Spotify and Kobalt have signed a direct, multi-year licensing agreement covering the United States.
The agreement marks Spotify’s latest direct deal with a prominent music publisher and moves its agreement with Kobalt beyond the traditional CRB model in the US.
This means that Kobalt’s direct deal supersedes the audiobook ‘bundling‘ payment structure that, starting in March last year, saw Spotify dramatically cut the rate of mechanical royalties paid to publishers and songwriters in the US.
Since then, Universal Music Publishing Group and Warner Chappell Music have signed direct licensing deals with Spotify that override the CRB bundling discount.
SonyMusicPublishing is the largest outstanding player on SPOT’s list of potential direct licensing deals. MBW understands that Spotify is currently in discussions with the company about a new deal.
Kobalt claims to be the world’s largest independent music publisher, serving over 1 million songs across 10 global offices.
It represents songwriters including Roddy Ricch, Max Martin, Karol G, Andrew Watt, Stevie Nicks, Phoebe Bridgers, The Lumineers, Gunna, Justin Quiles, The Foo Fighters, Paul McCartney, and many more.
According to today’s announcement, the new arrangement between Kobalt and Spotify is “designed to deliver greater flexibility, efficiency, value, and protections to songwriters in the US”.
The companies also said that it “reflects a broader shift toward licensing structures that allow songwriters to participate more directly in the value their work creates on streaming platforms”.
It won’t have gone unnoticed that Spotify’s latest deal with Kobalt is for the US only. Could a separate ex-US licensing agreement be forthcoming between SPOT and Kobalt – or Kobalt’s sister global collection org, AMRA?
Some of the specific language used in the official announcement of today’s deal is worth paying attention to.
Commenting on the deal, Alex Norström, Spotify’s Co-President & Chief Business Officer explained that “this agreement with Kobalt boosts our support of songwriters through a licensing model that unlocks new growth and will expand the way music is madeand shared today”.
Norström said: “We’ve always believed that better partnerships lead to better outcomes.”
Spotify is rumoured to be developing an AI-powered remix feature that would allow users to edit songs, including speeding up, slowing down, and mashing up tracks.
Could that be what Norström is referencing in his statement?
“This agreement with Kobalt boosts our support of songwriters through a licensing model that unlocks new growth and will expand the way music is madeand shared today.”
Alex Norström
Also in today’s press release, Spotify and Kobalt noted that their new licensing deal “reflects the collaborative efforts between [the two companies] in building a licensing framework to enable new formats, innovations, and potential to connect creators and fans alike”.
One particular “new format” not yet available on Spotify in the US is music videos.
The company initially launched music videos in beta in March 2024 in 11 countries – the UK, Germany, Italy, the Netherlands, Poland, Sweden, Brazil, Colombia, the Philippines, Indonesia and Kenya. It later added Egypt to the list.
The platform then expanded music video streaming to 85 new markets in October 2024, but the US wasn’t included.
If music videos are indeed one of the “new formats” Spotify’s statement refers to, a new licensing deal with Kobalt that covers music video usage in the US ahead of the format’s probable launch there would make sense.
(Also not irrelevant in terms of ‘new formats’: Just last week, Kobalt announced a landmark licensing agreement with ElevenLabs’ new AI music platform, Eleven Music – a rival to Suno.)
“As the largest independent music publisher dedicated to fighting for the rights of songwriters, this deal reaffirms our unwavering commitment to ensuring our songwriters are paid fairly for their work, and underscores the importance of progressive licensing models that reflect the real-world use of music across digital platforms.”
Laurent Hubert, Kobalt
Kobalt CEO Laurent Hubert commented on the new Spotify deal. “As the largest independent music publisher dedicated to fighting for the rights of songwriters, this deal reaffirms our unwavering commitment to ensuring our songwriters are paid fairly for their work, and underscores the importance of progressive licensing models that reflect the real-world use of music across digital platform.
“This partnership is a step in the right direction, and we look forward to continuing to work with Spotify to increase the value of songwriter royalties.”
Spotify’s controversial “bundling” move in the US market is an important piece of context to today’s story.
A short history:
The move stemmed from a 2022 US Copyright Royalty Board ruling on statutory precepts called “Phonorecords IV,” which established that bundled multimedia services could pay a lower mechanical royalty rate than standalone music subscription services.
SPOT subsequently added audiobooks to its Premium music service and claimed this qualified as a “bundle,” allowing it to cut mechanical royalty payments to publishers and songwriters in the US.
The move began affecting payouts in Spring 2024. The decision attracted legal action from the Mechanical Licensing Collective (MLC), which filed a lawsuit against Spotify in May 2024, alleging the platform was illegally underpaying royalties to songwriters and publishers.
The MLC’s lawsuit was dismissed in January 2025, with the court holding that the Premium Service is a bundle.
Universal Music Group,Warner Music Group and Kobalt now each have new private direct deals in the US with Spotify that override those statutory CRB rules going forward, therefore improving the mechanical royalty payments expected to flow from SPOT to those companies.
Spotify, in its most recent Form 6-K filed with the SEC last week for its Q2 financial results, pointed out that the MLC filed a request on April 1 to file an amended complaint alleging that the streaming company “improperly valued the components of the Premium Service bundle and improperly reported royalties for the Audiobook Access Tier product”.
SPOT noted that “the MLC is entitled to appeal the original decision after the resolution of its new claims” and that, “if the MLC were to appeal and ultimately be entirely successful in its case, the additional royalties that would be due in relation to the period March 1, 2024 to June 30, 2025 would be approximately €256 million, plus potentially penalties and interest, which [SPOT] cannot reasonably estimate.”
That €256 million estimate works out to USD $290 million according to the average exchange rate for Q2 published by the European Central Bank.Music Business Worldwide
