Breaking news: Warner Music Group has cashed in $400m of Spotify shareholdings – worth around three-quarters of its total equity in the streaming company.
The news comes less than a week after MBW revealed that Sony had liquidated half of its Spotify stock, from which it generated around $750m.
In the past few minutes, WMG boss Steve Cooper told the major music company’s investors that the firm had “sold about 75% of our Spotify equity for approximately $400m”.
Warner’s share sale transaction was either made in April or the first few days of May (after the major’s last fiscal quarter), according to Cooper.
It suggests that Warner’s total pre-sale shareholding in Spotify was worth somewhere between $500m and $550m.
Speaking on a quarterly earnings call today (May 7), Cooper tackled the thorny issue of what will now happen to the Spotify equity banked by his company.
The exec confirmed, for the first time, what Warner’s distributed label partners can expect as a result.
“We’ll share these proceeds [the same way] we share revenue from actual streams and so-called digital breakage,” said Cooper.
“In addition, we will be sharing equity proceeds with distributed labels – if [this is] included in their agreements with us.”
MBW understands that Warner’s digital breakage policy sees the major commit to paying out these ‘extra’ digital revenues to individual artists in accordance with their contractual royalty percentage.
“we will be sharing [Spotify] equity proceeds with distributed labels – if [this is] included in their agreements with us.”
Steve Cooper, Warner Music Group
Added Cooper today: “This sale has nothing to do with our view of Spotify’s future. We’re hugely optimistic about the growth of subscription streaming, we know it has only just begun to fulfill its potential for global scale.
“We fully expect Spotify to continue to play a major role in that growth.”
Warner just posted company-wide revenues of $963m for the first calendar quarter of 2018 (its fiscal Q2), up 16.7% year-on-year, or 10.4% at constant currency.
Within that, WMG’s recorded music operation turned over $791m in the quarter, while Warner/Chappell generated $174m.Music Business Worldwide