It was long an open secret that the three major labels — Sony, Universal and Warner Music — owned stakes in Spotify that were rumored to be as large as 18% but have since been revealed to be 5.7% for Sony, and an estimated 4% for the other two. (SEC rules require disclosure of shareholders with 5% or more.) This was a very savvy strategy on the part of Spotify: Making the labels not only partners, but party to their success or failure.
And at the end of the first day of Spotify being a public company, how do those shares add up? Not quite as nicely as they did when trading began early this afternoon — Spotify opened at $165.90 per share, giving the company a market valuation of $29.5 billion, but then drifted down 10% and closed at $149.01 — but none too shabby either. It’s well above what Spotify has disclosed for private stock sales from Jan. 1-March 14, 2018, which had varied widely — ranging between $48.93 and $132.50 per share.
Sony Music Entertainment owns 10,164,560 of Spotify’s outstanding shares, or 5.7% of all outstanding shares. Thus, multiplied by today’s closing Spotify price of $149.01 per share: Sony Music Entertainment’s stake is worth $1.514 billion.
Assuming that UMG and WMG’s ownership stakes are 4%, as sources say — although one source close to the situation tells Variety that Warner’s share is less than 4% — those are now worth about $1 billion each as of today’s closing price.
The three majors have all pledged to share with their artists any profit generated by the sales of the company’s equity in Spotify. On Tuesday, reps from Sony and Universal sent statements to Variety regarding sharing that money with its distributed labels:
“Sony Music and The Orchard are committed to sharing with their artists and distributed labels any net gain they may realize from a sale of Sony Music’s equity stake in Spotify. This is consistent with our previously announced policy of sharing breakage and equity proceeds from digital catalog licenses with our artists and distributed labels,” Sony’s statement reads.
For its part, Universal says: “UMG’s approach to sharing with artists any proceeds of an equity sale also applies to distributed artists and labels, consistent with the terms of their agreements with UMG.” At press time, Warner had not responded to requests for comment.