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Upcoming Spotify Renegotiations Magnify Tussles With Labels
Partners pulling in different directions have been essential to developing agreements for online music royalties. Spotify's upcoming renegotiation with major labels has observers curious how the industry will move ahead.
The tensions at work between the stakeholders go way beyond an online giant fighting with old-fashioned suppliers about money, although the financial aspects are always present. Music's importance online is evident, for example in social media engagement. The importance of online platforms in our daily lives is unprecedented, still growing, and we rely on digital content publishers the way we once did on newspapers or television networks — except we heavily rely on digital platforms to constantly stay innovative. What have you done for me lately?
Bloomberg recently interviewed top executives about how the label-Spotify negotiations are going and these raise big questions. "This isn't the first time, nor will it be the last where we are involved in a discussion or negotiation with them on how songwriters are fairly compensated," said Universal Music Publishing Group COO Marc Cimino.
Private negotiations take place against both copyright's statutory legal context as well as the financial leverage of the parties, and meanwhile Spotify has pursued its own ability to provide a business home for singer/songwriters as well.
In some ways the difference between a music audio track and a music video is subtle, although when music videos were brand new the difference felt enormous. Legally the difference is enormous still, and while labels and song publishers fight on behalf of their artists, these details influence long-term strategic plans for Spotify such as opening in new markets and which sets of services they will be able to provide. While concessions get made, slowly and/or painfully at times, business disagreements have been worked out in the past, allowing the present-day success of licensed streaming to emerge as a viable ecology. But it will only remain viable with continued concessions.
Spotify went public in spring, with a built-in big payout to partners who became investors as well. Artists dealing with both have speculated about whether some of that increase in value should go to them, and there is ongoing commentary and debate on that financial detail. Meanwhile, the context for everybody is that a licensed ecosystem for music and music videos is socially electric.
The celestial jukebox has come to life. Now the business leaders behind it must agree on the next round of detailed terms that will shape our common future in ways that feel like social reshaping. At this point consumers have every reason to be heard, and they speak with their wallets by subscribing to premium music services. But their dollars really need to work for everyone because innovations like Spotify have been great and people love their music, online and off. This round of reshaping could be a lot like, "Turn it up!"