Author: BEN SISARIO / Source: New York Times
In the music industry, one of the biggest issues hanging over Spotify’s arrival on the New York Stock Exchange has been what the major record companies would do with the billions of dollars in equity they held in the streaming service.
One answer became clear on Wednesday, when Sony announced that it had sold 17 percent of its stake in the company for more than $250 million.
The transaction was made on Tuesday, the day Spotify began trading on the exchange, Sony said. Spotify had closed its first day with a market valuation of $26.5 billion.
In Spotify’s early days, record companies viewed the streaming service’s hybrid business model of both free and paid streaming as a potential risk that could undermine the sales of CDs and downloads. So as a condition of granting licenses for their music, the labels received chunks of equity.
As things turned out, sales of CDs and downloads have plunged dramatically in the last few years, although the quick rise of streaming has increased the recording industry’s revenues over all.
What the labels would…
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