Spotify strikes a deal with Universal Music to make the relationship two-sided

Better have my money... Universal Music Group is the major label that reps Rihanna, T. Swift, and hundreds of other musical A-Listers. For years, Spotify has been coughing up cash to the world's largest record company for the right to stream its artists' tunes. It's a one-sided relationship in which Spotify pays UMG for each song stream.

• Spotify hasn't been consistently profitable since most of its revenue goes to paying music labels (since they actually own the music being streamed). Case in point: UMG made almost $4B from streaming sales in 2019.
• But Spotify has some leverage, too... Streaming sales now make up over half of UMG's revenue, and Spotify has around 35% of global streaming market share. So...

Spotify's making it "two-sided"... Spotify just signed UMG onto its "two-sided marketplace." Under the new licensing agreement, UMG could eventually be paying Spotify for marketing, data, and analytics.

• Right now UMG is just an experimentation partner. Spotify thinks its tools will be valuable enough to hook the label into shelling out big bucks. That's because...
• Spotify thinks it knows more about your music tastes than anyone: Last year, it intro'd the ability for labels to pay to send targeted push notifications for new music. Universal saw huge success pushing the Weeknd’s “After Hours.”