Spotify is preparing to be acquired at a price tag ‘north of $14 billion,’ according to multiple sources now speaking with Digital Music News. Signatures and final approvals are ‘exceptionally close,’ with an announcement carefully planned for exactly one week from now, according to one dealmaker.
The buyer is not being disclosed, though the Wall Street Journal is already preparing a front page story for next Wednesday morning. The article will symbolically be available only to paying subscribers.
The paid-only symbolism is part of a massive shift in philosophy by both Spotify, the major labels, and its soon-to-be-named mega-buyer. The deal comes amidst cantankerous negotiations between Spotify and the major recording labels, with the CEOs of both Universal Music Group and Sony Music Entertainment applying heavy pressure on Spotify to eliminate their free access tier. Spotify initially resisted those moves, but is now softening its stance as part of an artist-friendly, three-way deal involving YouTube and its various music properties.
According to the details of this momentous plan, shared under strict confidence with Digital Music News, YouTube has agreed to stop showing free music videos entirely if Spotify agrees to close its free access tier at the same time. The unilateral move will make listening to free music far more difficult for casual music fans, and millions of Spotify and YouTube listeners will be shocked to find free streaming music completely shut off, effective next Wednesday.
The plan is expected to mint several million paying subscribers overnight, and substantially change the music industry balance sheet in the process.
“We’re finally making streaming fair for every musician and rights owner, and I’m happy that everyone can equally enjoy the spoils of our years of hard work,” Ek stated, in a quote approved for the Wall Street Journal. “I hope our friends over at Pandora will follow our example.”
In parallel with those efforts, Recording Industry Association of America (RIAA) CEO Cary Sherman is planning to announce a bombshell deal with the Russian cultural ambassador Viktor Petrov that will effectively close 99% of illegal torrent and mp3 download sites in the country. That, coupled with an initiative by US Department of Homeland Security special advisor Douglas Stamper to block virtually all illegal music sites worldwide, will finally deliver the ‘paid only’ environment envisioned by Universal Music Group exiting executive Rob Wells.
The deal will also feature a number of artist-friendly aspects, part of a ‘Sustainable Streaming’ core of principles arranged in round-the-clock sessions just outside of Stockholm. As part of the buyout, Spotify CEO Daniel Ek has reportedly insisted that at least half of the $14 billion-plus payout be paid directly to a musicians fund, with Taylor Swift a symbolic beneficiary. Billionaire Sean Parker, a high-ranking Spotify executive and co-founder of the original Napster, has also committed to donating his payout of approximately $1.41 billion to create a pro-bono legal and accounting fund designed to help artists locate and receive streaming royalties from their labels.
More as this develops. Image by Official LeWeb Photos, licensed under Creative Commons Attribution 2.0 Generic.