Spotify has recently made its debut on the New York Stock Exchange, being listed at a price of $165.90 per share. The streaming service now has a market cap of just under $30 billion, which is quadruple what the company was valued at after its last round of funding. The biggest question is how will the artists who make this business possible be affected?
The Swedish audio streaming company Spotify gave away a large portion of its equity to major record labels as a negotiation tactic to gain access to the US market back in 2011. There are apparent issues with that arrangement and in 2015, the major labels individually vowed that they would compensate artists in the event that Spotify were ever traded publicly.
Now that Spotify is trading on the New York Stock Exchange, the majors continue to insist that artists will get a piece of the pie from the streaming company's listing debut. Currently, the three major labels that hold hold billions of dollars worth of Spotify equity are offering a lot of promises absent of many important details.
It is beginning to appear that the labels will only give artists a piece of that Spotify equity if they ever decide to sell their shares. This could happen in the very near future especially if major artists start putting the pressure on the labels for answers and clarity.
When this goes down it is likely that seems likely that some amount of cash will be distributed by the major record companies to the artists according to a formula that is currently a work-in-progress.
It should be interesting in the coming weeks and months to see how thats tale unfolds...