Warner Music CEO Steve Cooper on giving artists $126m from Spotify equity, and the company’s bright future

Warner Music Group (WMG) has about US$26 million to distribute to its artists around the world as part of their royalty statements issued through this month and in September.

“During this last quarter, we sold our entire stake in Spotify, realizing $504 million in proceeds,” revealed Steve Cooper, WMG’s CEO on a quarterly earnings call.

WMG was the first major to announce, in February 2016, that it would share proceeds from equity in streaming services with its artists.

Distributed labels are eligible if terms in their deals call for it.

Cooper was quick to emphasise that jettisoning its stake in Spotify did not in any way suggest a lack of confidence in the Swedish company’s prospects.

He said, “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.

“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 fulfil its potential for global scale.

“We fully expect Spotify to continue to play a major role in that growth.”

WMG’s total revenue for the three months ended June 30 was $958 million, up 4.5%, or 1.9% in constant currency.

Digital provided $576 million of that, now representing 60% of its income. The figure was 54% this time last year.

Streaming accounted for $448 million (up 22% from Q3 in 2017) and now represents for 56% of total revenue.

Streaming has, over the financial year, made $1.26 billion.

Revenue from physical music sales and mechanical revenue continued to decline.

Warner Music business grew in the US, Asia and Latin America but declined in Europe.

Cooper said, “Amazing new music from our artists and songwriters and great execution from our global operators have driven our year-to-date revenue up 12%, or 7% in constant currency.

“While streaming continues to fuel our growth, we are exploring a wide array of creative and commercial opportunities in order to position ourselves for long-term success.”

In this quarter, publishing revenue did better than the recording, rising 6% (3.9%)in comparison to recorded music.

Cooper noted of the future: “While Apple and Spotify continue to grow their global subscriber numbers, Amazon and YouTube are both off to a great start with their premium services.

“This increased competition is good news for our business, and we’re happy to see other large tech companies, such as Facebook, begin to recognize the true value that music brings to their platforms.

“We believe it’s hugely positive that, in today’s world, artists and songwriters have more choice, as well as more control over their careers.

“In such a world, we’re uniquely positioned to help creative talent navigate increasingly complex ecosystems to unlock their biggest opportunities.

“We’re one of the few companies that can offer artists and songwriters global impact across all platforms, services and geographies.”