Spotify signs new deal with Sony Music Entertainment

Spotify signs new deal with Sony Music Entertainment In this week’s subscription roundup, we highlight music streaming service Spotify’s newest licensing deal with Sony, ahead of its expected market debut. We also feature a report on Netflix’s earnings ahead of its second quarter results. Lastly, we also feature an in-house blog covering the ongoing net neutrality saga in the US. 
 

Spotify’s new licensing deal has all the signs of a blockbuster IPO

Popular music streaming service Spotify has signed a licensing deal with Sony Music Entertainment. This will help Spotify reduce the royalties it pays to Sony’s artists in exchange for restricting access to new albums to paying subscribers only for the first two weeks before making them available to all users. Spotify had been struggling with these legal and commercial uncertainties ahead of its planned IPO later this year/early next year. Favourable royalty terms will go a long way to helping Spotify achieve profitability and make it an attractive buy for investors. Spotify has already signed deals with Universal Media Group and Merlin, leaving only Time Warner as the last big label it needs to bring on board.

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Netflix investors see subscriber additions as the most important metric

It seems that Netflix investors still see subscriber growth as the most important metric for the streaming services company. However, the big challenge for Netflix is that the second quarter results have historically been weak for subscriber additions. Last year, the company’s shares tanked when they revealed net additions of only 1.7 million subscribers in Q2, well below market expectations of 2.5 million. Even CEO Reed Hastings has acknowledged that the second quarter is a seasonally tight quarter for the business. Notably, Netflix has been on a continuous drive to include more international content, invest in local content and newer genres to attract more users to its fold.

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Should digital subscribers worry about the ongoing net neutrality debate in the US?

The issue of net neutrality has reared its ugly head again as the proposed move by the Federal Communications Commission (FCC) to repeal the existing rules has sharply polarised opinions in the US. Internet giants such as Facebook, Amazon and Google have all taken the pro net neutrality stand and are resisting any change in the legislation. They even observed an internet-wide day of action on July 12 to raise awareness and support. If the FCC has its way, then digital subscribers face potentially higher prices for streaming services, and either slower access to some websites or even no access at all. Needless to add, ISPs seem to be supporting the FCC on this one.

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Also, read about Netflix’s domination over other OTT players

 


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