Spotify and Warner Music ink new multi-year deal

NEW YORK - Spotify (NYSE: NYSE:SPOT) and Warner Music Group (NASDAQ: NASDAQ:WMG), a music industry giant with annual revenues of $6.4 billion and a market capitalization of $16.7 billion, have entered into a new, multi-year agreement that aims to enhance the music streaming experience for users while supporting artists and songwriters. Announced today, the partnership is set to shape the future of audio-visual streaming and expand the music ecosystem through innovative collaboration.

Under the terms of the deal, both companies will focus on creating new fan experiences and broadening their music and video catalog. The agreement introduces new paid subscription tiers and content bundles that are expected to make paid music subscriptions more appealing. Additionally, the companies will continue to support ’artist centric’ royalty models, which aim to reward artists for their ability to attract and engage with audiences. According to InvestingPro data, Warner Music Group has demonstrated strong financial performance with a 6.4% revenue growth and maintains a healthy gross profit margin of 47.8%.

A significant aspect of the new agreement is the introduction of a direct licensing model with Warner Chappell Music in several additional countries, including the U.S. This move is intended to benefit songwriters in the evolving music landscape by providing them with a more direct relationship with the streaming service.

Warner Music Group’s CEO, Robert Kyncl, commented on the agreement, stating that it delivers new benefits for artists, songwriters, and fans. He emphasized the importance of collaboration between rights holders and streaming services to increase the value of music and drive growth and innovation. InvestingPro analysis shows that WMG has consistently rewarded shareholders, having raised its dividend for 5 consecutive years, with a current dividend yield of 2.24%. For deeper insights into WMG’s financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Spotify’s Founder and CEO, Daniel Ek, highlighted the company’s commitment to accelerated execution in 2025. Ek mentioned that the partnership with Warner Music Group is part of Spotify’s efforts to push the boundaries of what’s possible for audiences worldwide, enhancing the appeal of paid music subscriptions and supporting artists and songwriters.

This partnership is based on a press release statement and reflects the ongoing commitment of both Spotify and Warner Music Group to innovate and grow the music streaming industry. Based on InvestingPro’s Fair Value analysis, WMG currently appears to be trading near its Fair Value, with analysts maintaining a moderate buy consensus and projecting profitability for the upcoming year.

In other recent news, Warner Music Group Corp. has made several significant moves that impact its business operations and strategic direction. The company recently acquired a majority interest in Tempo Music Investments, a move that expands Warner Music’s portfolio with a diverse array of music rights from acclaimed artists and songwriters. This acquisition aligns with Warner Music’s broader strategy to invest in high-value music rights.

Additionally, Warner Music Group has seen adjustments to its stock price targets from several analyst firms. UBS analysts, led by Batya Levi, lowered the price target for Warner Music Group from $43.00 to $41.00, citing foreign exchange pressures. Despite this, UBS maintained a Buy rating on the shares. Similarly, Guggenheim analysts adjusted their stance on the company, reducing the 12-month price target from $44 to $40, also due to foreign exchange challenges, but maintained a Buy rating.

In another development, Warner Music Group has amended the employment agreement with its CEO, Robert Kyncl. The company has transitioned his annual performance-based compensation to restricted stock units from performance share units. This change was reported in a recent 8-K filing with the Securities and Exchange Commission.

Lastly, Loop Capital reduced Warner Music Group’s price target from $38.00 to $35.00 while maintaining a Hold rating on the stock. This adjustment reflects Loop Capital’s outlook on the company as it embarks on early-stage management changes aimed at reinvigorating its recorded music growth. These are among the recent developments shaping the future of Warner Music Group.

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