Spotify, Warner hope to clinch royalty deal by September

A smartphone with a headset with Spotify logo is seen in front of a displayed Warner Music logo in this illustration picture taken on July 24, 2017.
A smartphone with a headset with Spotify logo is seen in front of a displayed Warner Music logo in this illustration picture taken on July 24, 2017. PHOTO: REUTERS

LONDON (REUTERS) - Music streaming company Spotify is close to agreeing a new licensing pact with Warner Music Inc, the last big music royalty deal it needs before pushing ahead with a US stock market listing, four sources familiar with the situation said.

The parties are positive a deal could be signed by September as major issues such as granting loss-making Spotify a more favourable revenue split in return for making some new albums accessible only to its paying subscribers for a defined period have already been agreed, the sources said.

However, the precise revenue split and the size of a potential guaranteed upfront payment to the label, home to artists including Ed Sheeran and Muse, have yet to be agreed, said two sources.

"The negotiations are at a crossroads," said one of the sources, asking not to be named because the talks are private, adding discussions were taking place daily.

"There are still a number of key points that remain to be agreed. If we manage to come to terms on these points, then it could lead to a very quick transaction. If not, any deal would remain at bay."

Others saw a deal being done by late summer.

"Given the way talks are progressing, I would be surprised if we don't have a deal in September," said another source on the other side of the table.