The Swedish music service Spotify, biggest competitor for Apple Music, for over a year working without a contract with Universal Music Group.
Spotify is currently not have a valid long-term contract with the three major labels Sony, Warner and Universal and their music departments. This applies to Universal Music Group for more than one year. The contract with the Warner Music Group had already expired early in 2016, one with Sony Music Entertainment only a month ago. At present, the cooperation run on a monthly basis. The reported extensively Music Business Worldwide.
The reason is, as might be expected to be the distribution of profits. So the label obtained for example from Apple Music after the three-month free phase 58 percent, Rdio, it should even be formerly 60 percent, whereas Spotify distributes only 55 percent of the income for the provision of music on the label, according to IOM. This lower profit sharing has been defended as “Marketing Discount” to invest in about expanding the audience reach Spotify. Due to the high market share of Spotify, but in which many listeners with free advertising account (freemium model) are traveling, but also twice as much paid (30 million) as in Apple Music (15 million as of June 2016), it is considered unlikely that the three major labels to withdraw their offer of music for the streaming service from Sweden – together they control at least 75 percent of the music market. Nevertheless, the label want to make a profit share of 58 percent, like you would with Apple Music also in Spotify. The pressure for the Swedish company is likely to grow – not only by the more pleasant for the label model of profit sharing of Apple, but also because already Amazon and Google operate with their own streaming services in the background and also can rely on a large area.
