Digital Music: Spotify, Google and Grandfathering Label Deals
Last year, around the time that Apple acquired music service Lala, Google and Spotify were deep in acquisition discussions, says a source with knowledge of the negotiations. Ultimately no deal happened, and the two companies tried to negotiate a deal to have Spotify pre-installed on all Android phones instead. But the deal almost happened, says our source, and Google was going to pay nearly $1 billion for the service. Ultimately the deal went sideways because Google was demanding that all label deals be grandfathered in. And Spotify wanted a $800 million+ walk away fee if the deal faltered (Google had a similar provision in their Admob acquisition).
Here’s what “grandfathering” label deals means: The deals that music labels do with online music companies contain a provision that if the company is acquired, the deals terminate. That’s exactly what tripped up Facebook when they were looking to acquire or partner with a music startup a few years ago.
- How Spotify Almost Sold To Google For $1 Billion, Plus New Apple Rumors