Norwegian UN Peacekeeper reacts to news that The Verge thinks $25 million dollar advance for streaming rights to 25% of music market is a lot of money. Photo by Русский: Фото: Михаил Евстафьев English: Photo: Mikhail Evstafiev (Mikhail Evstafiev).
The UN announced today that it is airlifting calculators, music industry textbooks and clues to Silicon Valley tabloid tech blog The Verge. This was prompted by an article published by The Verge that seemed to completely misunderstand the scale of revenues generated by the recorded music business (even with widespread piracy). As a result The Verge missed the real story contained in the leaked Spotify-Sony contract: Sony gave away streaming rights to our music for (pardon the pun) a song!
Sony represents about 25% of worldwide recorded music revenue. In 2011 (the date of contract) recorded music revenue was around 16 billion dollars. Sony’s share was actually higher then but we can safely assume they were responsible for approximately $4 billion dollars. So the $25 million over 2 years (or $43 million if you optimistically interpret the contract like The Verge) is a pittance for these rights. The Verge then made a big fuss about whether this advance was likely to be properly credited to artist accounts. But that’s missing the point because everyone knows the real payout was probably in the Spotify stock that Sony, key managers, artists and executives received. Now, that’s the story. How is the equity to be credited to artists? Not the $25 million. That’s chump change.
Now I understand how The Verge may have missed this. They consulted the MySpace of music industry experts, Rich Bengloff for comment. Bengloff who is highly unlikely to look kindly on his former employer Sony Music, piled on saying that Sony artists were unlikely to receive any of this advance. What Bengloff didn’t note was that the “indie” labels that he represents are also unlikely to share these advances with artists either.
Finally here is another clue for The Verge: Does Sony Entertainment CEO Michael Lynton (not Sony Music chief Doug Morris) have some sort of special (investor?) relationship with Spotify’s Daniel Ek? Might this have something to do with what looks like a remarkably good Sony catalogue deal for Spotify?
I mean I’m just guessing here but has anyone bothered to search the Wikileaks archive for some keywords? I dunno… different combinations of “Spotify, Lynton, Daniel, wife, manuscript?”