Spotify’s negotiations with record companies
According to a Wall Street Journal report from August 23, Spotify plans to launch an IPO (initial public offer) next year. However, the report states that the company is currently on a slippery slope when it comes to negotiations with record companies over music streaming and revenue sharing agreements.
According to the report, Spotify currently pays around 55% of its revenue to record companies and artists and “an additional 15% to music publishers and songwriters.” But the report states that the different stakeholders in the music-streaming industry including record labels want Spotify to pay them 58% of its revenues.
Early this year, Spotify had received financing of “$1 billion in convertible debt” from investors, including “TPG, hedge fund Dragoneer Investment Group and clients of Goldman Sachs Group.” According to a Wall Street Journal report from early this year, Spotify had a valuation of $8.5 billion in June 2015.
However, its current negotiations with record companies over revenue sharing and music streaming rights could affect its valuation.