May 19, 2015
Details of Sony’s Contract With Spotify Leaked

Among continued fervent speculation and rumour surrounding the actual details of Spotify’s deal with the major labels, a full copy of the contract between the streaming giant and Sony Music has been leaked online.

While artists have been storming off and setting up their own streaming services, and rivals have been keen to maximize the lucrative market for themselves, it seems that Spotify have been making sure that their position in the marketplace remains solid. The contract, originally written in 2011 and leaked in full by tech outlet The Verge, shows just how much Spotify pays Sony in advances, how streaming rates are calculated, and how Spotify must hit certain subscriber levels.

The deal also includes a “Most Favoured Nation” clause, a common trade practice which, in simple terms, means Sony can audit Spotify and claim any difference in advances if another major is receiving more. One clause also specifies that Spotify can keep 15 percent of ad revenue sold to third parties. Given the gross revenue split is 70/30 in favour of the labels, this means the split is more like 55/45. Spotify also grants Sony a large amount of free ad space on the service, which Sony could, in theory, sell on at a profit.

The most complex details however are exactly how much money Sony gets paid per stream. If you’re studying for a degree in law or accounting, the details might make for interesting reading, otherwise, it’s not easy to sum up. In short, Sony’s cut depends on various complex formulas, and if a release is particularly popular, Sony could get far more than their agreed revenue split due to clauses surrounding per-subscriber multipliers–complex stuff indeed.

Despite the leak, details of the big question–how much each artist gets paid–is still a total mystery. This is largely due to the fact that Sony has varied and diverse agreements with their large stable of artists, making it impossible to tell how Sony’s share of the money is divided up once it passes into the label’s hands.

Both Spotify and Sony have made no public comments on the leak. Read the contract in full here.

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