Spotify making money for record labels

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spotifylogo.jpgUniversal Music Group’s Rob Wells has said that Spotify is finally beginning to present itself as a very sustainable financial model for the record labels that have agreed licensing deals with the streaming app.

Wells went on to reveal for the first time the details of some of Spotify’s licensing deals. In the UK and Spain, every track streamed represents a royalty payment to the labels. For the French, Swedish, Finnish and Norwegian territories, Spotify instead pays out a cut from subscriptions and advertising revenue.

While Spanish and UK subscription numbers remain low thanks in part to the comprehensive free service, Spotify requires only a 10-12% conversion of free-to-paid users to provide a healthy return to the labels. “That to me equates to a sustainable business model” Wells said.

The news will help bolster attempts to see Spotify launched in the United States. Spotify CEO Daniel Ek is to speak about the plans at the upcoming New Music Seminar in Los Angeles.

Via: The Telegraph

Gerald Lynch