Sony starts distributing $750m to artists from Spotify shares sale
All payment is expected to reach the parties by the end of August.
It still owns 862 million worth of Spotify stock. But as its stake is below 5%, it is no longer obliged to divulge if it sells any more stock.
The monies to artists and labels are a straight-out gift, and will not be considered as part of recouped earnings.
Sony has also worked out that certain producers and guests on records are also entitled to some of the money as they helped generate billions of dollars of sales for Sony through the years.
The payments will be divvied up based on the contract deals the major has with artists and distributed labels, and based on a percentage of their earnings (and contributions to the Sony balance sheet) in the past ten years.
This is the period during which Sony held those stocks.
It would seem that Adele who has sold over 100 million records for Sony overseas – in Australia she was until recently with the local indie Remote Control – will benefit greatly from the “Spotify windfall”.
Those with steady catalogue sales as Bruce Springsteen, Bob Dylan and Michael Jackson’s estate would also be getting hefty cheques by the end of August.
Artist managers and labels told Variety that the decision to split the money was totally voluntary and that Sony was not under obligations.
They attribute the gesture to CEO Rob Stringer who is described as “a very stand-up guy, and a guy who does the right thing and is very earnest and he’s taking care of artists,” according to Maverick’s Larry Rudolph, whose management clients include Britney Spears, Aerosmith and Pitbull.
He added about the windfall: “It’s a completely voluntary payment. In other words, had Sony not done this, nobody really could have complained.
“Theoretically, Sony got this equity on its own. But of course, they’ve recognized the fact that they couldn’t have gotten it but for the artists.
“They made a wonderful decision to voluntarily share the wealth, which is rare in the music industry. So, I commend them highly on their decision.”
Analysts say that Sony’s share split is more generous than the method that Warner Music used.
Universal Music Group, which holds $1 billion in Spotify profit from its 3.5% share, has not made public any of its plans.
An earlier statement emphasised: “UMG’s approach to sharing with artists any proceeds of an equity sale also applies to distributed artists and labels, consistent with the terms of their agreements with UMG.”