Sony Music and Spotify Agree to New Global Deal For Sony Music Publishing U.S.

Spotify CEO, Daniel Ek

Spotify and Sony Music have entered a new chapter in their partnership to bring music to user’s hands worldwide. An all new direct partnership opens the market for Sony Music Publishing and ties the label giant to the streaming provider for a multi-year venture.

While the details of this deal remain undisclosed, it does indeed include a new direct licensing arrangement in the US, reported to “Ensure songwriters share more direct in the growth of streaming” stated by Spotify. The significance in this deal is the direct business to business model it reflects, as this agreement moves past the traditional CRB - Copyright Royalty Board US royalties model.

Although the CRB model is traditional, it may not serve Sony Music Publishing going into the future as it is a lengthy legal battle on who sets the mechanical royalty rates. Additionally speaking, this “CRB” meets only every 5 years as well. With this direct deal, Sony Music Publishing can operate more efficiently in royalty and data collection for their artists.

By removing this CRB model, Spotify can now move past the ‘bundling’ payment structure that saw the DSP drastically cut their mechanical royalty rates paid to US publishers and writers. All three major labels - Universal Music Group, Warner Chappell, and now Sony Music have direct publishing agreements with Spotify.

With these partnerships, major labels now have the ability to streamline their artist’s royalties directly from streaming platform to label to artists, cutting out many middlemen and most likely fees and percentages that were removable. As major label’s scale more effectively, the nature of recoupment and royalty distribution makes a significant improvement going forward.