Spotify just signed a long-term licensing deal with Warner Music Group that helps pave the way for the music streamer to go public. Warner was the last major label to re-sign with Spotify, after Universal and Sony (along with indie label group Merlin) inked new deals with the company earlier this year.
While details are scarce, the general idea behind these new licensing deals is that Spotify gets to pay reduced rates to rights holders in exchange for concessions to the labels, like the freedom to withhold new albums from Spotify’s ad-supported (and far less lucrative) free tier for a certain period of time. Ad-supported streaming has been an annoyance for the music industry, which is finally seeing its revenue grow thanks to paid subscriptions.
The Warner deal clears what is presumed to be Spotify’s last major hurdle before going public through an unconventional direct listing of its stock. The company reportedly met with the SEC earlier this week about its plan. While the label deals square away Spotify’s royalty agreements with labels, the issue of songwriter royalties–and the faulty metadata that keeps getting Spotify sued–is still being ironed out.
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