Spotify May Be In Trouble As Music Streaming Service Wants To Lower Revenue Share

[PhilSynowiec]

Swedish music streaming service Spotify may soon be in trouble as the company wants to lower its revenue split. Music Business Worldwide reports that Spotify is out of contract with three major music companies, and renegotiations aren't going too well.

Currently, Spotify is preparing for an IPO and labels would like the service to raise its revenue split from 55% to 58%. However, the company would like raise the split to lower than 50%.

"How far down Spotify want to push this rev share is a matter of debate: one label source told us today that Spotify has asked to go below 50%, but a senior Spotify source flatly told us this is untrue.

(Apple is also believed to pay publishers 13.5%-15% of revenue depending on the territory – slightly higher than Spotify.) Regardless, the idea of Spotify paying labels – and artists – a lower portion of its income is bound to be highly contentious."

Apple Music currently splits its revenue at 58%, but obviously a much larger company. Spotify reported a $194 million loss last year and would like to use spending on exclusive artist deals like Apple.