SVP of Digital for Universal Music Group International Rob Wells revealed some of the financial details of the licensing agreements it has with Spotify for the first time. In the UK and Spain, Spotify pays a per stream royalty for each track users listen to. In its other four territories (France, Sweden, Finland and Norway), the labels instead get a cut of the revenue generated from subscriptions and advertising. "That to me equates to a sustainable business model," said Wells.
Spotify only needs a 10-12% conversion rate of free to paid users in any given territory to give the labels a decent return. Wells also revealed that Spotify was the fourth largest digital partner in terms of revenue contribution in 2009. The top three weren't named, but it's likely Apple's iTunes and Google's YouTube are among them. Spotify has already taken over iTunes in terms of revenue contribution in its native Sweden.