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Spotify entering into €280 million sponsorship deal with FC Barcelona, causing various controversies

By | Published on Wednesday 9 February 2022


Spotify is close to confirming a €280 million sponsorship deal with the Barcelona football club, which will get the streaming service naming rights over the team’s stadium Camp Nou.

The big bucks deal is likely to cause yet more controversy within the music community, in addition to the mini-controversy already underway regarding whether or not the sponsorship arrangement contributed to the resignation of the football club’s CEO Ferran Reverter.

Officially Reverter has departed FC Barcelona after just seven months in the job for “personal family reasons”, although it’s been widely reported that he’d had a number of run-ins with the club’s President Joan Laporta, including over the specific terms of the big Spotify sponsorship deal.

Away from the world of football, Spotify splashing the cash in the sports sector will provide further ammunition for the streaming firm’s ever vocal critics in the music community – especially artists and songwriters.

During the recent headline-grabbing debate around misinformation on the Spotify platform – mainly in relation to its exclusive Joe Rogan Experience podcast – there has been plenty of misinformation floating around about how the Spotify platform works as well.

Of course that’s been the case throughout the whole economics of streaming debate. Plenty of people who criticise Spotify do so by making incorrect statements about the company. Some go as far as to suggest that the Spotify business model trashed the record industry, when in fact that business model – as employed by Spotify and others – single-handedly turned round a recorded music business that had been in steep decline for fifteen years up until 2015.

Others hone in on the average per-play payments that each service makes, with the argument that Spotify’s rivals pay much more for the music they stream. Which is also misleading.

All the services have more or less the same deals with the music industry, making more or less the same revenue share commitments. Yes, Spotify has exploited its market dominance to improve the terms of its licences. But if every Spotify premium subscriber switched to one of its rivals tomorrow, the total amount of streaming money coming into the music industry would be more or less unchanged.

Now, there are plenty of issues with the model of course, and some of those issues can only be solved by the services, though in many cases the issues actually lie within the music industry itself. As the economics of streaming inquiry in the UK Parliament demonstrated.

All that said, Spotify does keep doing things that make it easier to diss as a business, even if you correct for the misinformation around the business model and licensing deals.

First there’s the whole whole Joe Rogan debacle. Rogan’s own commitment to better research his controversial guests – and to book experts to respond to said controversial guests – were sensible editorial solutions to the criticisms made about his COVID coverage.

However, Spotify boss Daniel Ek’s line that the Joe Rogan Experience is just another third party podcast that can only be subject to the same content checks as every other podcast on the platform wasn’t a great argument, given Spotify’s $100 million exclusive licensing deal with Rogan and his programme.

Meanwhile, when responding to the criticism around racist language and comments that had featured on Rogan’s podcast in the past, Ek announced a $100 million investment to support music and audio from “historically marginalised groups”. Which is an admirable investment to make. Although it only adds fuel to the fire when it comes to artists and songwriters who feel that Spotify exploits their music without paying a fair rate.

Splurging €280 million on sponsoring a football team throws yet more fuel on that fire. Maybe it’s a wise investment for the company that will help expand its podcasting business in the sports content domain. Though with Ek’s recent unsuccessful attempts to buy Arsenal, it partly looks like another attempt by the Spotify chief to dabble in the football business. Though this time at the streaming firm’s expense.

And of course, all this cash splashing comes as the big battle over song royalty rates under the US compulsory licence is front and centre for the American music community, with the Copyright Royalty Board considering what those rates should be for the next five years, while Spotify and many of the other streaming services are still appealing the rates that the CRB set last time.

Spotify et al are currently pushing for a 10.5% revenue share commitment to songwriters and publishers in the US, even though the CRB previously increased it to the 15% commitment that is already common elsewhere in the world. Of course, with the music publishers now advocating for 20%, Spotify may be going in at 10.5% in the hope that the the outcome is 15%. But in the short term, the whole thing makes Spotify look bad.

It is true that Spotify already hands over the majority of its revenues to the music industry – and has invested billions over the years into the business model that turned around the fortunes of the recorded music business – meaning that overall it’s far from being a profitable concern. However, it’s harder for the company to argue that its commitments to songwriters and publishers should be reduced when it’s concurrently spending hundred of millions on assorted projects outside of music.

Capitalising on that in a tweet responding to reports of Spotify’s Barcelona deal yesterday, the boss of the US National Music Publishers Association, David Israelite, said, simply: “You can’t even make this shit up”.