Can big record labels still have a conscience and do good? Warner Music Group may have just proved that with a big move for artists and labels.
Warner Music Group have just sold all of their holdings in Spotify stock for a significant $504 million. The big news however is that Warner are passing these funds off to artists and labels in a significant move which gives something back from the monumental success of music streaming. Over $100 million of the money from their Spotify shares will be distributed to their roster.
Warner Music Group’s CEO, Steve Cooper said on an earnings call: “In February 2016, we were the first major to announce a policy to share proceeds from equity in streaming services with artists. I’m pleased to say that, in connection with the sale of our Spotify equity, an estimated $126 million will be credited to artist accounts on their June 30th royalty statements which are issued around the world in August and September. As such, we took the P&L expense in the quarter.”
Cooper re-assured that the sale of stocks didn’t represent their thoughts on Spotify’s future or music streaming’s prospects, as you’d expect considering how streaming is booming. Cooper continues: “Just so there won’t be any misinterpretation about the rationale for our decision to sell, let me be clear: we’re a music company, and not, by our nature, long-term holders of publicly traded equity.”
Cooper went on to speak on the increasing competition in music streaming as services like Apple Music and Spotify continue to grow rapidly and other services like Amazon and YouTube expand. He says that competition in the new ‘streaming’ arena of music is “good news for our business” as their digital revenues continue to soar.
Cooper says: “Amazing new music from our artists and songwriters and great execution from our global operators have driven our year-to-date revenue up 12%, or 7% in constant currency. While streaming continues to fuel our growth, we are exploring a wide array of creative and commercial opportunities in order to position ourselves for long-term success.”
Warner Music Group’s executive vice-president and CFO, Eric Levin added: “We are pleased with our revenue growth in the context of a very difficult prior-year comparison. The health of our business is evidenced by our very strong cash generation.”