Big label stakes highlight Spotify's truthiness trouble

This is my truth, tell me yours

By Andrew Orlowski • Get more from this author

Posted in Music and Media, 7th August 2009 13:08 GMT

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Major labels have the largest equity stakes in Spotify, a Swedish computer title reports. The company has previously denied this. But how much will artists see from the deals?

The four major labels - Universal, Warners, Sony, and EMI paid for an 18 per cent share of Spotify's stock. Merlin, the licensing agency backed by the independent sector, also took an equity stake. That's larger than any other single investor.

As with many digital deals, the share returned to artists is unclear.

Brian Message, chairman of the Music Managers' Forum, told El Reg that he was "looking forward concluding discussions where the contracted artists share of the equity position is crystalised'".

Earlier this week, the Financial Times reported that a Hong Kong billionaire was seeking a $50m investment in Spotify - but that would buy a smaller stake than the aggregate major label holding.

Merlin seems pleased with the investment - saying it's confirms interest in independent music once the public has a free choice. Indeed, the indies are well represented with services that return little or no revenue; cracking the more profitable services, where majors seek to exert more control, is more challenging.

But it's a puzzle why Spotify has denied to senior music business figures that there was major label equity in the service. Confirmation that there was equity has come from major label sources.

It's not the first time that Spotify has been less than straight.

In June we exclusively published Spotify's revenues and subscriptions. The company denied they were accurate to a trade publication - but these were Spotify's own numbers. This either means that Spotify is providing inaccurate information to its partners, or it's lying.

Why does it have such a problem telling the truth?

Founders Daniel Ek and Martin Lorentzon own the majority of the stock via Cyprus-based investment vehicles. Ek and Lorentzon are Swedish; the company is registered in Luxembourg. You can read the report from Computer Sweden via MacWorld here. ®

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