Spotify and BMG have recently inked a direct multiyear publishing licensing agreement in the United States, deviating from the conventional Copyright Royalty Board model. This move, announced on October 8, signifies a strategic shift for Spotify, aiming to enhance value for songwriters and their representatives. It is part of a series of similar agreements that Spotify has been entering into in recent times.
The agreement is designed to provide songwriters and publishers with improved compensation through a combination of direct licensing from Spotify and statutory payments from the Mechanical Licensing Collective (MLC). By adopting this approach, Spotify anticipates offering higher overall royalties compared to the previous audiobook bundle payment system implemented by the MLC in March 2024, which had led to concerns within the industry about reduced royalty rates.
In a joint statement, Spotify and BMG highlighted that this new deal represents a step towards a more flexible licensing model, emphasizing the objective of ensuring that songwriters directly benefit from the growth in streaming. Spotify’s co-president and chief business officer, Alex Norström, expressed the company’s dedication to fostering collaboration within the music industry, underscoring the importance of supporting songwriters through innovative licensing models that enhance the music listening experience on their platform.
BMG’s CEO Thomas Coesfeld echoed similar sentiments, emphasizing the importance of fair representation and reward for songwriters. He described the agreement as progressive and aligned with contemporary music consumption patterns across digital platforms. Coesfeld also lauded Spotify’s commitment to implementing artificial intelligence protections, which resonate with BMG’s efforts to protect artists’ rights and ensure equitable remuneration.
BMG’s decision to bring its digital and streaming operations in-house in 2023, under Coesfeld’s leadership, marked a strategic move to gain more control over platform relationships, data utilization, and catalog management. Following this restructuring, BMG appointed Monti Olson to head its North American publishing operations, focusing on signings and expanding its catalog. Coesfeld emphasized that publishing remains BMG’s primary revenue driver, with ongoing investments in global operations to capitalize on the expansion of streaming markets.
These developments reflect a broader trend in the music publishing industry where major players like Spotify and BMG are reshaping traditional licensing models to better serve songwriters and adapt to the evolving landscape of digital music consumption. As streaming platforms continue to dominate the music industry, partnerships like the one between Spotify and BMG are crucial for ensuring that creators receive fair compensation for their work and that the industry remains sustainable and vibrant in the digital age.
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