Following the announcement of the new agreement, UMG shares rose by 5% in European trading, while Spotify's US-listed shares fell by 3%.

This partnership illustrates a broader trend of collaboration between streaming services and major music companies, potentially reshaping music marketing and monetization.

Universal Music Group (UMG) and Spotify have forged a new multi-year agreement aimed at enhancing streaming innovation and artist success.

This partnership promises various benefits for artists, songwriters, and consumers, including new subscription tiers, content bundling, and an enriched audio-visual catalog.

Spotify's CEO, Daniel Ek, emphasized that this collaboration is crucial for sustaining the growth of the music industry and making paid subscriptions more appealing.

While specific terms of the deal were not disclosed, it is expected to improve the payment structure of Spotify's controversial music-audiobooks bundling deal, which has faced criticism for lowering royalties for songwriters.

The new agreement will alter how royalties are paid to Universal Music Publishing Group (UMPG), aiming to minimize reductions related to the bundling while recognizing differences in payouts between bundled and music-only users.

The National Music Publishers Association expressed cautious optimism about the deal, noting it appears to increase royalty rates across the industry.

Despite the financial recovery of the music industry due to streaming, payments to musicians from platforms like Spotify remain low, averaging between $0.003 and $0.005 per stream.

Top-streamed artists are the only ones making substantial income from streaming, forcing many musicians to rely on touring and merchandise for their livelihoods.

Criticism of the streaming model persists, with artists like Björk labeling Spotify as detrimental to musicians, reflecting broader concerns about the impact of streaming culture.

Spotify continues to dominate the audio streaming market with over 640 million users globally, including 252 million subscribers.