Yahoo! and Spotify announce a global content distribution and promotion agreement that will enable Yahoo! to integrate and promote Spotify’s on demand music service on Yahoo!’s Media Network. Spotify will initially roll out to Yahoo! Music and later will be contextually integrated globally across the rest of Yahoo!, including its entertainment sites. In turn, Yahoo! will create an app for Spotify’s platform featuring Yahoo! original entertainment content.

"At Spotify we want to light up the Web with music and as Yahoo!’s global music partner we’re able to reach their massive audience," said Daniel Ek, Spotify CEO & Founder. "We are really excited about the new Yahoo! leadership team and thrilled to partner with them to build great experiences around high quality content."

"Delivering compelling premium experiences across screens is core to our mission at Yahoo!. Spotify is the leader in the digital music field and together we can provide the ‘soundtrack’ for users around the world," said Ross Levinsohn, Interim CEO of Yahoo!. "What Daniel and his team are doing is changing an industry, and we’re thrilled to be partnering with them."

Spotify replaces Rhapsody as Yahoo!'s digital music partner. Rhapsody had been a partner with the web giant since February of 2008.

In other Spotify news, a report from Business Insider claims that the digital music service is now the #2 source of revenue for the major labels. The biggest source of label revenue is now Apple's iTunes Music Store, which paid out approximately $3.2 billion to the labels in 2011, according to Business Insider's data. However, Business Insider's source points out that the gap between Apple and Spotify remains quite large. "iTunes is way up here," the source said, gesturing up high, "and everyone else is way down here."