Universal Music Says Artists Would Benefit From a Spotify Equity Sale
It's taken two years and an IPO, but Universal Music Group is now ready to commit to sharing with its artists the bounty it could generate from the sale of its Spotify stock. A spokesperson with the Vivendi-owned major confirmed their intent in a one-sentence statement to Music Business Worldwide earlier this week.
"Consistent with UMG's approach to artist compensation, artists would share in the proceeds of a [Spotify] equity sale," the rep said.
UMG's widely expected move arrives two years after Warner Music Group and Sony Music Entertainment made similar pledges about equity proceeds. Indie label representative Merlin has also committed to paying out a portion of their Spotify stake via the Worldwide Independent Network (WIN)’s Fair Digital Deals Declaration.
It's unclear why UMG took this long to make their pledge regarding artist compensation, but it may have been contingent on Spotify making their public offering plan official, which they did last week in a filing to the Securities and Exchange Commission. In the filing, the music streaming service said they will trade under the symbol "SPOT" at the New York Stock Exchange.
Among the information included in the regulatory paperwork, Spotify claimed a user base nearly double that of Apple Music, including 159 million monthly active users and 71 million premium subscribers as of Dec. 31, 2017. It also disclosed that both its earnings ($4.99 billion) and losses ($1.506 billion) were up in 2017 versus 2016 ($3.6 billion and $652.57 million, respectively).
The SEC filing also revealed that music from UMG, SME, WMG and Merlin made up approximately 87 percent of streams in 2017. The three majors each hold about a 5 percent stake in the streamer, though the filing noted that Sony actually controls 5.7 percent of Spotify shares, meaning their artists will potentially see more in an equity sale.
Following the filing, founder and CEO Daniel Ek tweeted that he was glad to have all of this information released to the public and that "transparency breeds trust."