Spotify, Universal Music To Collaborate On Former's Long-Touted Marketing Tools As Part Of New Licensing Deal

Spotify Technology SA SPOT has signed a new licensing deal with Vivendi SA’s VIVHY Universal Music Group, which will give it access to the music company’s catalog for streaming, the Wall Street Journal reported Wednesday.

What Happened

Universal also signed up for the streaming service’s “two-sided marketplace,” where it will pay for marketing, data, and analytics. Terms of the deal have not been disclosed.

The partnership will involve Universal testing and developing tools as well as servicing and marketing products that the Swedish company hopes both artists and music companies will buy.

“Our plan is to be chief experimental officer,” Universal CEO Lucian Grainge said on the deal.

“We’ll take this experimentation and really drive it forward now with what we know about consumers and what we know about each other’s data.”

Talks between the music industry constituents and Spotify can take years and the companies had first discussed the so-called two-sided marketplace ahead of Spotify going public in 2018, the Journal noted.

Why It Matters

Universal holds a 40% market share in recorded music in the United States.

The deal with the music company comes at a time when the Stockholm-based Spotify is entering new markets in Russia and 12 other Eastern European nations. The music streamer would hope to attract new talent from these regions, many of which belong to Universal’s labels, to its platform, according to the Journal. 

Spotify is also said to be under pressure from investors to pursue profitability, but the company says it continues to prioritize investing in growth.

Price Action 

Spotify shares closed 4.8% higher at $289.62 on Wednesday and fell 0.4% in the after-hours. On the same day, Vivendi OTC shares closed 0.5% lower at $27.45.