Spotify Already “Paying Out Well” to Record Labels

Posted Fri, 01/22/2010 - 02:27 by Mashable

Music streaming service Spotify has yet to launch in the US, but in Europe the service is already reportedly offering a sustainable revenue stream to the labels it’s made licensing deals with, according to the Telegraph. SVP of Digital for Universal Music Group International Rob Wells revealed some of the financial details of the licensing agreements it has with Spotify for the first time. In the UK and Spain, Spotify pays a per stream royalty for each track users listen to. In its other four territories (France, Sweden, Finland, and Norway), the labels instead get a cut of the revenue generated from subscriptions and advertising. “That to me equates to a sustainable business model,” said Wells. Spotify only needs a 10-12% conversion rate of free to paid users in any given territory to give the labels a decent return. Wells also revealed that Spotify was the fourth largest digital partner in terms of revenue contribution in 2009. The top three weren’t named, but it’s likely Apple’s iTunes and Google’s YouTube are among them. Spotify has already taken over iTunes in terms of revenue contribution in its native Sweden. The service is expected to launch in the States sometime in the first half of this year. Spotify CEO and founder Daniel Ek will be speaking at the upcoming New Music Seminar in Los Angeles, where we’ll be on the ground eager to bring you more specific details about Spotify’s plans to take leadership in the subscription music space. Reviews: Google, Spotify, YouTube Tags: money, music, music streaming, record labels, riaa, spotify, subscription music

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