Daniel Ek has a brand new shareholder to maintain blissful – and it’s one which comes with a repute.
Based on a Bloomberg report, ValueAct Capital Administration introduced at a Columbia College occasion as we speak (February 10) that it has acquired a shareholding in Spotify.
Spotify’s share value was up by roughly 4% in pre-trading on the NYSE this morning following the report.
ValueAct CEO Mason Morfit didn’t affirm the scale of the shareholding. Nevertheless, he mentioned that, in recent times, SPOT’s “working bills and funding for content material exploded”, however that the streaming firm was “now finding out what was constructed to final and what was constructed for the bubble”.
A Spotify spokesperson mentioned as we speak: “We welcome ValueAct as an investor in Spotify.”
What’s notably intriguing about ValueAct’s place in Spotify is that the previous firm has a historical past of nudging firms it invests in in direction of elevating client costs and enhancing margins.
As cited in a observe from William Packer (MD, Media & Web) at BNP Paribas Exane as we speak, ValueAct took a stake in The New York Instances Group final yr and urged it to each reduce prices and lift costs.
Based on a report from Reuters revealed final summer time, ValueAct acquired a 6.7% stake in The New York Instances Group.
Its different investments, in keeping with the ValueAct web site, embrace firms equivalent to Adobe, Microsoft, and Motorola.
Packer’s BNPP observe means that “activist strain at Spotify might speed up plans for the group to lift core music subscription costs which stay under key friends Apple and Amazon“.
Each Apple and Amazon Music have, up to now 4 months, raised their normal premium subscription value within the US from $9.99 to $10.99 per 30 days.
Thus far, nevertheless, Spotify has refused to affix them in doing so.
How a lot leverage San Francisco-based ValueAct must affect Daniel Ek’s technique at Spotify stays to be seen.
Based on Spotify’s newest annual investor report, filed with the SEC up to now fortnight, Ek personally owned 31.7% of complete voting energy at Spotify on the finish of 2022.
His co-founder on the Swedish streaming service (and its former Chairman), Martin Lorenzton, owned 42.6% of complete voting energy.
Ek owned 16.5% of odd shares in Spotify, in keeping with the submitting. Lorentzon owned 11.1%.
The second greatest particular person holder of odd shares in Spotify on the shut of final yr was funding agency Baillie Gifford, which owned a 14.5% stake (see under).
Spotify introduced final month that it will be shedding 500 folks globally.
Daniel Ek wrote in a letter to workers explaining the modifications: “As you might be properly conscious, over the previous couple of months we’ve made a substantial effort to rein-in prices, however it merely hasn’t been sufficient. So whereas it’s clear this path is the appropriate one for Spotify, it doesn’t make it any simpler — particularly as we take into consideration the numerous contributions these colleagues have made.”
“Like many different leaders, I hoped to maintain the sturdy tailwinds from the pandemic and believed that our broad world enterprise and decrease danger to the influence of a slowdown in adverts would insulate us. In hindsight, I used to be too bold in investing forward of our income development.”
Added Ek: “I take full accountability for the strikes that bought us right here as we speak.”Music Enterprise Worldwide