Warner Music Group and Spotify have announced a new, multi-year agreement, covering both recorded music and music publishing, that effectively ends the companies’ disputes over the streaming giant’s “bundling” option, which pays rights-holders less in royalties by offering audiobooks and music together for a reduced subscription fee. Universal Music struck a similar deal with Spotify just days ago. While terms of the deal were not announced, it appears that a compromise has been reached over royalties.
According to the announcement, the new deal “will help deliver new fan experiences, a deeper music and video catalog, further paid subscription tiers, and differentiated content bundles. The agreement also builds on the companies’ existing alignment around ‘artist centric’ royalty models that reward and protect the power of artists to attract and engage audiences.” Like Universal’s deal, the new publishing agreement introduces a direct licensing model with Warner Chappell Music in several additional countries including the U.S.
Robert Kyncl, CEO, WMG, said: “This major agreement delivers new benefits for artists, songwriters, and fans, while unlocking further collaboration that expands the music ecosystem. It’s a big step forward in our vision for greater alignment between rights holders and streaming services. Together with Spotify, we look forward to increasing the value of music, as we drive growth, impact, and innovation.”
Daniel Ek, Spotify’s Founder and CEO, said: “For Spotify, 2025 is a year of accelerated execution, and our partners at Warner Music Group share our commitment to rapid innovation and sustained investment in our leading music offerings. Together, we’re pushing the boundaries of what’s possible for audiences worldwide—making paid music subscriptions more appealing while supporting artists and songwriters alike.”
The announcement was made along with a mixed earnings report for Warner, which saw total revenue down 5% (4% in constant currency) and operating income down some 40% to $214 million, as opposed to $354 million in the prior-year quarter. On the earnings call Thursday morning, Kyncl pointed to “temporary macro conditions” as a reason for the drops.
Revenue was down 4.7% (or 3.6% in constant currency). According to the announcement, recorded music revenue growth was impacted by a licensing agreement extension for an artist’s catalog, which resulted in $75 million of licensing revenue in the prior-year quarter. Recorded music growth was also impacted by the termination of the distribution agreement with BMG, resulting in $32 million less recorded music revenue compared to the prior-year quarter, of which $16 million impacted streaming revenue and $16 million impacted physical revenue, and a renewal with one of the company’s unspecified digital partners, which resulted in $30 million of recorded music streaming revenue in the prior-year quarter (or $26 million in constant currency).
More to come…
