Tuesday, August 7, 2018

Warner sells entire stake in Spotify, crediting artists with $126m as a result | Music Business Worldwide


Warner Music Group has sold all of its shares in Spotify for more than half a billion dollars.

Warner is allocating 25% of this money to its artists, but, unlike Sony, it’s not ignoring unrecouped balances when it does so – meaning that a significant proportion of this cash will actually remain at WMG.

Warner today confirmed it was no longer a stakeholder in Spotify, which floated on the New York Stock Exchange on April 3.

WMG CEO Steve Cooper told investors on an earnings call that Warner realized $504m in proceeds from selling Spotify stock in the quarter ending June 2018.

“I’m pleased to say that, in connection with the sale of our Spotify equity, an estimated $126 million will be credited to artist accounts on their June 30 royalty statements which are issued around the world in August and September,” said Cooper.

That $126m equates to exactly a quarter of the $504m.

MBW understands the $126m includes payments to Warner/ADA-distributed labels, but these make up a small proportion of the money. Warner, as previously announced, is only sharing Spotify proceeds with its partner labels when obligated to do so by individual contracts.

MBW revealed earlier this year how Sony Music will be paying its artists and partner labels from its Spotify stock proceeds.

In a surprise move, the Rob Stringer-led major will ignore unrecouped balances when it pays its acts a chunk of its windfall – via checks that are scheduled to arrive with performers by the end of August.

Unlike Warner, Sony will also be sharing these Spotify share profits will all of its eligible partner labels.

According to MBW’s analysis, Warner was granted a 4% equity stake in Spotify as part of licensing deals first signed in 2008.

Due to dilution of stock from additional investors, we estimate, Warner ended up with approximately 2% of Spotify by the time the company floated in April.

Warner Music Group’s total revenues grew 1.9% year-on-year at constant currency in its fiscal Q3 (calendar Q2), with a quarterly haul of $958m.Music Business Worldwide

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