In pulling his music, Neil Young started a conversation about the music industry’s responsibility in keeping Spotify accountable for the controversial, potentially harmful content it exclusively distributes for Joe Rogan. Two of the largest music companies in the world, however — both of whom own stakes in Spotify — don’t seem interested in talking about it publicly.
Spotify has faced controversy for the past several weeks since Young pulled his music from the platform in light of misinformation about Covid-19 on the platform, particularly on Rogan’s podcast. Joni Mitchell followed suit days later, with India Arie also calling for her music to be removed over Rogan’s past use of a racial slur on the podcast. Last weekend, Spotify quietly removed around 70 episodes of the Joe Rogan Experience from the platform, with Rogan taking to Instagram to apologize for racist language he used in the past. Since then, he took to standup and mocked some of the backlash he received both for his use of the slur and misinformation about Covid on his podcast.
So far, have both UMG and Sony have been publicly silent and haven’t issued any statement regarding where their responsibility lies in the issue, and it isn’t clear what the two companies have had with Spotify in light of their place as shareholders. Representatives for both companies declined to comment.
Spotify’s major stock owners have for the most part stayed quiet on the ongoing controversy — and there’s certainly questions to be raised about a lack of shareholder activism at large — but Universal Music Group and Sony Music Entertainment aren’t like most stockholders. A lesser-known fact outside of the music industry is that all the major labels were given stakes in Spotify years ago as part of a licensing agreement back when the streaming service was just a hungry startup. Warner sold its stake in Spotify in 2018 for over $500 million, but Sony and UMG still own their shares. Alongside their status as two of the most significant music rights holders on the platform and representing the music and career interests of some of the biggest stars and most promising upcoming artists in the industry, they’re also significant shareholders in Spotify as a company.
As Billboard previously reported last year, as of the end of 2020, UMG still held about 3.4% ownership in Spotify, while Sony held about 2.85% after selling half its stock in 2018, a number which will have diluted since then. Given Spotify’s current market cap, those shares are worth over $1 billion for UMG and hundreds of millions for Sony.
The music business itself, including the big three record companies and many of the highest earning artists in the industry, remain beholden to Spotify, which represents a major chunk of song royalties in the modern music landscape. Given their reliance on Spotify, it’s unlikely any record company could afford such action as to pull the music off the platform, and it’s unclear how many artists want their music off the platform in general.
And offloading stock may not be the right move either. Spotify’s stock has dipped considerably since last year, and if the stock rebounds, selling low not only cuts the company out of potential earnings, but also impacts how much artists could earn. Sony paid artists directly when it sold half its Spotify stock in 2018, and in part thanks to demands from Taylor Swift when she signed with UMG in four years ago, UMG artists will get the same treatment.
While it isn’t clear what action either label could do, in an era with a premium on standing against misinformation and racism, there’s certainly more that could be said than nothing.