Spotify deal with Universal Music removes key obstacle to IPO

|About: Spotify (SPOT)|By:, SA News Editor

A multi-year global deal between Spotify (Private:MUSIC) and Big Three label Universal Music Group (VIVHY +0.9%) allows for full potential of streaming, including flexibility for new releases, the companies say.

And the deal, two years in the making, finally paves the way for Spotify to go public. A guaranteed contract with the world's biggest record company will ease a lot of investor fears.

In return for lower royalty rates (reportedly 52% from a previous 55%), Spotify conceded to an industry demand for holding new releases back from its free tier for two weeks. Universal artists will be able to choose to release new albums on premium only for that period.