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Spotify reaches deal with Universal Music, world's biggest record label

Spotify will keep streaming artists like Drake, Imagine Dragons, Luis Fonsi, Halsey and J. Cole. But the companies said they'll experiment on new artist marketing tools together.

Angela Lang/CNET

Spotify reached a deal to continue streaming music from Universal Music Group, the world's largest record label, the companies said Wednesday. Beside keeping all of UMG's artists and recordings on Spotify, the companies said Universal would work with Spotify to help develop tools that market artists and their music, a newer area of Spotify's business that makes money beyond just simple royalties. 

A deal was widely expected. Spotify is the world's biggest music service, in an age of streaming as the most common way people listen to tunes, so it'd be high-risk for any record label to pull out of Spotify. And Spotify losing the massive catalog of UMG would be devastating to the service's appeal. But even as streaming has raised the fortunes for both Spotify and the music industry, and even as both sides have grown accustomed to royalty standards, newer complexities -- like how much labels participate in and pay for Spotify's marketing and promotion tools -- mean deals like these aren't necessarily foregone conclusions. 

UMG's deal with Spotify is a multi-year worldwide license agreement; financial terms and duration of the deal weren't disclosed. 

"With this agreement, UMG and Spotify are more aligned than ever in our commitment to ensuring the entire music ecosystem thrives and reaches new audiences around the globe," UMG CEO Lucian Grainge said in a statement. 

Spotify CEO Daniel Ek said that the new deal expands and strengthens the company's partnership with UMG. "Together, we look forward to reinvesting in and building new tools and offerings for artists around the world," he said in a statement.  

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