Spotify's reasoning is that the music is to be promoted within the app to reach a wider audience. The company has already put in place a tool called a Marquee, and are planning another one, according to sources for Bloomberg.
"They need to diversify their revenue streams, they need to find a way to push up the operating margin," said Mark Mulligan, industry analysts at Midia Research, to the us.
Among the performers who have so far chosen to take advantage of the feature, the Marquee – which will send alerts to the user when an artist releases a new song – is Justin Bieber, and Lil Wayne.
Under the current royalty terms of the offer, the record companies, who are shareholders in Spotify, and the right to a share of the company's revenues. This means that, in theory, record companies could be able to get back some of the money that they give to Spotify for the move, but Spotify is reportedly in talks to require a specific intäktspool, which is not to be shared with the record labels.
the Record companies felt that in practice this would mean a reduction in the royalties they receive.
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