Spotify: the moment everyone is talking about

Universal Music Group confirmed Wednesday that it would be selling half of its 3 percent stake in Spotify — a deal worth as much as $1.4 billion based on the streaming service’s valuation as of April 29 — and thanks in part to Taylor Swift, all of UMG’s roster of artists stand to be cashing in too. Spotify has emerged this Friday as one of the stories drawing attention in Estonia.

Key facts

• Universal Music Group confirmed Wednesday that it would be selling half of its 3 percent stake in Spotify — a deal worth as much as $1.4 billion based on the streaming service’s valuation as of April 29 — and thanks in part to Taylor Swift, all of UMG’s roster of artists stand to be cashing in too.
• Taylor Swift's UMG deal could get the company's artists a big payout from UMG's sale of Spotify shares announced on Wednesday (April 29).
• Universal Music Group chairman and CEO Lucian Grainge said on Tuesday (April 29) in an earnings call that the company’s board had approved the sale of half of UMG’s equity stake in Spotify, and that a portion of the proceeds will go to UMG artists.
• How Swift has anything to do with this windfall is a bit complicated, and goes all the way back to the major record labels’ original licensing agreements with Spotify from the late 2000s, which got the companies stock in the then-fledgling streaming service.
• Credit where it’s due, as Music Business Worldwide reported back in 2016, with no legal requirement to do so, Warner Music Group and Sony Music Group had both committed to doling out some of the profits to the artists if they sold their Spotify stock.

What we know

Going deeper, Taylor Swift's UMG deal could get the company's artists a big payout from UMG's sale of Spotify shares announced on Wednesday (April 29).

On the substance, Universal Music Group chairman and CEO Lucian Grainge said on Tuesday (April 29) in an earnings call that the company’s board had approved the sale of half of UMG’s equity stake in Spotify, and that a portion of the proceeds will go to UMG artists.

Beyond the headlines, how Swift has anything to do with this windfall is a bit complicated, and goes all the way back to the major record labels’ original licensing agreements with Spotify from the late 2000s, which got the companies stock in the then-fledgling streaming service.

More precisely, Credit where it’s due, as Music Business Worldwide reported back in 2016, with no legal requirement to do so, Warner Music Group and Sony Music Group had both committed to doling out some of the profits to the artists if they sold their Spotify stock.

It is worth noting that Sony sold first, selling off a portion of its Spotify stock after the IPO in April in 2018.

By the numbers

At this stage, Meanwhile, Swift famously removed her music from Spotify in protest of low payouts compared to album sales, with her music returning in 2017.

On a related note, At the time of her signing with UMG in November of 2018, Swift said that non-recoupable term on the Spotify stock sales “meant more to me than any other deal point.”

Going deeper, Universal Music Group Universal Music Group to Sell Half of Its Spotify Stake, Reports $3.3 Billion in Revenue.

On the substance, Universal Music Group to Sell Half of Its Spotify Stake, Reports $3.3 Billion in Revenue.

What they're saying

“They have generously agreed to this, at what they believe will be much better terms than paid out previously by other major labels,” Swift wrote in 2018, giving her thanks to UMG CEO Lucian Grainge.

“I see this as a sign that we are headed towards positive change for creators,” Swift wrote of the stock terms back in 2018 after signing with UMG, “a goal I’m never going to stop trying to help achieve, in whatever ways I can.”

The wider context

On a related note, But none of that was accidental, as UMG artist Taylor Swift sings in “Mastermind.” In March 2018, UMG pledged to give artists a share in any future Spotify divestment, following similar commitments from Warner Music Group and Sony Music Group.

Going deeper, the decision by UMG’s board to sell half of its Spotify stake follows UMG investor Pershing Square’s suggestion that the company make this divestment in a non-binding offer Pershing made for the company on April 7.

On the substance, Years ago, as part of her negotiation process to sign with UMG, Swift demanded that the company pay out artists

Beyond the headlines, UMG confirmed it’d do the same nearly two years later, about a month before Spotify’s IPO.

More precisely, Warner did the same a few months later, selling the company’s entire Spotify stake.

The bottom line

• How Swift has anything to do with this windfall is a bit complicated, and goes all the way back to the major record labels’ original licensing agreements with Spotify from the late 2000s, which got the companies stock in the then-fledgling streaming service.
• The decision by UMG’s board to sell half of its Spotify stake follows UMG investor Pershing Square’s suggestion that the company make this divestment in a non-binding offer Pershing made for the company on April 7.
• Years ago, as part of her negotiation process to sign with UMG, Swift demanded that the company pay out artists — regardless of debts they may have to the company.
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