Spotify's Contract With Sony Music Gets Leaked

With the influx of music streaming services in the past few years and its increasing relevance in today's music scene, little is known about the deals that go on between the services and music labels. 

Until now that is, as The Verge have today leaked details of a 2011 contract between Spotify and Sony Music Entertainment.

The contract was signed just months before Spotify launched in the US and it revealed that the two-year deal asked for them to pay $42.5 million dollars in yearly advances to Sony, with an optional third year that Sony could use. 

Interestingly, a "Most Favored Nation" clause was added to keep Sony's yearly advance rates as competitive as any other music label. 

Sources claim that none of the money would be given to the artists, but rather directly to the record company. 

Sony's revenue was dependent on its overall percentage of streams, however they also received $9 million in ad spots on Spotify that they could sell for profit. 

Spotify's income however remains quite murky — While they have claimed in the past that they take 30% of the gross revenue total, this contract states that the company can take up to 15% of ad revenues from hired third parties. 

The leak comes at an intriguing time with the impending relaunch of Apple's music service, Beats Music, as well as speculation that Spotify are set to launch video content on their services, with an announcement to be made at a media event tomorrow. 

Furthermore, in what is a milestone for the music business, Warner Music Group announced last week that they had made more revenue from streaming services than download sales in their last financial quarter.