Spotify is out of contract with all three major music companies, and according to Music Business Worldwide, the renegotiations aren’t going well. Citing sources familiar with the talks, the outlet says the sticking point is revenue share.
With Spotify preparing for an IPO, the labels see this as a great opportunity to get the streaming company to raise its revenue split from around 55% to 58%, which is what Apple Music pays. Spotify, however, wants to lower the amount.
How far down Spotify want to push this rev share is a matter of debate: one label source told us today that Spotify has asked to go below 50%, but a senior Spotify source flatly told us this is untrue.
(Apple is also believed to pay publishers 13.5%-15% of revenue depending on the territory – slightly higher than Spotify.) Regardless, the idea of Spotify paying labels – and artists – a lower portion of its income is bound to be highly contentious.
Essentially, Spotify needs the labels to cut it some slack if it’s going to be able to compete with tech heavyweights like Apple. It posted a $194 million loss last year, and wants to ramp up spending in 2016 for things like exclusive artist deals.
Source: Music Business Worldwide