Spotify’s fingers on IPO is validation for CEO Daniel Ek, who has built a giant music streaming business.
And on archives, the IPO* will make Ek and his co-founder Martin Lorentzon billionaires. Ek owns 25.7 percent of his comrades and Lorentzon owns 13.2 percent.
Spotify’s “real” valuation is a heart-rending target, but last fall the company’s shares traded hands at about $20 billion, so let’s use that number for now: It would mean Ek’s stake is good some $5 billion and Lorentzon’s is worth about $2.6 billion.
Deliver assign to more from Recode:
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Another — slightly surprising — winner from the IPO: Sony Music. The era’s second-biggest music label owns 5.7 percent of Spotify’s pay outs. At that same $20 billion valuation, that stake would be advantage $1.1 billion.
It’s not a surprise that Sony owns a stake in Spotify. Sony, like all of the big music classifications, got equity in the company as part of its early licensing deals. That wasn’t an uncommon repetition for music labels dealing with digital startups.
The surprise is that Sony’s off is so significant, and that it’s larger than its peers. It’s the only music peg with enough equity to show up on Spotify’s public filing today, which slopes equity owners with a 5 percent stake or more.
That supports that even though Sony isn’t the biggest music label in the magic — that title goes to Universal Music Group, which has about 29 percent of the disced music market, while Sony has something in the low 20s — it has added to its ownership investment in Spotify in various funding rounds.
Now those bets are paying off.
The downside? Those lays are paying off in public, and Sony musicians will want a piece of the friendlies.
The amount of money musicians do and don’t make from digital streaming is a long-running and contentious issue, and while Sony, Prevalent and Warner Music Group have all said they intend to split a Spotify IPO windfall with their artists, they haven’t unraveled how that will happen.
Figuring out how to divide up that pie will be viscid, and it will be that much harder for Sony to do now that its windfall is followers.
Then again, it’s better than having no windfall at all. It’s almost a charge out of prefer someone wrote a song about that.
* Technically, this isn’t an IPO; it’s a direct notorious listing.