Taylor's Impact: Sony Music re-evaluates streaming
Quote:
Taylor Swift's decision to pull her music from Spotify — in large part because of its ad-supported free service — has gotten the attention of another entertainment giant. As reported by The Wall Street Journal, Sony Music chief financial officer Kevin Kelleher said the world's second-largest music company is re-evaluating its approach to streaming services like Spotify.
"Actually, a lot of conversation has taken place over the last week in the light of that," Kevin Kelleher said regarding Swift's disappearance from Spotify. "What it all really comes down to is how much value are the music company and the artist getting from the different consumption methods." Of course, that doesn't mean that the massive amount of music distributed by Sony is going to go away soon, but at the very least the company is unsurprisingly asking the question of what strategy will make it the most money going forward.
I'd just like to add that Sony Music Entertainment artists include One Direction, Pitbull, Calvin Harris and Carrie Underwood. Also Beyonce, Britney Spears, Avril Lavigne, Bruce Springsteen, Christina Aguilera, Kelly Clarkson, Miley Cyrus.
Also if Sony Entertainment are having these discussions, you can bet that UMG and Warner are also doing the same.
According to multiple sources, the major labels now carry a collective ownership share in Spotify of roughy 20%, a multiple of the percentage held in Beats.
The shift is a result of some re-engineering by the major labels on how they profit from streaming services. In the older model, labels focused more on large, upfront guarantees in exchange for the rights to use their valuable catalogs. Rhapsody, for example, has bitterly complained about that approach in the past, but according to a pair of sources close to those deals, that has shifted considerably over the past few years. “[The big recording labels] decided they want equity more than payments, because there’s a market [for acquisition] now,” one source relayed.
“You’re talking about the difference between making millions right now, or billions in a few years.”
On that note, one source pointed to Spotify as a very, very juicy prize, with one target sale price pushing past $10 billion (you know, WhatsApp money).