Spotify To Pay Universal Music Group $1 Billion, According To Leaked Email
Spotify is locked in difficult talks with the major labels. None are more contentious than with Universal Music, whose CEO has stated publically that it is time to change the music streamer's freemium model.
Spotify expects to pay Universal Music $1 billion over the next two years, according to a leaked internal email. That's a number equal to the estimated 2013 global revenue of all streaming music services combined.
Universal execs were surprised at Spotify’s $1 billion claim, according to the New York Post. They say the real value of Spotify’s payments to UMG are much lower.
While this level of public puffery is normal during most contract talks, statements questioning Spotify's freemium music model form all three major labels, and Spotify's new promise of explosive growth, underscore just how very important streaming revenues have become.
It is time for the freemium model to go.
The free tier is unsustainable.
If true, is Spotify essentially buying themselves into business, once again, betting they’ll get an IPO launched before the whole thing collapses under the weight of debt?