Warner Music Group and Sony Music will offer their artists a portion of profits if they sell their stakes in Spotify, according to Music Business Worldwide.
Warner Music Group CEO Stephen Cooper first announced that if it sells its equity interests in Spotify, Warner will pay a portion of its proceeds to its artists. The artist portions would apply to situations where Warner hasn’t paid its own cash for equity stakes in a digital service.
“As there is an ongoing debate in the media regarding how artists should be paid for use of their music on streaming services, we wanted to take this opportunity to address the issue head on,” said Cooper during an earnings call. He pointed out “the main form of compensation we receive from streaming services is revenue based on actual streams,” and added, “there are some services from which we receive additional compensation.”
“There are equity stakes in some streaming services for which we have not paid,” he continued. “Although none of these equity stakes have been monetized since we implemented our breakage policy, today we are confirming that in the event we do receive cash proceeds from the sale of these equity stakes, we will also share this revenue with our artists on the same basis as we share revenue from actual usage and digital breakage.”
Warner is estimated to own between two and three percent in Spotify, according to Music Business Worldwide.
Sony Music has also stepped up to offer a similar deal to its artists, according to Music Business Worldwide.
“As we have previously shared with our artists and their representatives, net proceeds realized by Sony Music from the monetization of equity interests that were provided to Sony Music as part of the consideration for a digital license will be shared with our artists on a basis consistent with our breakage policy,” Sony said in a statement to Music Business Worldwide.
Sony holds a reported six percent holding of equity in Spotify, according to Music Business Worldwide.
Spotify is expected to make its initial public offering (IPO) in the next 12 months.
The report does not make mention of songwriter copyrights benefitting from the deals.
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