
Warner Music Group Sells Entire Stake in Spotify - prostoalex
https://variety.com/2018/biz/news/warner-music-group-sells-entire-stake-in-spotify-1202897605/
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shp0ngle
From TFA, since people love to react just to a headline:

“Just so there won’t be any misinterpretation about the rationale for our
decision to sell, let me be clear: We’re a music company, and not, by our
nature, long-term holders of publicly traded equity,” he said. “This sale has
nothing to do with our view of Spotify’s future. We’re hugely optimistic about
the growth of subscription streaming, we know it has only just begun to
fulfill its potential for global scale. We fully expect Spotify to continue to
play a major role in that growth.”

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colordrops
So why don't they keep the shares of they are so optimistic?

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m12k
My guess is they probably made the investment in the first place to make sure
they were onboard if/when music streaming took off. Now that it's well
established, and there are competing services, they are probably better off by
not playing favorites and being able to squeeze Spotify when negotiating
licenses without harming their own investment (similar to what the movie
industry is doing with Netflix).

~~~
mcny
What stops Spotifyfrom trying to fight back with more tools for recording
artists? Find out what artists need and allow them to self publish on Spotify?
I imagine recording an album is orders of magnitude cheaper than just the
production cost of Westworld or black mirror.

I mean just following the Netflix route in general. Is Spotify already doing
this?

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seventhtiger
Publishers do more than deliver music to the audience. They do market
research, facilitate collaboration, fund production, and they promote the
music.

Even if musicians can reach the audience directly, which they already could
for some time now, they benefit a lot from a publisher that creates
opportunities and handles business while they focus on making music. Too many
good indie musicians are just a publisher away from success.

~~~
calgoo
There are also many publishers who are horrible people, lock people into huge
contracts where they basically kill the artist off by forcing them to produce
crap. There is a need for another change in the music industry, removing the
need for the big publishers and handing power back to the creators.

I agree we need new tools to replicate the other tasks that the producers do
apart from funding production / studio time. The question becomes if we have
reached a time when having a good twitter/snapchat/facebook profile is enough
to promote an artist.

Then there is the question of what an artist/creator actually needs to earn to
be successful. Is it enough to live on, provide for your family, and let you
save for retirement? Does your goal really need to be to become a mega-star
making millions?

Its my opinion that if we reduce the expectancy of the artist/creator to more
of a "standard" earning level, then there might not be as much need for the
big producers? It might also make artists happier by giving them the option of
being creative without as much control of outside forces.

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Polyisoprene
The major labels invested in Spotify to help kill illegal downloads and
control their future during the transition to streaming. Now, with competing
services, they want to make sure Spotify doesn’t become dominant and control
their future.

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nojvek
The thing I don’t understand is why Spotify has to be the label’s slave. The
labels are taking a huge margin from both Spotify who is the distributor and
the artist who is the creator.

Why can’t Spotify just remove the label as the middle man and give artists a
bigger chunk? That would attract artists and Spotify gets to increase their
share a bit as well.

Isn’t a label just a glorified pimp for an artist?

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Polyisoprene
For pop music marketing is everything. The major labels are the curators of
pop music. Spotify owning/promoting artists would be a big change and it’s
probably too early for pure social media promotion.

For ambient/classical music Spotify is already doing it. Placing an order on
music they believe their subscribers would like from unknown artists.

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pasta
A lot of people in this thread are confused.

Selling stock can mean a lot of things. For example:

* You need money asap.

* You think the stock won't rise so you decide that your investment should return.

And from the article it looks like they need the money.

Ofcourse we can only guess what they need the money for.

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mlthoughts2018
For Sony and WMG, it’s such a small amount of money that I’m skeptical of this
line of reasoning.

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slivym
I think this is great news. Essentially the message this is sending is that
we're now safe from 2 things: We're safe from one record label attaining a
controlling share in spotify and using it for vertical integration. We're also
safe from 1 music streaming service from becoming a monopoly and being able to
jack up prices. This looks like great news for consumers.

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ulfw
It's hard to fight them or sue them or whatever when you are a part-owner.

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KevanM
New WarnerMusic app coming up?

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linkmotif
> “Just so there won’t be any misinterpretation about the rationale for our
> decision to sell, let me be clear: We’re a music company, and not, by our
> nature, long-term holders of publicly traded equity,” he said.

How did they come to holding this equity, then? As a music company, are they
medium and short term equity holders?

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kall1sto
Spotify is on the best way to become the Google of the music industry. They're
doing alot of things right. Not sure if it's the best decision to sell now but
i guess the people from warner know what they're doing.

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vesak
I don't think so. After they went public, they have an actual pressure to make
money, and they are not in a good position for that at all. They have a
handful of dangerous competitors, all of which are not reliant on the music
business.

~~~
arcanus
> They have a handful of dangerous competitors, all of which are not reliant
> on the music business.

That can be a double edged sword. They can also kill products that are losing
money. Apple does not give away much for free. If this is a loss leader I
don't see them keeping the service.

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Xixi
Apple doesn't like not being in control. There are a handful of core use-cases
(besides basic phone functionality like calling and texting) of a smartphone
that Apple will simply not give control away. Among these I see the browser,
music and maps/GPS which is why I don't see Apple divesting from Safari, Maps
or Music.

I don't think Apple is making much money from Maps, and yet here we are, they
keep investing into it. If Apple drops Apple Music, they don't want Spotify to
come knocking at the door and say: pay us or we will discontinue Spotify on
iOS. Much worse scenario: Google buys Spotify. Apple has been relying on
Google Maps before, I don't think they want a re-run...

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ed_blackburn
Presumably, they'll get a better yield cashing in and spending it on growing
developing acts? Or they'll just return it shareholders and the board gets a
hefty slap on the back for a bumper dividend?

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AmericanChopper
Whether it’s the case or not, I think this point is over looked quite often.
Some of the most successful businesses I’ve ever worked for have entirely
abandoned profitable verticals to focus on more profitable core business.
Opportunity cost is serious business.

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gdubs
Tangent but relevant to HN: the book “Fortune’s Formula” touches on
information theory, Bell Labs, gambling, and the New York parking lot company
that went on to purchase Warner back in the 60s.

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tmikaeld
Does this mean they won't have the Warner music in Spotify?

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patd
Probably not in the short term. But I always felt that Spotify having the
labels as shareholders was the main guarantee that they would keep their
content on the platform.

Maybe they'll need to start producing their own original content like Netflix
did.

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toomanybeersies
That really wouldn't work though.

Most people use Spotify like the radio, they listen to the top 40 chart, or
they listen to music they know and love.

If Spotify was missing the Warner catalogue, it would be completely neutered.
It relies on the fact that I can find 99% of the music I want. Every time an
artist or an album gets removed from Spotify, so many people get up in arms
about it. Imagine a major label dropping Spotify.

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toast0
Radio style play gas compulsory licensing. If the user can't pick the music
directly, Spotify can play any song, without an explicit license.

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mywittyname
This undermines the entire purpose of paying for Spotify.

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jlv2
The linked article appears to have been deleted.

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EugeneOZ
It's because Spotify doesn't have a button in UI to clean your queue.

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sschueller
Lawsuit coming up?

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rnd0
time to drop my spotify subscription, I see.

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bb101
What in the article would lead you to make that decision? What would you
replace your subscription with?

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rnd0
>What in the article would lead you to make that decision?

The fact that Sony has also sold their shares, and Universal is contemplating
it.

If they see Spotify as failing (even if they don't admit it -as Cooper
pointedly denies at the end of the article) then that potentially leads to a
situation where Spotify cannot offer content from major labels ...at least not
at current prices.

>What would you replace your subscription with?

I just started a trial with youtube premium, I already have amazon prime. The
article mentions a few alternatives to subscribe to if no longer has the music
or content I want.

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jstanley
Why would you preemptively cancel a subscription to a service you presumably
like, just because you think you _might_ not like it in the future?

If at some time new music stops becoming available, then it would be more
reasonable to cancel then. I don't see what you gain out of cancelling it
early.

