Warner Music Group and Spotify’s New Agreement
Warner Music Group and Spotify have entered into a long-term licensing agreement.
And before you ask … Yes, sources have confirmed that it replaces Payment structure “Association.” Last year, Spotify notably reduced the mechanical fees paid to publishers and songwriters in the United States.
Details of the New Licensing Arrangement
The new Warner Agreement with Spotify comes on the heels of last month’s announcement from Universal Music Group, which also included a new agreement related to royalties that addressed the previous mechanical fee situation in the States.
The explanation is complex, and this could obscure today’s news. For those interested in the essentials, here’s a brief overview:
- In 2022, the US Copyright Council ruled on the legislative commandments (‘PhonoRecords IV’) needed to calculate mechanical payments for royalties from streaming services to rights holders;
- As part of these commandments, a guideline was established for the Lower speed of mechanical royalties for “related” services compared to “music-only” services;
- Spotify later added audiobooks to its primary premium music service, claiming this qualified as “BULK” (i.e., audiobooks plus music), allowing it to lower the mechanical royalty rates paid to publishers and songwriters in the U.S.;
- Universal Music Group and Warner Music Group now have new private direct agreements in the U.S. with Spotify that will navigate these CRB rules in the future. However, within these private agreements, both music rights companies will continue to recognize the difference between “only” and “music-only” audiences on Spotify while (b) significantly enhancing mechanical royalty payments expected to flow from Spotify.
- These private, direct agreements between Spotify and their respective music publishing companies (Universal Music Publishing Group and Warner Chappell Music) will take place both in the U.S. and internationally. Additionally, Spotify has secured new global licensing agreements with the recorded music divisions of each company.
Statements from Company Leaders
According to a press release announcing the new Spot/WMG agreement today: “This new course will help deliver new fans, deeper musical experiences, enhanced subscription levels, and differentiated content packages.”
“The agreement is also founded on the existing alignment of companies around the ‘artist-focused’ royalty models that reward and safeguard the artists’ ability to attract and build an audience.”
“Notably, the new publishing agreement introduces a direct licensing model with Warner Chappell Music in several additional countries, including the United States, enhancing the benefits for songs in this evolving landscape.”
Robert Kinkl, the CEO of WMG, stated: “This foundational agreement provides new advantages for artists, songwriters, and fans, simultaneously unlocking collaborative opportunities that expand the music ecosystem. This marks a significant step forward in our vision for better alignment between rights holders and streaming services. Together with Spotify, we are eager to enhance the value of music as we drive growth, impact, and innovation.”
Daniel Ek, the founder and CEO of Spotify, remarked: “For Spotify, 2025 is the year of accelerated execution, and our partners at Warner Music Group share our commitment to rapid innovation and sustainable investment in our leading music offerings.”
“Together, we are pushing the boundaries of what’s possible for audiences worldwide, creating more engaging paid music subscriptions that support both artists and songwriters.”
This is a pivotal day for Warner, which is also releasing its latest quarterly earnings today (February 6).
Earlier today, Warner confirmed it had acquired a controlling stake in Tempo Music, in a deal believed to value the company at over US $450 million.
