WMG Sells Spotify Stake

• During its earnings call on Tuesday morning, Warner Music Group announced that it has now sold its entire stake in Spotify, realizing $504 million. As reported by Variety, CEO Steve Cooper said that the sale resulted in $126 million that was “credited to artist accounts on their June 30 royalty statements which are issued around the world in August and September.” A rep confirmed that distributed labels are included in that amount, if their deal terms include it. Cooper noted, “In February 2016, we were the first major to announce a policy to share proceeds from equity in streaming services with artists.”

Back in May, Sony Music revealed in a public filing that it had sold approximately 50% of its shares for an estimated $750 million, while independent label collective Merlin sold 100% of its shares for an estimated $125 million and immediately distributed the earnings to its members. Universal Music Group has not sold its shares, perhaps in anticipation of parent company Vivendi’s plan to sell 50 percent of that business unit.

In announcing the company’s initial sale of 75% of its Spotify equity, Cooper was quick to note that the company’s decision does not reflect a lack of confidence in Spotify’s future, saying, “Just so there won’t be any misinterpretation about the rationale for our decision to sell, let me be clear: We’re a music company, and not, by our nature, long-term holders of publicly traded equity. This sale has nothing to do with our view of Spotify’s future. We’re hugely optimistic about the growth of subscription streaming, we know it has only just begun to fulfill its potential for global scale. We fully expect Spotify to continue to play a major role in that growth.”