Following Universal Deal, Spotify Locks Down Indies in Long-Term Licensing Pact With Merlin

Toru Yamanaka/AFP/Getty Images
Daniel Ek, Spotify Co-Founder/CEO

Spotify and independent label organization Merlin have agreed to a multi-year licensing agreement that ensures an uninterrupted flow of music from non-majors to the music streaming leader, plus extends to Merlin members the same flexible release option that was core to a recent deal with Universal Music Group.

Merlin represents over 20,000 indie labels, who collectively make up roughly 12 percent of the global digital music market. The deal will give Merlin's members, including Beggars Group, Domino, Epitaph/Anti, Kobalt Music Recordings, Secretly Group, Sub Pop and many others, improved access to data and marketing opportunities going forward.

Unsurprisingly, Spotify's new "flexible release policy" -- coined earlier this month with UMG's landmark pact (more on that here) -- is also part of the deal. That policy gives Merlin's label partners the ability to make new albums available only on the service's premium (paid) tier for the first two weeks after release. After that, albums are made accessible to free tier users.

Other particulars of the Spotify/Merlin deal have not been disclosed.

Merlin has worked with Spotify since the streamer launched in 2008, via a single global license providing access to the music of its partner labels. "Merlin was a launch partner to Spotify back in 2008, and our partnership has thrived ever since," said Merlin CEO Charles Caldas in a statement. "This new agreement lays the path to future sustainable growth for us both, and we look forward to remaining an integral part in the service's continued success."

Beggars Group founder Martin Mills, who is chairman of Merlin, said the updated pact "allows independents in the Merlin community the comfort of knowing they have a highly competitive deal and parity of access to the service, whilst creating a commercial environment in which Spotify can grow to the benefit of all of us."

Spotify co-founder and CEO Daniel Ek said on Twitter that he was "super happy" about the new agreement, and communications chief Jonathan Prince added that the deal "means new ways to break indie artists, connect them to fans, build audiences and share data!"

With Merlin and Universal deals in place, Spotify has two major entities to come to terms with: Warner Music Group and Sony Music Entertainment. These long-term licensing agreements are seen as a crucial step as Spotify tries to clear the path for going public, either with an IPO or a direct listing as rumored.

According to the RIAA, streaming now accounts for 51 percent of U.S. recorded music revenue, with Spotify and rivals like Apple Music and Amazon fueling 11.4 percent growth in 2016 following years of decline.