Spotify is expected to sign a $1B licensing agreement with Universal Music to cover streaming royalties over the next two years.
The $1 billion number — equal to the global revenue generated by all companies in the fast-growing streaming sector in 2013 — underscores the extent to which Spotify and other streaming services will drive digital revenue for the world’s biggest record company. Spotify’s payments to Universal, home to Taylor Swift, Nick Jonas and Madonna, are projected to account for 16 percent of the music giant’s recorded music revenue by March 2017 — up from 11 percent for the April 2015 to March 2016 period. In addition, Universal, which owns a stake in Spotify, will get 39 percent of its pretax earnings from Spotify by 2017, up from 28 percent over the next 12 months, according to the email, which factored in Spotify estimates for Universal’s growth.
Apple will launch its own $10/month streaming service in June. Unlike Spotify, their service will not offer advertiser-supported free streaming. Spotify boasts 60 million users worldwide, 15 million of whom pay for the ad-free version.