Universal Music Group announced the board-approved sale of half its equity stake in Spotify, with a portion of proceeds going to artists. The move fulfills a 2018 pledge and ties back to Taylor Swift's contract negotiations. Lucian Grainge revealed the decision during the company's first-quarter earnings call on April 29.
Universal Music Group chairman and CEO Lucian Grainge stated during Tuesday's earnings call that the company's board had approved selling half of UMG's equity stake in Spotify. A portion of the proceeds from the divestiture will be distributed to UMG artists, in line with their contracts. UMG confirmed in a statement that artists will share in the proceeds, consistent with its artist compensation approach, while the company's share will initially support its buyback program, which Grainge said is doubling in size. The announcement follows a suggestion from investor Pershing Square, whose founder Bill Ackman estimated UMG's full Spotify stake at 2.7 billion euros ($3.1 billion) in an April 7 merger proposal letter, proposing 750 million euros for artists if approved. Pershing's non-binding offer did not proceed, but UMG moved forward independently with the partial sale—no shares have been sold yet, the company noted. This development stems from a March 2018 UMG pledge to share future Spotify divestment proceeds with artists, mirroring commitments by Warner Music Group and Sony Music Group. Taylor Swift, who signed with UMG's Republic Records in November 2018 after leaving Big Machine, negotiated a key clause ensuring such payouts would be non-recoupable. In an Instagram post at the time, Swift wrote: “As part of my new contract with Universal Music Group, I asked that any sale of their Spotify shares result in a distribution of money to their artists, non-recoupable. They have generously agreed to this, at what they believe will be much better terms than paid out previously than other major labels.” The non-recoupable structure addresses industry concerns that payouts might offset artists' outstanding advances. While exact amounts for individuals remain unknown, the sale could yield hundreds of millions of dollars for artists, particularly those with unrecouped balances. Similar initiatives by Warner (benefiting 4,500 legacy artists in 2023), Sony (paying millions to thousands by 2022), and others have cleared such debts.
