It’s big news that Taylor Swift has left the Big Machine label for Universal Music, but a byproduct of that deal is that the label’s artists would receive all of their share of the revenue from a sale of the company’s holdings of Spotify should it decide to sell. That means that the total amount allotted for the artist would flow into the his or her pocket without being recouped even if the artist still owes UMG money.
Swift made the Spotify stock sale a condition of her new deal, something that would not only benefit her greatly, but also every artist on the label.
UMG is said to own about 3.5% of Spotify’s stock, which comes to around $850 million at the company’s current valuation, according to Music Business Worldwide. UMG didn’t actually lay out any hard cash for the stock – the equity came as part of its last licensing agreement.
Should UMG actually follow through on the point, it would be following in the footsteps of Sony Music, who did not recoup the amount that artists owed after the sale of 50% of its Spotify stock. Warner Music did recoup after selling its Spotify shares and doling out 25% of the windfall to its artists, meaning that many artists did not receive any money but their debt to the company was either reduced or wiped out.
All this sounds good on paper and makes Swift out to be a hero, which she might be if a UMG Spotify stock sale should come to pass. That might not happen however, especially in the short term, since Spotify’s stock has taken a beating lately along with most other tech stocks. Plus, UMG would have much more leverage with the company as a major stockholder, which makes the strategic sale of the stock unlikely.
If you’re a Universal Music artist it’s probably best to worry more about your Spotify chart and playlist positions rather than either its stock price or potential stock sale. And remember that while such a windfall is probably contractually assured for Swift, the company could always change its mind in regards to its other artists.[Photo: Eva Rinaldi Photography www.evarinaldi.com]