On Sunday, January 26, Spotify and Universal Music Group (UMG) released a joint statement officially announced a multi-year partnership to work on restructuring Spotify's subscription service. The plan aims to introduce "new paid subscription tiers, bundling of music and non-music content, and a richer audio and visual content catalog" to create a more "artist-centric" platform, according to the press release.

This recent partnership is the latest to adjust to the new era of "Streaming 2.0," a term to describe the streaming industries' strategic shift from prioritizing consumer growth to prioritizing consumer value. UMG Chairman and CEO Lucian Grainge outlined the tenets of "Streaming 2.0" on September 17, 2024 when he announced "big shifts" UMG would work toward with other streaming companies in the coming years, according to Complete Music Update. Instead of focusing on the simple business model of paying for unlimited streaming of a seemingly endless catalogue of music, UMG proposed a subscription-tier model that adjusts to the user's listening habits, more partnerships with merchandising companies, and adapting monetization rates for artists depending on their popularity.

UMG officially partnered with Amazon Music on December 22, 2024 to accomplish some of the goals of "Streaming 2.0," striking a deal to increasing subscriber engagement with their favorite artists. The plan will introduce subscription tier services for access to exclusive content and partnerships with merchandising companies and non-music content, according to Variety. UMG will also work toward directing more streaming revenue and royalties to the aritsts uploading music to the platform, as well as protecting their music from unlawful AI-generated content, misattribution, and fraud.

The multi-year partnership with Spotify follows Grainge's new vision in a similar way. "When we first presented our vision for the next stage in the evolution of music subscription several months ago," said Grainge in the press release, "this is precisely the kind of partnership development we envisioned." He continued,

"This agreement furthers and broadens the collaboration with Spotify for both our labels and music publisher, advancing artist-centric principles to drive greater monetization for artists and songwriters, as well as enhancing product offerings for consumers.”

Daniel Ek, founder and CEO of Spotify, added:

“For nearly two decades, Spotify has made good on its commitment to return the music industry to growth, ensuring that we deliver record payouts to the benefit of artists and songwriters each new year. This partnership ensures we can continue to deliver on this promise by embracing the certainty that constant innovation is key to making paid music subscriptions even more attractive to a broader audience of fans around the world.”

Much of the goals outlined mirror those made in the December 2024 Amazon partnership, with a main emphasis on the implementation of a subscription tier service to incentivize listeners to pay more for exclusive content from their favorite artists. "By deepening audience experiences, driving further engagement and amplifying the connection between artists, songwriters and their fans," the press release writes, "the collaboration between these two companies will position the industry for continued subscriber growth and retention."

The official statement also addressed UMG's concerns with fraud, misattribution, and unlawful use of artists' music from generative AI companies. According to the press release,

"The new agreements also renew the companies’ commitment to artist-centric principles, ensuring that artists continue to be properly rewarded for the share of audience engagement that they drive and that their streaming royalties remain protected through the platform’s application of its fraud detection and enforcement systems."

Under the new partnership, both companies will attempt to eliminate monetization opportunities for pages with less than 1,000 monthly listeners and reallocate money from the general revenue pool to established artists, according to Route Note. This decision will also theoretically assist in Spotify's on-going issue of streaming fraud, where fake pages take money from the revenue pool through automated plays of AI-generated music.

The joint statement also alludes to a potential solution to Spotify's current Premium Individual, Duo and Family plans that bundled access to music with audiobooks, which was the subject of controversy in May 2024. Under the current bundle subscription services, Spotify lowered the mechanical royalty rate (the percentage of royalties artists and labels collect per stream) to match the blanket license that applies to audiobooks. Last year, the Mechanical Licensing Collective (MLC) filed a lawsuit against Spotify for unpaid royalties, demanding repayment of the proposed loss to artists and future compliance, according to Music Week. Sunday's press release states:

"The new publishing agreement establishes a direct license between Spotify and Universal Music Publishing Group across Spotify’s current product portfolio in the U.S. and several other countries, which reinforces a mutually beneficial relationship for songwriters on the platform."

As of right now, there's no indication when these new changes will be made.