Spotify and Universal Music Group (UMG) have reached a groundbreaking multi-year agreement that addresses the controversial bundling practices affecting music royalties since early 2024.

The deal's key components include:

• A first-of-its-kind direct licensing arrangement between Spotify and Universal Music Publishing Group (UMPG)
• Substantially improved payouts compared to statutory mechanical royalties
• Modifications to bundling-based discounts
• Support for UMG's "Streaming 2.0" vision

This agreement comes after Spotify migrated over 99% of US subscribers to bundled packages, which significantly reduced royalty payments to publishers and songwriters. The new deal aims to ensure fairer compensation while maintaining competitive subscription offerings.

The agreement also reinforces UMG's artist-centric principles, including:

• 1,000-stream-per-annum threshold for payment triggers
• Protection against fraudulent activity
• Enhanced monetization for artists and songwriters
• New product developments and subscription tiers

Sir Lucian Grainge, UMG's Chairman and CEO, praised the deal as aligned with their Streaming 2.0 vision, emphasizing improved monetization for artists and songwriters while enhancing consumer offerings.

While other publishers currently maintain existing payment structures, this deal could prompt similar negotiations from Warner Music Group, Sony Music Entertainment, and Merlin, potentially reshaping the streaming industry's royalty landscape.

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