Spotify has signed a new licensing deal with Warner Music Group, paving the way for the music streaming service to go public.
Warner was the last of the three big record labels to agree to renewed terms to make its catalogue available to Spotify’s 140 million users.
However, Spotify has been forced to agree to some limitations to get the labels to sign.
Artists and labels have in the past complained about minuscule revenue from steaming sites when compared to downloads or physical sales.
But with the deals with Sony, Universal and now Warner in place, Spotify is expected to float on the New York Stock Exchange as early as this year.
“Our partnership with Warner Music Group will help grow the new music economy where millions of artists can instantly connect with fans, and millions of fans can instantly connect with artists,” Spotify’s chief content officer Stefan Blom told the BBC.
Posting on Instagram, Warner Music chief digital officer Ole Obermann said: “It’s taken us a while to get here, but it’s been worth it, as we’ve arrived at a balanced set of future-focused deal terms.
“Together with Spotify, we’ve found inventive ways to reinforce the value of music, create additional benefits for artists, and excite their fans all over the world. Even with the current pace of growth, there’s still so much potential for music subscription to reach new audiences and territories.”
The “inventive ways” were not outlined, but if Warner Music’s deal is similar to those agreed with Sony Music and Universal, it is likely to include a clause allowing the labels to hold back certain songs from Spotify’s non-paying users for a limited period of time. Such a move would increase the royalties for artists who are unhappy at the lower earnings generated by streaming services.
Speaking about the Universal deal agreed in April, Spotify founder and chief executive Daniel Ek explained that “artists can choose to release new albums on premium only for two weeks, offering subscribers an earlier chance to explore the complete creative work, while the singles are available across Spotify for all our listeners to enjoy”.
According to the latest public figures, Spotify has 60 million paying customers – just under half of its entire user total. Its nearest competitor, Apple Music, has 27 million subscribers.
Spotify has long been expected to float on the New York Stock Exchange, but was holding off until the major deals were struck to offer clarity to investors over future expenses.
Reports suggest Spotify will not have an initial public offering (IPO) when it does go public.
Almost all companies IPO when going public to raise money and offer shares to more investors, but Spotify is expected to simply list on the NYSE without a sale. That tactic which would mean an increase in share value for its existing, private investors.