Spotify Nearing Warner Music Deal, But Ongoing Battles With Songwriters, Publishers Could Delay IPO
[UPDATED] Spotify is nearing a new licensing deal with Warner Music, the last of the big three label agreements it needs before a U.S. stock market listing, according to a new report. But ongoing battles with music publishers could delay the streamer's entry into the public markets.
Spotify is nearing an important new licensing with Warner Music Inc., multiple sources tell Reuters.
The deal will signed by September, according to the sources, with major issues including a lower revenue split for money losing Spotify, in return for the ability to window releases from free subscribers, already agreed to. The exact revenue split and the size of a possible upfront payment to the music group is still being negotiated.
Warner Music is the last of the big three music group deals that Spotify needs before moving towards a U.S. stock market listing that would bring Spotify the cash it will eventually need to survive and grow globally.
Though close, the deal is far from done. "The negotiations are at a crossroads," said one of Reuters sources said. "There are still a number of key points that remain to be agreed. If we manage to come to terms on these points, then it could lead to a very quick transaction. If not, any deal would remain at bay."
Songwriters, Music Publishers Could Delay IPO Plans
There are also other unresolved issues that could delay Spotify's entry into the public markets; most notably its rocky relationship with songwriters and the music publishing community.
Spotify has traditionally left its deal with music publishers until after it completed new deals with Universal, Sony, WMG and Merlin. But this time the publishers may be in no mood to sign on without major concessions.
Growing criticism of the size of Spotify payments to songwriters could embolden music publishers to demand higher payments, even as labels are accepting less. Ongoing battles over Spotify's use of unlicensed tracks has also strained Spotify's relationship with the songwriting community.
After settling both an NMPA complaint and a class action lawsuit brought by songwriters Melissa Ferrick and David Lowery over the unlicensed use of thousands of tracks, Spotify was hit with two new lawsuits last week. Nashville music publishers Rob Gaudino and Bluewater Music each filed lawsuits alleging that Spotify failed to obtain the proper licenses to stream more than 2500 songs. Gaudino was the principle songwriter for the Four Seasons.