PTN INSIDER REPORT 012 / Spotify & BMG Go Direct ā The Split Shift / October 10, 2025
š 1. CONTEXT / INDUSTRY SHIFT Spotify and BMG have quietly rewritten the streaming playbook. Theyāve signed a direct U.S. publishing license, cutting around the Mechanical Licensing Collective (MLC) - the body that processes mechanical royalties for most publishers under the Copyright Royalty Board model. Why it matters: it marks the first time a major publisher has opted out of the collective system and gone direct. Thatās not just a contract, itās a declaration of independence. This shift means publishers can negotiate their own mechanical rates, reporting cadence, and payment pipelines. It also means streaming services could face a fragmented royalty landscape where deals are private and data transparency gets murkier. - š 2. CASE FOCUS / BREAKDOWN ⢠BMGās move: The company frames it as āfaster, fairer, and more directā payment to songwriters. ⢠Spotifyās motive: Simplify reporting, reduce latency, and lock in favorable economics before more publishers demand renegotiations. ⢠System crack: If Sony or Kobalt follows, the MLC could lose leverage and scale, effectively returning us to pre-2018 chaos when every service had separate licenses. ⢠Creator angle: Speed of payment improves, but independent writers may lose the unified protection and audit power the MLC provided. - š 3. STRATEGY OR BUSINESS PRINCIPLE This is a āsplit shiftā moment - the era of uniform streaming splits may be fading.BMGās strategy is vertical control: own the data, the negotiation, and the payout line. Spotifyās strategy is horizontal leverage: play direct with the biggest catalog owners to stabilize margins. The underlying principle: whoever controls the interface between data and payout controls the future of creator economics. - ā
4. TAKEAWAYS / ACTION STEPS 1. Understand your royalty chain Know whether your publisher is part of the MLC, a direct license, or both. The difference can affect not only your income but how long it takes to reach you.