Spotify’s splashy World Trade Center digs include 14 floors of breathtaking scenery. But it also required a 17-year lease — for more than $566 million in total rent.
According to financial details shared with Digital Music News this morning, Spotify is sinking massive amounts into its 4 World Trade Center lease.
That is: more than $566 million for a 17-year lease, with nearly $31 million in upfront payments required.
Spotify has separately reported those rental figures to regulators in Europe.
The WTC deal, inked in February of this year, puts Spotify in a coveted — and symbolic — space. Indeed, Spotify’s 478,000 square foot sprawl will cover 14 floors, and includes customizations on each floor plan.
Shortly after its first deal, the streaming heavyweight exercised an option to take an additional 100,000 square feet. That filled 4 World Trade Center to 100% occupancy.
All in all, that contract works out to $33.29 million a year on base rent alone, or $2.77 million a month.
Other costs, including utilities, furniture, janitorial services, and ping-pong/billiard tables, aren’t included. Spotify is also bearing the cost of various customizations, though we’re not sure of those specifics.
The long-term arrangement saddles Spotify in the space until at least 2034.
At that stage, the company hopes to be a multi-billion dollar enterprise, with tens of thousands of employees worldwide. Indeed, the company is already hiring like crazy, with at least 1,000 new people joining the NY-based operation.
The broader shift to New York follows a long, testy exchange between the streaming platform and officials in Stockholm. This is a company born in Sweden, though onerous regulations made New York the better spot.
By contrast, New York welcomed Spotify with open arms. Back in February, the city kicked in $11 million in credits over 15 years, part of a broader ‘World Trade Center Rent Reduction Program’. We’re not clear on whether those subsidies factored into the overall, $566 million rental cost.
The pricey rent comes alongside major label guarantees of more than $2.34 billion — over the next two years.
That disclosure emerged in June of this year, with the guaranteed advances likely allocated to Universal Music Group, Warner Music Group, Sony Music Entertainment, and indie consortium Merlin. That cabal is now printing cash thanks to Spotify, with the advances guaranteed and not recoupable.
The streaming platform has now completed deals with all three majors, with lowered royalty payments part of the packages. The deals reportedly also include windowing for frontline releases, with paying subscribers getting first access. Spotify CEO Daniel Ek has long been opposed to gated access, according to sources.
lmao fucking idiots, wondering why they’re not profitable !
Just special grade of Swedish methamphetamine!
Spotify has some fucking nerve. They are worse than the fucking MTA smh. They need to start paying us artist more. FoH spotify
How does this compare on square footage with their current place and with other places around Manhattan? Can we get the whole picture before we say that this is pricey?
Spotify pays about $70 per square foot. It is a little bit higher than average Downtown, ($65) but is clearly lower than f.e. average Midtown ($88), and also lower than the overall Manhattan average ($80). Spotify actually got a pretty good deal here.
The real question is if the PANYNJ bet that Spotify will exist in 2034 will come true.
People here may hate Spotify for financial purposes, but they do have a very useable product that millions of people enjoy. Having said that, in order to acquire the talent resources to build and support such a product, they need to have access to top talent. The volume of top talent Spotify needs can only be found in a few select cities in the entire world, all of which are very expensive. This is something unique to NYC. Sadly for Spotify, they did choose NYC with it’s unfortunate weather, though they are probably saving on salaries compared to the Bay Area, where they wouldn’t be able to get away with the salaries they pay. Apple and Google both pay noticeably better than Spotify.
In all fairness, Spotify doesn’t have a product.
We – meaning: musical artists – have the product. All Spotify does is package it up nicely and sell it at bargain-basement prices. They pay us very little for it – if at all.
If everyone revoked Spotify’s licenses tomorrow, they’d have absolutely nothing.
And so would artists and songwriters. This is a joint venture.
artists and songwriters would be fine without spotify
True, but they may have gone a bit overboard for this particular space, especially for a company that isn’t actually profitable, and could be looking at potentially billions in statutory damages for not licensing a large percentage of their music. I would’ve chosen something a little less extravagant.
YOU ARE OUT OF YOUR MIND! They are just giving away for almost free other people products with to total disregard to business principles.
Ek style streaming and YouTube style ads introduced and endorsed respectively by Francis Keeling and Rio Caraeff of UMG suicide team is SHRINKING $300B of obvious music goodwill to $25B GRAVE in 2025.
UMG, the trend setting label, needs urgently corporatewide PSYCHIATRIC evaluation!
Puuulease. The “usable product that people enjoy” from Spotify is free and cheap music. Spotify wouldn’t exist or be a useless app if it weren’t for THE CONTENT which they pay practically NOTHING for. Meanwhile the average salary at the company is $140,000 with a CEO raking MILLIONS. Making excuses and justifying their self-centered business decisions, in the face of obvious evidence regarding their unfair distribution of money between content and Spotify expenses… you’re either the victim of their propaganda or you believe musicians shouldn’t be paid well because you don’t value the content.
I wonder how well the record labels treat the musicians and what the financial distribution ratio is, for comparison.
The issue with Spotify & the labels is one of accounting – the royalty rate is set very low while their non-recoupable advances are astronomical to the major labels. The labels don’t care as they pocket the difference – in other words they get paid off to agree to an extremely low royalty rate – so the content creators get a very small slice of the pie in comparison to Spotify & the Majors.
The majors are also equity shareholders in the company…should be interesting when this goes public and they are subject to more scrutiny – beyond trimming their cash burn there could be some revisions to the astronomical advances the labels get – which would force labels to increase royalty rate.
The internet music streaming business is the best paid gig in town.. more money than all the record labels put together… the distribution business is King..
man that is so untrue. streaming may be the most profitable in a lot of cases, they certainly do not have more money than the labels. Remember a lot of the money they make goes back out to these already massively wealthy labels
Welp, they have no problem paying off the Class Action suit that’s been filed against them for adding catalog they didn’t get permission for. Nice for some of us.
These costs will lock them into a predatory stance with artists and content creators. It is absolutely necessary to build an alternative that is capable of fair compensation, not just a windfall for middlemen.
Absolutely. That’s why I’m intrigued about Mycelia.
Looks like Spotify now regards that as a mistake, at least based on statements on record from Spotify attorneys. They are arguing that the mechanical is not applicable to streaming.
Paying the class actions would seem to erode those arguments. But then again, there isn’t a decision saying: ‘mechanicals for streaming are correct’. And nothing in the Copyright Act, just an ill-hammered-out concession involving streaming payouts to publishers.
I remember the days when $50 Million or $100 Million was considered a lot of money.. We knew of a major independent that was sold for $50 Million to a major International media player and at the time it was considered to be a massive amount..
Now it’s peanuts compared to the numbers talked about here with Spotify..
Do we know what Spotify pays the labels? Aren’t record labels the ones shafting artists? They pay the artists very little and then pocket most of what Spotify sends them?
True, people on labels are getting doubly screwed. However, as an indie artist who owns 100% of her product, I can promise Spotify is shafting me directly. (Or was, I should say, because I pulled all my content off.)
Karl , not exactly . We , as a label , handle a small catalogue of 5000 tracks , which has been streamed on Spotify . We get about a few hundred dollars from them monthly . Lately , we’ve been just passing these amounts to our artists , cause we don’t even want to keep any of this . And our streaming numbers are not bad , but they only generate this much of an income due to the Spotifys payment politics .
Define “not that bad”…. It is very simple, if you have a catalogue that attracts paying subscribers mainly, not Freemium, in a market where ppl want to pay for music, you will have a good payment. The “politics” of Spotify is not the problem, the reason why you get poor payments it is either: 1) Not enough streams, you will need some tens of millions to get somewhere (which is not so much actually), 2) A catalogue that is not streamed en mass by paying subscribers. Volume, volume, volume, by paying subscribers. Paying subscribers is the problem in many markets, not the “politics”…
As a producer with three artists on Spotify, this makes me furious. When will someone come out with a new streaming service that requires subscribers to pay (not any more than many apps) and only takes a minor percentage off the top?
DO I HAVE TO START THIS COMPANY MYSELF?
Working on it now. Stay tuned.
Please let us know there must be a reasonable alternative to these pirates or there will be no hope for artists and songwriters to make a living.
Now I know where all the money went that my recording brought them that I’ve never seen a dime from…nice racket these guys got…wonder how they sleep at night? With gold threaded pillows I’m sure…
The musicians have done pretty much NOTHING to save the music business. All they seem to be doing is spending time working on new recordings for the ‘music fans’ to get for free on Youtube and Spotify. Great business model! And they all sit around complaining and waiting for some Tech company to provide a fair Platform where they, the struggling musicians actually get paid for their creative work. Good luck!! Tech companies are only interested in making money for themselves and could care less about the starving musicians! Go get a real job that pays, guys! Wake up musicians. You need to spend some money building your own Platform but this might be a little too late twenty years since Napster!