When the streaming music service Spotify was getting its subscriptions off the ground, the biggest record labels took equity stakes in Spotify. As a result of Spotify going public, the labels are selling big chucks of their holdings.
One week ago, it was reported that Sony had sold approximately half of its shares for about $750 million. It bears to mention that Sony is the record label with the greatest stake in Spotify.
On May 7, the Warner Music Group followed Sony’s precedent, and it sold 75 percent of its Spotify holdings, for approximately $400 million.
Steve Cooper, CEO of Warner Music Group, noted this disclosure during the label’s earnings call in the morning. He further stated that this sale does not reflect any pessimism about the potential of Spotify.
In the earnings call, Cooper remarked that Warner is a music company as opposed to “long-term holders of publicly traded equity.” He went on to add that they are optimistic about the growth of subscription streaming via Spotify. “We fully expect Spotify to continue to play a major role in that growth,” he said.
The bulk of Spotify’s revenue is generated from the following three major record labels: Sony, Warner and the Universal Music Group. The labels mentioned that they would distribute some of the cash they receive from their Spotify shares to songwriters and artists/musicians.
Spotify went public last month, where it was valued at $30 billion, and Wall Street values Spotify at $27 billion.
In March of 2018, as Digital Journal reported, Spotify had launched “Amplify,” a new hub, which highlights social issues in the music business.
