What Will Spotify’s Entrance into the Stock Market Mean for the Triangle’s Music Labels? | Music
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Tuesday, April 3, 2018

What Will Spotify’s Entrance into the Stock Market Mean for the Triangle’s Music Labels?

Posted by on Tue, Apr 3, 2018 at 3:34 PM

Spotify went public today, but how that will affect record labels across the worldーincluding those in the Triangleーremains largely unclear.


The world’s most popular music streaming service was preemptively valued at $132 per share by the New York Stock Exchange. But that price shot up to nearly $166 during its stock market debut, which elevated its overall value to almost $30 billion Tuesday, according to CNBC.


Spotify’s entrance as a publicly traded company has opened a dialogue about its relationship with record labels and artists, including those in North Carolina. Currently, the platform remains heavily dependent on partnerships with recording giants. Just four companies own 87 percent of the music on Spotify, according to the Guardian.

The company has frequently generated controversy over some artists' claims that it does not pay enough royalties. A now-famous feud with Taylor Swift ended last summer when Swift finally agreed to place her catalog back on the service. Meanwhile, local recording companies are rarely given such a large platform to negotiate their own terms with the service.


Brendan Greaves, cofounder of Paradise of Bachelors, a small, independent record label based in Chapel Hill, says he’s unsure how Spotify’s decision to go public might alter that power dichotomy.


“There is an obvious lack of parity as far as compensation and control when it comes to the majors versus independents, and I don’t know how that’s going to change,” Greaves explains. “With the infinite choice and options available to listeners, it’s hard to get their attention."

He continues, "They’re creating a very narrowly curated culture that can be tricky to become part of, though we’ve had great luck with Spotify playlisting some of our songs, and it is really helpful.”


Spotify entered the market in an unusual wayーvia a direct listing that does not require a partnership with an investment banking firm. The unorthodox move will streamline the trading process but could increase volatility in Spotify’s market value. It also means that shareholders who currently have a stake in the company can sell directly to the public.


Wilson Fuller, the head of digital at Merge Records in Durham, whose roster has included Arcade Fire, Neutral Milk Hotel, and Conor Oberst, doesn’t believe that Spotify's choice to go public will have much of an effect on independent labels. In particular, Fuller remains skeptical “that the folks buying stock will be any more pro-independent than the existing private leadership.”


That's not to say that Spotify hasn't made an effort to reach out to independent artists in other ways, though, Fuller points out.

"Spotify has consistently gotten better at working with independent partners since their launch, and I certainly expect that to continue," he says.

Despite boasting 157 million users and 71 million paying subscribers, Spotify has yet to turn a profit. That's largely because most of its revenue goes back to the artists and labels whose music is available for streaming on its service.

For companies with deeper wallets like Apple Music and Amazon, those losses aren't as significant. However, a shift by Spotify to focus on more independent artists and labels could loosen the majors’ tight grip on the market.


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