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Spotify Reaches Deal With Warner Music, Paving Way to Go Public

Spotify Reaches Deal With Warner Music, Paving Way to Go Public

(Bloomberg) -- Spotify Ltd. signed a new global agreement with Warner Music Group, giving the online-music pioneer long-term deals with all three major record labels as it prepares to go public.

Warner Music, owned by billionaire Len Blavatnik, announced the deal Thursday via social media. Terms weren’t disclosed. Spotify, the biggest on-demand streaming service with more than 60 million paying subscribers, plans to skip a traditional share sale and list directly on the New York Stock Exchange late this year or early next, according to people familiar with the matter.

By signing Warner, Spotify can assure investors that it has good working relationships with the biggest suppliers of its song catalog. Vivendi SA’s Universal Music Group and Sony Corp.’s music division signed new accords with Spotify earlier this year. The labels had previously been working with Spotify without long-term deals in place.

In accords with Universal Music, the world’s largest record label, and Merlin Network Group, which represents a consortium of independent labels, Spotify agreed to pay a smaller share of revenue to those partners if it meets certain targets. In exchange, the labels got more flexibility in how their songs are distributed on Spotify, including the ability to withhold new music from free users. Those deals paved the way for Sony and Warner Music to follow suit.

To contact the reporter on this story: Rob Golum in Los Angeles at rgolum@bloomberg.net.

To contact the editor responsible for this story: Crayton Harrison at tharrison5@bloomberg.net.