As part of its earnings results announced this morning, Warner Music Group said it had sold about 75 percent of its Spotify holdings and received about $400 million.
Warner Music Group CEO Steve Cooper said it would share the proceeds with its artists on the same basis as it does for digital revenue; he also said WMG would share proceeds with distributed labels if their contracts call for it.
In other words, if distributed labels weren’t shrewd enough to get equity shares negotiated based on market share included in their distribution contracts or didn’t have enough clout in negotiations, those labels will not be enjoying any Spotify proceeds.
In explaining the divestiture of the Spotify shares, Cooper cautioned that the move shouldn’t be interpreted as a loss of confidence in Spotify.
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“We are a music company and not by nature longterm holders of equity,” he said. “We expect digital streaming to continue to grow and we continue to expect Spotify to play a major role in that growth.”
The sale of the Spotify shares occurred after the close of its second quarter on March 31, in which the company said it had a $1 million net income loss on revenues of $963 million, versus $20 million in net income in the prior year quarter when sales were $825 million.
For the six month period, WMG reported $4 million in net income on revenues of $2.008 billion, versus $44 million in net income on $1.742 million in revenue. Overall, revenue grew 15.3 percent.
This story first appeared on Billboard.com.
