UMG Says Artists Will Profit From Spotify Stock Sale, But What Does That Mean?

After months of silence, Universal Music Group has joined Sony and Warners in pledging to share proceeds from the upcoming public sale of Spotify stock with the artists signed to its labels.  But the announcement came without details as to how much of the profit will be shared or how payments to artists will be calculated.

“Consistent with UMG’s approach to artist compensation, artists would share in the proceeds of a [Spotify] equity sale,”  the world's biggest music company told MBW, after more than a year of dodging the question.  Sony, Warner Music Group and indie licenser Merlin each promised to share the profits of any sale of Spotify stock with their artists back in the Fall of 2016.

All three major music groups took Spotify stock in lieu of payments in the streamer's early stages. For Sony, that means ownership of 5..7% of Spotify's stock.  It's unclear how much Spotify stock UMG and WMG own, but it is under the 5% threshold that requires SEC reporting.

When announcing that they would share Spotify stock profits with artists, WMG pledged to "share this revenue with our artists on the same basis as we share revenue from actual usage and digital breakage.”   Sonyt Music pledged that "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,” Merlin also issued a similar promised.

Thus far, UMG has not said how much of it's Spotify stock profits will be shared with artists or how the distribution will be calculated.