Spotify and Warner Music are close to reaching a new music licensing deal, several sources familiar with their negotiations said on Monday. Both sides reportedly believe that they could agree to a new set of royalties and licenses by early fall as the deal could be concluded as soon as September. The latest development comes shortly after the popular streaming service already managed to negotiate a new partnership with Sony Music, thus coming one step closer to managing a comprehensive content platform with songs and albums from all of the most popular performers on the planet while still maintaining a positive revenue stream. Warner Music is the last major partner with whom Spotify needs to renegotiate their terms of collaboration before completing its latest set of license negotiations that it started with the goal of raising its valuation prior to filing for an initial public offering (IPO) on the United States stock market.
Spotify and Warner Music reportedly already managed to agree on the approximate revenue split and specific albums that the former's subscribers will be able to access, sources said, adding that the two are currently in the process of working out a number points that are still thought to be of crucial importance to the proposed collaboration and could hence make the deal fall through. Among other things, Warner Music and Spotify have yet to reach an agreement in regards to the upfront payment that the latter would guarantee to the former, in addition to working out the revenue split agreement in a more detailed manner. The two are reportedly meeting on a daily basis and are expected to continue doing so by the end of the summer or until a final deal has been reached, sources said. The current state of affairs still doesn't guarantee a partnership, with some insiders who participated in the negotiations claiming that any potential stalling could lead to a wide variety of other issues and ultimately prevent the companies from coming to an agreement.
Spotify is understood to be in a tougher position in light of its IPO ambitions, as some of its investors are already pressuring the firm to ramp up its efforts to go public and allow them to cash in on their investments. Spotify is currently paying 55 percent of related royalties to Warner Music and is looking to reduce that figure to 50 percent, whereas the music label reportedly isn't willing to give up more than three percentage points of its current share.