First Sony sold a chunk of its Spotify shares. Then Warner. And now Music Week can exclusively reveal that independent labels rights body Merlin has cashed in its entire equity stake in the streaming giant.
And not only that, it’s already passed on the proceeds to its members – something its major label counterparts are still wrestling with.
"Merlin is an organisation that exists solely to maximise the value of our members’ rights and keeps only the monies that it needs to operate,” Merlin CEO Charles Caldas told Music Week. “It is outside of Merlin’s remit to hold a long-term equity position in a publicly-listed company where there is a liquid and transparent market for that equity. We therefore worked quickly to liquidate our interest in Spotify and have passed the proceeds to our eligible members.”
Merlin did not give details of how much money it realised from the sale, or details as to how it has been distributed. Caldas declined to reveal the size of Merlin's Spotify stake at sale, although it is believed to have originally held a 1% share in the company, although various deals and share options will likely have changed that over time. And Caldas said that Merlin, as one of Spotify’s launch partners back in 2008, has long been prepared for this day.
“Merlin has a long-standing set of policies designed to ensure that the monies realised from a sale such as this (and indeed all our activities) are distributed equitably amongst eligible members,” he said. "Nearly a decade’s worth of usage data from Spotify is currently being processed and will allow us to provide a track-level apportionment to accompany those payments."
Merlin’s situation is somewhat simpler than that of Sony – which has now sold half of its Spotify stake – and Warner in that, as a non-profit organisation, it didn’t have to work out its own share. But with over 800 members representing tens of thousands of labels and even more artists in 53 countries, it still must have been no easy task to divide up the stake. Merlin members will now have the responsibility of sharing the revenues with their artists, likely to be a long and arduous task, but the move again puts the indies body on the front foot, after both Sony and Warner had pledged to share their proceeds with distributed indie labels.
The move also leaves only Universal Music as yet to declare its hand. Music Week revealed last week that sources at the major suggest it has yet to sell any Spotify shares and has no immediate plans to do so.
The sale of equity stakes – and what happens next – has been a hot industry topic ever since Spotify’s successful $25 billion (£18.4bn) IPO last month. Spotify shares have been a stable option since then, closing last week at $156.77 (£115.36), $15 (£11) below its $171.23 (£125.99) high.
To read our article on what the shareholders' differing approaches mean for the music business, click here.