Rob Wells, the senior vice-president Digital for Universal Music Group International, talked to the Telegraph this week about his label's relationship with the popular streaming service Spotify, which is apparently one of the first ever sustainable business models for digital licensing.
In the UK and Spain, Spotify pays UMG a royalty per user, and in Sweden, Norway, Finland and France, Spotify pays the label from money generated by subscriptions and advertising.
"In all its territories bar two, Spotify pays the labels from a mixture of the money it generates from advertising revenues and subscriptions. That to me equates to a sustainable business model," says Wells.
Wells adds that only 10 to 12 percent of all users in any given territory need to have subscriptions for the record labels to make money, and that it is doing so in everywhere but Spain, where there is a ton of free users, and the 10 percent is such a large number. In the UK, Spotify has turned back to "invite only" membership, as a way to limit new users.
The senior VP also said Spotify was the group's fourth largest digital partner in terms of revenue, behind iTunes, YouTube and an unknown third.
"In all its territories bar two, Spotify pays the labels from a mixture of the money it generates from advertising revenues and subscriptions. That to me equates to a sustainable business model," says Wells.
Wells adds that only 10 to 12 percent of all users in any given territory need to have subscriptions for the record labels to make money, and that it is doing so in everywhere but Spain, where there is a ton of free users, and the 10 percent is such a large number. In the UK, Spotify has turned back to "invite only" membership, as a way to limit new users.
The senior VP also said Spotify was the group's fourth largest digital partner in terms of revenue, behind iTunes, YouTube and an unknown third.
