10 ms·

Warner Music Group Sells Entire Stake in Spotify

158 points by prostoalex 8y ago

deleted 8y ago
[deleted]
tmikaeld 8y ago
Does this mean they won't have the Warner music in Spotify?
- patd 8y ago
  Probably not in the short term. But I always felt that Spotify having the labels as shareholders was the main guarantee that they would keep their content on the platform. Maybe they'll need to start producing their own original content like Netflix did.
  - toomanybeersies 8y ago
    That really wouldn't work though. Most people use Spotify like the radio, they listen to the top 40 chart, or they listen to music they know and love. If Spotify was missing the Warner catalogue, it would be completely neutered. It relies on the fact that I can find 99% of the music I want. Every time an artist or an album gets removed from Spotify, so many people get up in arms about it. Imagine a major label dropping Spotify.
    - toast0 8y ago
      Radio style play gas compulsory licensing. If the user can't pick the music directly, Spotify can play any song, without an explicit license.
      - mywittyname 8y ago
        This undermines the entire purpose of paying for Spotify.
- peroo 8y ago
  No, this is just business. Sony and Merlin have already sold all or parts of their shares, and are in the process of sharing the windfall with their labels. It's a pretty significant chunk of cash, so if Warner didn't do the same they would look incredibly bad. Broader picture the majors want Spotify to succeed, because the alternative is having the business run by Apple and Google, who only have an ancillary interest in music.
rnd0 8y ago
time to drop my spotify subscription, I see.
- bb101 8y ago
  What in the article would lead you to make that decision? What would you replace your subscription with?
  - rnd0 8y ago
    >What in the article would lead you to make that decision? The fact that Sony has also sold their shares, and Universal is contemplating it. If they see Spotify as failing (even if they don't admit it -as Cooper pointedly denies at the end of the article) then that potentially leads to a situation where Spotify cannot offer content from major labels ...at least not at current prices. >What would you replace your subscription with? I just started a trial with youtube premium, I already have amazon prime. The article mentions a few alternatives to subscribe to if no longer has the music or content I want.
    - jstanley 8y ago
      Why would you preemptively cancel a subscription to a service you presumably like, just because you think you might not like it in the future? If at some time new music stops becoming available, then it would be more reasonable to cancel then. I don't see what you gain out of cancelling it early.
    - hoffs 8y ago
      Nobody mentioned anything about dropping their catalogue from spotify
- Torn 8y ago
  This is about equity, not about access to music & artists from those publishers
  - rnd0 8y ago
sschueller 8y ago
Lawsuit coming up?
yontherubicon 8y ago
I wonder if, perhaps, this is in any way related to Spotify's censorship of Alex Jones (hear me out). Not because of any political agenda on the part of Warner, but because, unlike Apple, YouTube or Facebook, Spotify is a subscription-based content service. Where Apple, YouTube, and Facebook have a significant buffer against Alex Jones' somewhat fanatical fanbase leaving their platforms, Spotify has no such insulation. Spotify has 70 million paying subscribers as of Jan. 2018. Jones has 7.5 million unique visitors to his website, which is a tertiary method of access, behind his radio syndication (secondary) and YouTube and Podcasts (primary)[1]. His podcast peaked at the #9 position on the Itunes podcast chart (Sorry, I had trouble finding download numbers, but given that the top ten podcast publishers had a unique monthly listenership anywhere between 5.2 and 4.3 million, assuming 4.5 million from podcasts is likely reasonable)[2, 3]. And his radio listenership is counted at 5.9 million [4]. On YouTube, he had 2.5 million subscribers and 17.6 million video views [5]. So, assuming that some people are superfans, we can probably assume that his peak reach, among people who sought him out is somewhere in the neighborhood of 18 million. That's ignoring the fact that his podcast with Joe Rogan was the most downloaded podcast ever when it came out (I think it still is. I recall hearing download numbers of that episode in excess of 50 million). We can assume the number of people who actually care enough to boycott a service would be in the neighborhood of 20 million. Assume 30% of those are spotify subscribers. These are the fans. We're not even dealing with the regular conservatives who just heard about it from Limbaugh and Drudge, some of whom may cancel subscriptions on principle. A drop of 5-6 million subscribers will be significant for Spotify, and likely result in a drop in share prices as well, once Spotify announces their next round of subscriber numbers. [1]: https://www.spin.com/featured/the-invisible-empire-of-alex-jones/ https://www.spin.com/featured/the-invisible-empire-of-alex-j... [2]:http://www.itunescharts.net/us/artists/podcast/alex-jones/podcasts/the-alex-jones-show-infowarscom/ http://www.itunescharts.net/us/artists/podcast/alex-jones/po... [3]: http://analytics.podtrac.com/industry-rankings/ http://analytics.podtrac.com/industry-rankings/ [4]: http://www.talkers.com/top-talk-audiences/ http://www.talkers.com/top-talk-audiences/ [5]: https://socialblade.com/youtube/user/thealexjoneschannel https://socialblade.com/youtube/user/thealexjoneschannel EDIT: I forgot to mention that I was talking about the timing of the drop. It's quite clear from the article, given Warner's previous sale of equity, that Warner intended to do this eventually. I was only suggesting that they might have decided to sell at this time because of potential subscriber drop.
KevanM 8y ago
New WarnerMusic app coming up?
shp0ngle 8y ago
From TFA, since people love to react just to a headline: “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,” he said. “This sale has nothing to do with our view of Spotify’s future. We’re hugely optimistic about the growth of subscription streaming, we know it has only just begun to fulfill its potential for global scale. We fully expect Spotify to continue to play a major role in that growth.”
- colordrops 8y ago
  So why don't they keep the shares of they are so optimistic?
  - lemiffe 8y ago
    Potentially for immediate liquidity to invest in multiple new assets? I assume they made quite a bit of profit on their initial Spotify investment.
  - m12k 8y ago
    My guess is they probably made the investment in the first place to make sure they were onboard if/when music streaming took off. Now that it's well established, and there are competing services, they are probably better off by not playing favorites and being able to squeeze Spotify when negotiating licenses without harming their own investment (similar to what the movie industry is doing with Netflix).
    - mcny 8y ago
      What stops Spotifyfrom trying to fight back with more tools for recording artists? Find out what artists need and allow them to self publish on Spotify? I imagine recording an album is orders of magnitude cheaper than just the production cost of Westworld or black mirror. I mean just following the Netflix route in general. Is Spotify already doing this?
      - 8y ago
pasta 8y ago
A lot of people in this thread are confused. Selling stock can mean a lot of things. For example: * You need money asap. * You think the stock won't rise so you decide that your investment should return. And from the article it looks like they need the money. Ofcourse we can only guess what they need the money for.
- mlthoughts2018 8y ago
  For Sony and WMG, it’s such a small amount of money that I’m skeptical of this line of reasoning.
EugeneOZ 8y ago
It's because Spotify doesn't have a button in UI to clean your queue.
ed_blackburn 8y ago
Presumably, they'll get a better yield cashing in and spending it on growing developing acts? Or they'll just return it shareholders and the board gets a hefty slap on the back for a bumper dividend?
- AmericanChopper 8y ago
  Whether it’s the case or not, I think this point is over looked quite often. Some of the most successful businesses I’ve ever worked for have entirely abandoned profitable verticals to focus on more profitable core business. Opportunity cost is serious business.
slivym 8y ago
I think this is great news. Essentially the message this is sending is that we're now safe from 2 things: We're safe from one record label attaining a controlling share in spotify and using it for vertical integration. We're also safe from 1 music streaming service from becoming a monopoly and being able to jack up prices. This looks like great news for consumers.
kall1sto 8y ago
Spotify is on the best way to become the Google of the music industry. They're doing alot of things right. Not sure if it's the best decision to sell now but i guess the people from warner know what they're doing.
- vesak 8y ago
  I don't think so. After they went public, they have an actual pressure to make money, and they are not in a good position for that at all. They have a handful of dangerous competitors, all of which are not reliant on the music business.
  - arcanus 8y ago
    > They have a handful of dangerous competitors, all of which are not reliant on the music business. That can be a double edged sword. They can also kill products that are losing money. Apple does not give away much for free. If this is a loss leader I don't see them keeping the service.
    - Xixi 8y ago
      Apple doesn't like not being in control. There are a handful of core use-cases (besides basic phone functionality like calling and texting) of a smartphone that Apple will simply not give control away. Among these I see the browser, music and maps/GPS which is why I don't see Apple divesting from Safari, Maps or Music. I don't think Apple is making much money from Maps, and yet here we are, they keep investing into it. If Apple drops Apple Music, they don't want Spotify to come knocking at the door and say: pay us or we will discontinue Spotify on iOS. Much worse scenario: Google buys Spotify. Apple has been relying on Google Maps before, I don't think they want a re-run...
  - kall1sto 8y ago
    Besides Apple Music I don't see any real competitors right now. Also Spotify's subscriber numbers keep growing rumored to be double of Apple Music's. https://www.statista.com/statistics/244995/number-of-paying-spotify-subscribers/ https://www.statista.com/statistics/244995/number-of-paying-...
ulfw 8y ago
It's hard to fight them or sue them or whatever when you are a part-owner.
ElonMuskTesla 8y ago
You must test Deezer
throwawaymanbot 8y ago
Warner Bros. is either merging or going to be sold. The purchaser may already be part of spotify.
Polyisoprene 8y ago
The major labels invested in Spotify to help kill illegal downloads and control their future during the transition to streaming. Now, with competing services, they want to make sure Spotify doesn’t become dominant and control their future.
- nojvek 8y ago
  The thing I don’t understand is why Spotify has to be the label’s slave. The labels are taking a huge margin from both Spotify who is the distributor and the artist who is the creator. Why can’t Spotify just remove the label as the middle man and give artists a bigger chunk? That would attract artists and Spotify gets to increase their share a bit as well. Isn’t a label just a glorified pimp for an artist?
  - Polyisoprene 8y ago
    For pop music marketing is everything. The major labels are the curators of pop music. Spotify owning/promoting artists would be a big change and it’s probably too early for pure social media promotion. For ambient/classical music Spotify is already doing it. Placing an order on music they believe their subscribers would like from unknown artists.
linkmotif 8y ago
> “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,” he said. How did they come to holding this equity, then? As a music company, are they medium and short term equity holders?
jlv2 8y ago
The linked article appears to have been deleted.
gdubs 8y ago
Tangent but relevant to HN: the book “Fortune’s Formula” touches on information theory, Bell Labs, gambling, and the New York parking lot company that went on to purchase Warner back in the 60s.

158 points by prostoalex 8y ago

deleted 8y ago

[deleted]

tmikaeld 8y ago

Does this mean they won't have the Warner music in Spotify?

patd 8y ago
Probably not in the short term. But I always felt that Spotify having the labels as shareholders was the main guarantee that they would keep their content on the platform. Maybe they'll need to start producing their own original content like Netflix did.
- toomanybeersies 8y ago
  That really wouldn't work though. Most people use Spotify like the radio, they listen to the top 40 chart, or they listen to music they know and love. If Spotify was missing the Warner catalogue, it would be completely neutered. It relies on the fact that I can find 99% of the music I want. Every time an artist or an album gets removed from Spotify, so many people get up in arms about it. Imagine a major label dropping Spotify.
  - toast0 8y ago
    Radio style play gas compulsory licensing. If the user can't pick the music directly, Spotify can play any song, without an explicit license.
    - mywittyname 8y ago
      This undermines the entire purpose of paying for Spotify.
peroo 8y ago
No, this is just business. Sony and Merlin have already sold all or parts of their shares, and are in the process of sharing the windfall with their labels. It's a pretty significant chunk of cash, so if Warner didn't do the same they would look incredibly bad. Broader picture the majors want Spotify to succeed, because the alternative is having the business run by Apple and Google, who only have an ancillary interest in music.

rnd0 8y ago

time to drop my spotify subscription, I see.

bb101 8y ago
What in the article would lead you to make that decision? What would you replace your subscription with?
- rnd0 8y ago
  >What in the article would lead you to make that decision? The fact that Sony has also sold their shares, and Universal is contemplating it. If they see Spotify as failing (even if they don't admit it -as Cooper pointedly denies at the end of the article) then that potentially leads to a situation where Spotify cannot offer content from major labels ...at least not at current prices. >What would you replace your subscription with? I just started a trial with youtube premium, I already have amazon prime. The article mentions a few alternatives to subscribe to if no longer has the music or content I want.
  - jstanley 8y ago
    Why would you preemptively cancel a subscription to a service you presumably like, just because you think you might not like it in the future? If at some time new music stops becoming available, then it would be more reasonable to cancel then. I don't see what you gain out of cancelling it early.
  - hoffs 8y ago
    Nobody mentioned anything about dropping their catalogue from spotify
Torn 8y ago
This is about equity, not about access to music & artists from those publishers
- rnd0 8y ago

sschueller 8y ago

Lawsuit coming up?

yontherubicon 8y ago

I wonder if, perhaps, this is in any way related to Spotify's censorship of Alex Jones (hear me out). Not because of any political agenda on the part of Warner, but because, unlike Apple, YouTube or Facebook, Spotify is a subscription-based content service. Where Apple, YouTube, and Facebook have a significant buffer against Alex Jones' somewhat fanatical fanbase leaving their platforms, Spotify has no such insulation. Spotify has 70 million paying subscribers as of Jan. 2018. Jones has 7.5 million unique visitors to his website, which is a tertiary method of access, behind his radio syndication (secondary) and YouTube and Podcasts (primary)[1]. His podcast peaked at the #9 position on the Itunes podcast chart (Sorry, I had trouble finding download numbers, but given that the top ten podcast publishers had a unique monthly listenership anywhere between 5.2 and 4.3 million, assuming 4.5 million from podcasts is likely reasonable)[2, 3]. And his radio listenership is counted at 5.9 million [4]. On YouTube, he had 2.5 million subscribers and 17.6 million video views [5]. So, assuming that some people are superfans, we can probably assume that his peak reach, among people who sought him out is somewhere in the neighborhood of 18 million. That's ignoring the fact that his podcast with Joe Rogan was the most downloaded podcast ever when it came out (I think it still is. I recall hearing download numbers of that episode in excess of 50 million). We can assume the number of people who actually care enough to boycott a service would be in the neighborhood of 20 million. Assume 30% of those are spotify subscribers. These are the fans. We're not even dealing with the regular conservatives who just heard about it from Limbaugh and Drudge, some of whom may cancel subscriptions on principle. A drop of 5-6 million subscribers will be significant for Spotify, and likely result in a drop in share prices as well, once Spotify announces their next round of subscriber numbers. [1]: https://www.spin.com/featured/the-invisible-empire-of-alex-jones/ https://www.spin.com/featured/the-invisible-empire-of-alex-j... [2]:http://www.itunescharts.net/us/artists/podcast/alex-jones/podcasts/the-alex-jones-show-infowarscom/ http://www.itunescharts.net/us/artists/podcast/alex-jones/po... [3]: http://analytics.podtrac.com/industry-rankings/ http://analytics.podtrac.com/industry-rankings/ [4]: http://www.talkers.com/top-talk-audiences/ http://www.talkers.com/top-talk-audiences/ [5]: https://socialblade.com/youtube/user/thealexjoneschannel https://socialblade.com/youtube/user/thealexjoneschannel EDIT: I forgot to mention that I was talking about the timing of the drop. It's quite clear from the article, given Warner's previous sale of equity, that Warner intended to do this eventually. I was only suggesting that they might have decided to sell at this time because of potential subscriber drop.

KevanM 8y ago

New WarnerMusic app coming up?

shp0ngle 8y ago

From TFA, since people love to react just to a headline: “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,” he said. “This sale has nothing to do with our view of Spotify’s future. We’re hugely optimistic about the growth of subscription streaming, we know it has only just begun to fulfill its potential for global scale. We fully expect Spotify to continue to play a major role in that growth.”

colordrops 8y ago
So why don't they keep the shares of they are so optimistic?
- lemiffe 8y ago
  Potentially for immediate liquidity to invest in multiple new assets? I assume they made quite a bit of profit on their initial Spotify investment.
- m12k 8y ago
  My guess is they probably made the investment in the first place to make sure they were onboard if/when music streaming took off. Now that it's well established, and there are competing services, they are probably better off by not playing favorites and being able to squeeze Spotify when negotiating licenses without harming their own investment (similar to what the movie industry is doing with Netflix).
  - mcny 8y ago
    What stops Spotifyfrom trying to fight back with more tools for recording artists? Find out what artists need and allow them to self publish on Spotify? I imagine recording an album is orders of magnitude cheaper than just the production cost of Westworld or black mirror. I mean just following the Netflix route in general. Is Spotify already doing this?
    - 8y ago

pasta 8y ago

A lot of people in this thread are confused. Selling stock can mean a lot of things. For example: * You need money asap. * You think the stock won't rise so you decide that your investment should return. And from the article it looks like they need the money. Ofcourse we can only guess what they need the money for.

mlthoughts2018 8y ago
For Sony and WMG, it’s such a small amount of money that I’m skeptical of this line of reasoning.

EugeneOZ 8y ago

It's because Spotify doesn't have a button in UI to clean your queue.

ed_blackburn 8y ago

Presumably, they'll get a better yield cashing in and spending it on growing developing acts? Or they'll just return it shareholders and the board gets a hefty slap on the back for a bumper dividend?

AmericanChopper 8y ago
Whether it’s the case or not, I think this point is over looked quite often. Some of the most successful businesses I’ve ever worked for have entirely abandoned profitable verticals to focus on more profitable core business. Opportunity cost is serious business.

slivym 8y ago

I think this is great news. Essentially the message this is sending is that we're now safe from 2 things: We're safe from one record label attaining a controlling share in spotify and using it for vertical integration. We're also safe from 1 music streaming service from becoming a monopoly and being able to jack up prices. This looks like great news for consumers.

kall1sto 8y ago

Spotify is on the best way to become the Google of the music industry. They're doing alot of things right. Not sure if it's the best decision to sell now but i guess the people from warner know what they're doing.

vesak 8y ago
I don't think so. After they went public, they have an actual pressure to make money, and they are not in a good position for that at all. They have a handful of dangerous competitors, all of which are not reliant on the music business.
- arcanus 8y ago
  > They have a handful of dangerous competitors, all of which are not reliant on the music business. That can be a double edged sword. They can also kill products that are losing money. Apple does not give away much for free. If this is a loss leader I don't see them keeping the service.
  - Xixi 8y ago
    Apple doesn't like not being in control. There are a handful of core use-cases (besides basic phone functionality like calling and texting) of a smartphone that Apple will simply not give control away. Among these I see the browser, music and maps/GPS which is why I don't see Apple divesting from Safari, Maps or Music. I don't think Apple is making much money from Maps, and yet here we are, they keep investing into it. If Apple drops Apple Music, they don't want Spotify to come knocking at the door and say: pay us or we will discontinue Spotify on iOS. Much worse scenario: Google buys Spotify. Apple has been relying on Google Maps before, I don't think they want a re-run...
- kall1sto 8y ago
  Besides Apple Music I don't see any real competitors right now. Also Spotify's subscriber numbers keep growing rumored to be double of Apple Music's. https://www.statista.com/statistics/244995/number-of-paying-spotify-subscribers/ https://www.statista.com/statistics/244995/number-of-paying-...

ulfw 8y ago

It's hard to fight them or sue them or whatever when you are a part-owner.

ElonMuskTesla 8y ago

You must test Deezer

throwawaymanbot 8y ago

Warner Bros. is either merging or going to be sold. The purchaser may already be part of spotify.

Polyisoprene 8y ago

The major labels invested in Spotify to help kill illegal downloads and control their future during the transition to streaming. Now, with competing services, they want to make sure Spotify doesn’t become dominant and control their future.

nojvek 8y ago
The thing I don’t understand is why Spotify has to be the label’s slave. The labels are taking a huge margin from both Spotify who is the distributor and the artist who is the creator. Why can’t Spotify just remove the label as the middle man and give artists a bigger chunk? That would attract artists and Spotify gets to increase their share a bit as well. Isn’t a label just a glorified pimp for an artist?
- Polyisoprene 8y ago
  For pop music marketing is everything. The major labels are the curators of pop music. Spotify owning/promoting artists would be a big change and it’s probably too early for pure social media promotion. For ambient/classical music Spotify is already doing it. Placing an order on music they believe their subscribers would like from unknown artists.

linkmotif 8y ago

> “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,” he said. How did they come to holding this equity, then? As a music company, are they medium and short term equity holders?

jlv2 8y ago

The linked article appears to have been deleted.

gdubs 8y ago

Tangent but relevant to HN: the book “Fortune’s Formula” touches on information theory, Bell Labs, gambling, and the New York parking lot company that went on to purchase Warner back in the 60s.