Last week, Sony, who easily held the biggest stake in Spotify, sold about half its shares for close to $750m. Then, yesterday, Warner Music Group followed suit — selling off 75% of their shares, and netting close to $400m.
So what the heck happened?
“It’s not you, it’s me”
Spotify went public last month, at a valuation of $30B, but in its first-quarter as a publicly traded company, their earnings hit well below investor expectations, causing their shares to fall more than 9%, shaving $3B off their current valuation.
But, according to Warner’s CEO, Steve Cooper, their decision to pull out is no indication of how they view Spotify’s future, saying that they are still heavily invested in the company’s success.
“We’re a music company and not, by our nature, long-term holders of publicly traded equity,” Cooper explained.
Didn’t know those two things were mutually exclusive
For the last decade, the music industry has been in a tailspin, relegating mid- to low-level artists like Lil’ Bow Wow to pro-bono shows at your cousin’s bar mitzvah.
(It’s still great “exposure,” right?)
On the bright side, Spotify royalty checks have boosted industry sales the last 3 years, and both Warner Music Group and Sony claim they plan to distribute some of the proceeds from their haul to musicians and songwriters.
The downside: Neither of them have explained how they plan on doing that — let’s hope Beyonce gives hers to Bow Wow.
