Spotify just cleared another hurdle this morning as it makes its way to its very own IPO. It announced the multi-year licensing deal that’s been secured with Merlin. Merlin is an international digital rights agency which is focused on the sector of independent labels.
Just after it secured its licensing deal with the world’s largest music label group, Universal, Spotify now only has two more licensing deals that it has to complete: with Warner Music Group and Sony Music. Once everything is set for Spotify, the way will already be clear for the company’s IPO, which is set later this year.
The recent deal of Spotify with Merlin is a continuation of its windowing policy which began with the deal with Universal. Artists are to withhold their releases for up to 2 weeks from their ad-supported, free service. From the release, it says that Merlin member labels will be able to participate in the flexible release policy that’s just been recently announced by Spotify.
According to Spotify’s CEO and co-founder, Daniel Ek, in a tweet last Thursday, Indie music has been a part to the success of the company since day one. Ek said that he is “super happy” to say that they have a multi-year deal with the Merlin Network.
Merlin’s CEO, Charles Caldas, also said in an interview that Merlin was one of the launch partners of Spotify way back in 2008. According to him, the partnership of Spotify and Merlin has thrived since then. The new agreement will lay down the path to a sustainable growth for both companies in the future. Caldas said that he is looking forward to see how things will progress. He added that he is glad to be a part of Spotify’s continued success.
As for the chairman of Merlin and founder of Beggars Group, Martin Mills, he said that they have already been great partners with Spotify. Both companies are helping one another and the updated arrangement is only to allow the independents within the Merlin community to have the peace of mind knowing that they have a deal that’s highly competitive. Mills also said that the growth of Spotify is a good commercial environment and it can benefit everyone in the community.
Streaming today accounts for at least 51% of the country’s recorded music revenue, as reported by RIAA. Merlin, which holds more or less 20,000 independent labels from different countries around the globe, is considered as the fourth major. Merlin’s members include Domino, Epitaph/Anti, Mad Decent, Kobalt, [PIAS], Sub Pop, Secretly Group, Entertainment One, Beggars Group, and many others.
The organization claims to represent at least 12% of the digitally-recorded music market. Merlin first licensed Spotify several years ago. Spotify is currently valued at more than $8 billion and is available in more than 50 markets worldwide. Spotify also claims that it has millions of active users. 50 million of its users are paying subscribers. The company is now under a lot of pressure to finally go public in such a short time. Otherwise, it will face penalties from the convertible debt arrangement from March 2016.