The answer is 6-7%. Fascinatingly, most respondents dramatically overestimated the amount.
For a while, all 3 majors and Merlin (a rights aggregator representing independent labels) had equity totaling close to 18%. But those numbers went down after more investment rounds. Merlin and Warner sold off their equity post-IPO. Sony eventually sold half of its stake.
So now it’s just Universal and Sony that have small stakes in the company. Now, you might ask, “does that mean these companies get 6-7% of my monthly subscription?” It’s complicated, but that’s a different pool of money.
Subscription revenues are divided up with a substantial percentage of revenues going to pay for licensing fees for sound recordings and compositions, based on overall track play count. That used to be about 70%, reports indicate it’s gone down since then, closer to 66-67%.
That 66-67% is divided up between sound recordings (money that goes to labels & artists) and compositions (money that goes to publishers and songwriters.)
Equity isn’t directly about revenue. It’s about the overall company value. Even when a company is profitable, it isn’t necessarily distributing dividends to investors.
Now, a recent WIPO report argued that valuation and other elements should be taken into account when reporting out how much of the benefits of streaming are making it to artists. @UMAW_ did a good job of summarizing that here: unionofmusicians.org/un-report
Rolling Stone had a good report last year on who actually owns Spotify. rollingstone.com/pro/news/who-r… (note that there may be a tiny bit extra label ownership via label stakes in Tencent.)
Finally you might ask “does that mean that the major labels have 6-7% control over how Spotify works, how it’s structured and how it operates?” The answer is “not directly”. As Rolling Stone reported, voting power is allocated differently among shareholders from ownership.
At the time of the RS report, Spotify founders Daniel Ek and Martin Lorentzon had 77% of voting power. Labels may still have some leverage because they control valuable catalog that Spotify needs. But at this point, they absolutely depend on Spotify for access to audiences.
One reason this matters: there’s sometimes an assumption that aspects of Spotify that indie artists don’t like must be because major labels want it that way. It’s an easy assumption to make, but it overstates how much control majors actually have over Spotify decision making.
For example, major labels today generally don’t like payola systems like Spotify’s Discovery mode! They are better able to make things work in environments where payola exists than indie labels and self released artists, but that doesn’t mean they appreciate the practice!
None of this is to let major labels or any other industry player off the hook. But understanding who really wields power and where helps us find places where common ground can be found. One of those places: nearly everyone agrees that payola sucks!

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More from @future_of_music

12 Aug
Guess how much of Spotify's equity is owned by major labels right now (no cheating)
The answer is around 6-7%. Most of y’all were way off!
Major labels do have a lot of power in the industry. So do large technology firms. The specifics of where that power lies and how it’s leveraged are extremely important in figuring out the right solutions.
Read 4 tweets
11 Aug
Sometimes people look at the challenges artists, songwriters, and indie labels face in trying to earn sustainable revenues from recorded music and conclude "copyright is broken." Let's unpack that with a quick THREAD. #FixStreaming 1/?
"Copyright is broken" is an attractive bumper sticker; it expresses legitimate frustrations that might be felt by creators, audiences, etc. But it doesn't do much to advance understanding of the situation we're all in. 2/
To begin with, it's binary. It imagines copyright (a system that has evolved over hundreds of years that encompasses laws, abstract concepts, real-world practices, institutions) as something that can either be broken or unbroken. 3/
Read 26 tweets
20 Feb
Much of the chatter about Twitch and Metallica and copyright is getting the facts and the history wrong. Quick thread.
The short version is that people are confusing the DMCA itself with particular companies' choices about how to implement the DMCA. That works to the benefit of huge companies like Amazon (owner of Twitch); they end up escaping scrutiny.
Jeff Bezos is worth $197 Billion. Twitch can afford to pay for music licensing! And any artist who controls their own publishing has the ability to waive their exclusive rights if they want to perform their own material and don't mind that the service isn't paying them.
Read 22 tweets
20 Feb
This is a really interesting small study on what's working with music livestreams. It's also a good example of how to present research. (quick thread) nmbx.newmusicusa.org/livestream-com…
First, the study acknowledges its limitations up front. It's a quite small sample size, and a specific group of respondents whose experience may not be representative of broader populations.
Importantly the authors make an effort to identify gaps in the data: "none of the respondents identified as disabled/having a disability ...we do not have the perspective of anyone who is blind/low vision or deaf/hard-of-hearing [... ] trying to navigate livestreams."
Read 6 tweets
1 Jan
The @FCC was required to release its Communications Marketplace Report before the end of 2020. Congress requires the agency to assess what's happening in the competitive landscape every 2 years. So they did, late yesterday. (THREAD) docs.fcc.gov/public/attachm…
This is the first time the report has been prepared by the FCC's new office of Economics and Analytics. FCC staff put a lot of work in, and it's useful to have this data publicly available, but there are some real problems, as noted by both @JRosenworcel and @GeoffreyStarks.
The report centers economics but comes up short on analysis. Most of the data comes from industry or investment banking firms. When they're the ones funding the research, the research reflects the questions they're interested in.
Read 24 tweets
11 Dec 20
There’s a new bill that harmonizes penalties for illegal streaming services with penalties for illegal download services. FMC has long supported harmonization while wanting to make sure policies don’t have unintended consequences. So how is this bill?
Turns out, it’s pretty narrowly tailored to deal with truly bad actors! Even more narrow than previous attempts to deal with the problem. Unfortunately one of the problems with internet policy is that rhetoric gets heated.
The last couple times bills dealing with these issues were floated, some people made outlandish and frankly dishonest claims, like that it would have sent Justin Bieber to prison.
Read 4 tweets

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