, and maybe other publishers in the future, Spotify is signaling that it is ready to make nice so that it can push forward with its plans for new products.
It also must be noted that all of these publishing companies, as well as Spotify, are global.
While the bundling situation is specific to the United States, UMPG and other publishers are negotiating with Spotify for licensing deals in multiple markets worldwide where publishers have room to negotiate. With UMG’s direct deal, UMPG and Spotify can move forward with their plans to grow their income and presence in emerging markets — something both Spotify and UMG shareholders are keen on — without wasting time and resources threatening each other in every new licensing conversation.
It turns out that playing nice is helpful for both parties — and the market is rewarding that. Since the announcement of their new direct deal, the share price of both companies saw a positive bump. Even Warner Music Group saw upward movement, since some analysts believe the UMG deal opens the door for other major music companies to do the same.
Though it constitutes a step in the right direction, only time will tell how, and if, other direct deals between Spotify and publishers develop, and if this might grow the chasm between majors and indies.
Spotify won a ruling Wednesday dismissing a lawsuit from the Mechanical Licensing Collective that accused the streamer of unfairly slashing royalty rates, with a federal judge ruling that Spotify’s move was supported by “unambiguous” regulations.
The MLC sued last year, claiming Spotify had “unilaterally and unlawfully” chosen to cut its music royalty payments nearly in half through bookmaking trickery – namely, by claiming that the addition of audiobooks to the platform entitled the company to pay a lower “bundled” rate.
But in her decision on Wednesday, Judge Analisa Torres said that federal royalty rate rules clearly allowed Spotify to legally claim the lower rate, rejecting MLC’s argument that the company was not actually offering a “bundle” of services.
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“Audiobook streaming is a product or service that is distinct from music streaming and has more than token value,” the judge wrote, alluding to the specific wording of the federal rule. “Premium is, therefore, properly categorized as a Bundle.”
A spokeswoman for the MLC did not immediately return a request for comment on the ruling.
The MLC, which collects streaming royalties for songwriters and publishers, filed its lawsuit in late May — a week after Billboard estimated that Spotify’s move would result in the company paying roughly $150 million less over the next year. In its complaint, the MLC claimed Spotify was “erroneously recharacterizing” the nature of its streaming services to secure the lower rate.
“The financial consequences of Spotify’s failure to meet its statutory obligations are enormous for songwriters and music publishers,” the group’s attorneys wrote at the time. “If unchecked, the impact on songwriters and music publishers of Spotify’s unlawful underreporting could run into the hundreds of millions of dollars.”
At issue in the lawsuit is Spotify’s recent addition of audiobooks to its premium subscription service. The streamer believes that because of the new offering, it’s now entitled to pay a discounted “bundled” royalty rate under the federal legal settlement that governs how much streamers pay rightsholders.
In Wednesday’s ruling, Judge Torres agreed. She said the rules required only that Spotify offered a different service and that it provided users with more than “token value” – and that the addition of audiobooks was clearly covered by those terms.
MLC’s attorneys had argued that audiobooks were that kind of “token” non-factor, since Spotify didn’t raises prices when it added them and only a small proportion of subscribers actually listen to them. MLC had claimed Spotify added the books was merely a “pretext” to cut rates for music.
Spotify moved to dismiss the case in August, calling it “nonsensical” and “wasteful.” The company’s attorneys blasted the MLC’s argument that the audiobooks were aimed at a legal loophole, saying it “profoundly devalues the contributions of the tens of thousands of book authors.”
In her decision on Wednesday, Judge Torres sided with Spotify’s argument. Though she said the new offering might strike ordinary consumers as more of a “two-for-one deal” than a traditional bundle, she said Spotify’s addition of the books had clearly brought more than nominal value to its users.
“MLC cannot plausibly claim that having access to audiobooks is not something of intrinsic and monetary value to many, even if only a fraction of Spotify’s millions of Premium subscribers may take advantage of it,” the judge wrote. “The court can draw only one conclusion: that 15 hours of monthly audiobook streaming is a product or service that has more than token value.”
If anything, Judge Torres said, Spotify had “likely paid more in royalties to MLC than it was otherwise required to pay” because it did not immediately claim bundled status after introducing the audiobook feature.
In addition to dismissing the lawsuit, Judge Torres did not give MLC a chance to refile the case, saying the law was clear and that amending the accusations would be futile. The group can still challenge the ruling at a federal appeals court, however.
In a statement to Billboard on Wednesday, a Spotify spokesperson said the company was “pleased” with the court’s decision: “Bundle offerings play a critical role in expanding the interest in paying for music and growing the pie for the music industry. We know the regulations can be complex, but there’s plenty of room for collaboration—and our recent deal with [Universal Music Publishing Group] shows how direct licenses can create flexibility and additional benefits.”
Spotify paid $10 billion to music rights holders in 2024, according to a blog post published Tuesday (Jan. 29) from David Kaefer, the streamer’s vp/head of music business.
Last year, Spotify reported that it finished the third quarter of 2024 with 252 million subscribers. “Today, there are more than 500 million paying listeners across all music streaming services,” Kaefer writes. “A world with 1 billion paying listeners is a realistic goal.”
Spotify’s $10 billion payout, a new record for the company, is roughly 10 times as much as it shelled out to the music industry a decade ago. Kaefer says the streaming service has now contributed roughly $60 billion to the music industry since its founding.
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Also notable for Spotify in 2024 was CEO Daniel Ek‘s announcement to financial analysts in November that the company was “on track for our first full year of profitability.”
“We’re not here to merely optimize for today,” he added. “As you think about Spotify in 2025 and beyond, picture a company that operates with the same disciplined management you’ve seen this year, but one that also has the ambition to seize the opportunities presented by what’s happening in technology. In the near term, I see potential for transformative shifts in music discovery and new ways to connect artists and fans like never before.”
On Sunday (Jan. 26), Spotify announced that it had reached a new direct deal with Universal Music Group that will impact the company’s recorded and publishing royalty rates. “Constant innovation is key to making paid music subscriptions even more attractive to a broader audience of fans around the world,” Ek said in a statement regarding the news.
This sentiment was echoed in Kaefer’s blog post on Tuesday. “We offer an ad-supported free tier, while some services don’t,” he writes. “Beyond the ad dollars this generates, more than 60% of Premium subscribers were once free tier users. Bringing in users who don’t expect to pay for music, and deepening their engagement, means they’re more inclined to become subscribers in the future.”
“Onboarding people to paid streaming,” he continues, “is precisely what has increased our payouts — tenfold — over the past decade.”
Spotify will report its fourth-quarter earnings on Feb. 4.
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Universal Music Group and Spotify have struck a new direct deal, impacting both the company’s recorded music and publishing royalty rates, the companies announced today (Jan. 26). In a statement, UMG chairman/CEO Lucian Grainge said that the deal is “precisely the kind of partnership development [UMG] envisioned” as part of its idea for “Streaming 2.0,” the company’s proposed changes to revamp streaming royalty rates and improve remuneration for its artists on streaming platforms.
Under the new agreement, UMG and Spotify “will collaborate closely to advance the next era of streaming innovation,” according to a press release. “Artists, songwriters and consumers will benefit from new and evolving offers, new paid subscription tiers, bundling of music and non-music content, and a richer audio and visual content catalog,” the press release continues. The deal also includes continued protection for UMG through Spotify’s fraud detection and enforcement systems.
Importantly, the agreement includes a direct deal between Spotify and Universal Music Publishing Group, the first direct deal between Spotify and a publisher since the passage of the Music Modernization Act in 2018. One top publishing executive tells Billboard that this change “sounds like Spotify is raising the white flag” about the so-called “bundling” dispute which has soured relations between many publishers, writers and Spotify since it launched last year. In March, Billboard reported that Spotify’s payments to music publishers and songwriters would be cut significantly to account for Spotify bundling in audiobooks as part of its premium tiers. Instead of paying out royalties for these tiers purely to music publishers and writers, Spotify began splitting the payments between music and books publishers.
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Billboard estimated the losses to be about $150 million in the first year the bundled audiobooks took effect. Now, nearly a year later, Universal Music Publishing Group appears to be back in a better position with Spotify. One source familiar with the deal said it has improved royalty payments for UMPG songwriters, although the two companies declined to state the specifics of how the new publishing royalty model (or the one for recorded music) works.
“Spotify maintains its bundle, but with this direct deal, it has evolved to account for broader rights, including a different economic treatment for music and non-music content,” a Spotify spokesperson clarified in a statement to Billboard.
“[This deal] makes sense,” the publishing executive tells Billboard. “[Spotify is] despised in the songwriting industry. Their main competitor, Amazon, has already left them isolated and alone. And they claim to want to expand into more videos but can’t get deals done. It was monumentally stupid for them to put themselves in this position but perhaps they are finally trying to get out of the bind they put themselves in.”
Grainge said, in his complete statement about the deal, “When we first presented our vision for the next stage in the evolution of music subscription several months ago — Streaming 2.0 — this is precisely the kind of partnership development we envisioned. This agreement furthers and broadens the collaboration with Spotify for both our labels and music publisher, advancing artist-centric principles to drive greater monetization for artists and songwriters, as well as enhancing product offerings for consumers.”
“For nearly two decades, Spotify has made good on its commitment to return the music industry to growth, ensuring that we deliver record payouts to the benefit of artists and songwriters each new year,” Spotify founder/CEO Daniel Ek said in a statement. “This partnership ensures we can continue to deliver on this promise by embracing the certainty that constant innovation is key to making paid music subscriptions even more attractive to a broader audience of fans around the world.”
Investors are betting there’s more gas in Spotify’s tank as the streaming company’s stock price reached an all-time high of $511.98 on Friday (Jan. 24) and finished the week at a record closing price of $510.43, up 5.1% from the previous week. Friday’s closing price valued the company at $101.6 billion, an increase of $5 billion in one week.
Spotify shares are off to a fast start in 2025 — rising 14.1% over the 15 trading days so far — after gaining 138.1% in 2024. The Stockholm-based streaming company is forecasting 665 million monthly active users, an increase of 25 million from the prior quarter, and 260 million premium subscribers, up from 252 million in the third quarter. Spotify’s fast-rising stock price mirrors the improvement in the company’s gross margin, which is forecasted to be 31.8% in the fourth quarter, up from 31.1% in the previous quarter.
Live Nation shares rose 3.8% to $140.74 on Friday, falling just shy of the all-time high of $141.18 reached on Nov. 25, 2024. On Thursday, Evercore raised its Live Nation price target to $160 from $150.
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The 20-company Billboard Global Music Index rose 3.5% to a new record of 2,303.31, bringing its gain in 2025 to 8.4%. That’s more than double the year-to-date gains of the S&P 500 (up 3.7%) and Nasdaq composite (up 3.3%). A dozen of the 20 music stocks finished the week in positive territory, with three exceeding 5% gains. Of the eight stocks that lost ground, just one fell more than 2%.
The week’s greatest gainer was Chinese music streamer Tencent Music Entertainment, which rose 7.4% to $11.59. On Tuesday (Jan. 21), Morgan Stanley upgraded Tencent Music to “overweight” from “equal weight.” K-pop company SM Entertainment also did well, gaining 7.1% to 84,000 won ($58.76), bringing its year-to-date increase to 11.1%.
Cumulus Media finished the week at $0.88, up 4.8%. The radio company’s shares soared nearly 17% on Thursday (Jan. 23) following news that Matthew Blank resigned from the Cumulus board and was replaced by Steven Galbraith, managing director of Kindred Capital Advisors and among the largest Cumulus shareholders.
SiriusXM shares fell 1.4% to $21.96. On Thursday, Morgan Stanley lowered its price target on the company to $21 from $23. SiriusXM has fallen 3.7% year-to-date and has lost 58.9% over the last 52 weeks.
The worst performer of the week was Deezer, which fell 7.3% to 1.15 euros ($1.21). Deezer shares have fallen 46.5% over the last 52 weeks and are already down 14.2% in 2025.
Stocks performed well globally as earnings season got off to a strong start. According to FactSet, 80% of companies that reported earnings thus far have exceeded expectations, beating the 10-year average of 75%. In the United States, the S&P 500 and Nasdaq composite each gained 1.7%. South Korea’s KOSPI composite index improved 0.5% to 2,536.80. China’s Shanghai Composite Index was up 0.3% to 3,252.63. In the United Kingdom, the FTSE 100 increased less than 1%.
SiriusXM kicks off music companies’ earnings releases on Thursday (Jan. 30). Elsewhere, Spotify announced its fourth-quarter earnings on Feb. 4 while Warner Music Group follows on Feb. 6.
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Though making and distributing music has become easier than ever, the number of tracks being uploaded to digital service providers has fallen — not increased — in the last two years.
In the first quarter of 2023, an average of 120,000 tracks were being uploaded to DSPs each day, up from 93,400 in 2022, according to Luminate. That number dropped to 103,500 for the full year of 2023 and fell further to 99,000 last year, according to the company’s recently released 2024 year-end report. Normally, a decrease in the amount of new music tracked by Luminate wouldn’t merit much attention. But a 4% annual decline in new tracks is notable when today’s creators have an unprecedented number of tools to make music — including easy-to-use digital audio workstations like BandLab and generative artificial intelligence apps such as Suno — and can tap into global distribution.
Music professionals Billboard spoke to for this story pointed to numerous possible explanations for the drop in new tracks, with anti-fraud measures being the most widely cited reason for the decline. Bad actors are known to upload large numbers of tracks through do-it-yourself distributors before hacking into users’ streaming accounts to stream the songs. Erik Söderblom, chief product officer for music distributor Amuse, cites Spotify’s policy changes announced in 2023 to discourage labels and distributors from uploading tracks used to inflate streaming activity for the drop. “It has been a successful way for both of them as a DSP and us as a distributor to discourage fraudulent actors who abuse the system by releasing and monetizing large volumes of audio files through artificial streams,” he says.
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Beatdapp, which can identify when users’ accounts are hijacked and turned into bot farms that unknowingly stream music, has seen fraud rates decrease on the platforms it works with, says CEO Morgan Hayduk. While a small 4% decline in the scheme of millions of new tracks suggests there’s still ample music for these bot farms to illegally stream, Hayduk believes the financial penalties are having their intended effect. “I do think the DIY space is taking their end more seriously and trying not to be a conduit for this,” he says.
French streaming service Deezer introduced an “artist-centric” royalty payout scheme in 2023 to combat fraud and prioritize professional music over “functional” music such as background noise and nature sounds. But given Spotify’s far larger user base, the platform’s anti-fraud measures get more credit for creating outcomes favorable to artists and record labels. For instance, in 2023, Spotify began levying penalties on music distributors and labels when fraudulent tracks they uploaded had been detected. As a result, experts tell Billboard, better policing at the source of the problem could have resulted in distributors being wary of working with some creators.
While the anti-fraud measures may have had the intended effect and prevented some tracks from being uploaded, DistroKid, another self-serve distributor of independent artists, actually sent more tracks to DSPs in 2024 than the prior year. “There wasn’t a decrease in tracks uploaded to streaming services through DistroKid in 2024,” a company spokesperson said in a statement to Billboard. “The average number of tracks uploaded to streaming services each day steadily increased throughout the year.”
As for other, lesser factors, a likely candidate is Spotify’s 2023 decision to set a minimum threshold for royalty payouts at 1,000 streams. The policy received mixed reactions. Some critics called the threshold a penalty for developing artists who rely on royalties to help build their careers. But cutting off payments to the outer reaches of the long tail put Spotify in sync with major labels’ recent push for royalty accounting schemes that reward professional artists at the expense of, as Universal Music Group CEO Lucian Grainge put it in 2023, “merchants of garbage.”
Ending the practice of cutting tiny royalty checks may help DSPs’ goal of prioritizing professional musicians over a sea of unwanted content, but “may also dishearten early-stage artists who struggle to grow their project,” says Söderblom. As a result, fewer uploads would mean fewer new tracks could enter Luminate’s database. Will Page, author of Pivot: Eight Principles for Transforming Your Business, believes that the payout threshold likely had “a material effect on what Luminate gets to count.” After Spotify set a threshold for payouts at 1,000 streams, an artist would experience diminishing returns from uploading more unpopular music. According to Luminate, 93.2 million of the 202.2 million tracks in its database were streamed fewer than 10 times. Page, Spotify’s former chief economist, estimates that 99% of the 99,000 new tracks in 2024 made the recording artist less than $100 in royalties last year.
Anti-fraud measures and artist-centric royalty schemes may not account for all of the decline, though. Another factor could be a natural ebb in the supply of music. Söderblom sees 2022 as “a great year for DIY” because many artists had additional time to work on new music due to the COVID-19 pandemic. “The combination of accessible music production and distribution tools and a more or less global lockdown led to a huge influx of releases,” he says. “As the world returns to normal, it seems natural to see the volume of new uploads decline.” The same could be true of video creators. Last week, MIDiA Research declared that “the pandemic-induced content creation boom has peaked” after time spent creating content such as YouTube videos dropped in the second quarter of 2024 — marking the first decline since 2021.
Similarly, the 120,000 tracks uploaded daily in 2022 may have marked a peak of musicians uploading their back catalogs to distributors. MIDiA Research’s Mark Mulligan has surveyed amateur and semi-professional creators for five years. “A lot of them are in their 40s and 50s, and probably a lot are people who have been playing in bar bands and whatever else,” says Mulligan. “And they say, ‘Oh, we’ve got these demos. Let’s put them on Spotify.’ And so, they had a lot of back catalog that hadn’t been digitized before to put up there.” Those tracks weren’t necessarily new, but they were new to DIY distributors and streaming platforms. Once the backlog runs out, these artists may not have any other recordings to distribute.
Yet another explanation is the rise of social media as a destination for new music. Music streaming platforms and DIY distribution have leveled the playing field and given every artist an opportunity to reach listeners around the world. Still, many artists have realized they aren’t the next Taylor Swift and can’t get much traction at services such as Spotify and Apple Music. Streaming can work wonders for big artists, but the promise of democratization “has lost a lot of sheen,” says Mulligan. Small artists who don’t attract a crowd at Spotify can use social media or user-generated platforms such as Audiomack to connect with listeners. “They would rather have a small fan base who they can interact with than a large audience they can’t interact with,” he says. “Add that with the remuneration issue and it’s a much less compelling premise to go on streaming now than it was three, four years ago.”
If Mulligan’s hypothesis is true, the artist-centric approach adopted by Spotify, Deezer and others could end up hurting its biggest proponents: the major labels. Streaming platforms have essentially told long-tail artists, “We’re not going to stop you from coming in, but you’re not really welcome,” says Mulligan, which he thinks could have unintended consequences somewhere down the road. “Stop a generation of artists coming in,” he says, “and there’s a really good risk that you’ll inadvertently stop a generation of fans coming in if those artists go elsewhere to build their fan bases.”
Kendrick Lamar is kicking of 2025 with a bang. The rapper’s monumental hit, “Not Like Us,” has officially surpassed one billion Spotify streams. Lamar’s anthemic track, released in May 2024, marked the end of the highly publicized feud between himself and Drake and became a longstanding hit, topping the Hot 100 for two nonconsecutive weeks. […]