With Spotify about to become listed on the New York Stock Exchange, a big question that has hung over the heads of major label execs is what will happen if they liquidate their shares in the company. Revenue windfalls like this in the past have found their way to the company’s bottom lines and not much to the label’s artists, but in this case there’s too much scrutiny for that to happen. That’s why it’s good news that all three major labels have declared that at least some of the money will find its way into artist’s pockets.
On Monday Universal Music issued a statement to Music Business News that said, “Consistent with UMG’s approach to artist compensation, artists would share in the proceeds of a [Spotify] equity sale.” Sony Music followed that with a formal declaration. “Sony Music will be sharing with its distributed labels,” a spokesperson also stated to MBN. In 2016 Warner Music Group CEO Stephen Cooper also stated “… today we are confirming that in the event we do receive cash proceeds from the sale of these equity stakes, we will also share this revenue with our artists on the same basis as we share revenue from actual usage and digital breakage.”
It’s estimated that the amount of stock that the majors hold is equal to over $2 billion using the projected stock price of between $92 and $132 per share. The equity positions in Spotify came about as a result of music license negotiations, and no money was exchanged by the labels for the stock.
That’s all great news, but the real question on everyone’s mind is, “How much will actually trickle down to the artists?” This isn’t much of a win if they only see 5 to 10% as the bulk will still go the corporations. So it’s great that the labels acknowledged that they need to throw some dough the artist’s way, but that doesn’t mean a whole lot until it actually happens.