I am going to explain this without vitriol or bias, just facts. This is the most important post I have ever written.
Musicians usually don’t have a background in finance, many others in the music business don’t either. In any career that takes extreme focus, like music, or even physicians, you just don’t have time to learn other things.
That’s why guitar players and doctors are in the same boat. They master their field but become easy targets to get taken.
This entire push on Spotify is not to save the music business, or give you a platform to be discovered, or give you hope. It is 100% an IPO play, nothing more.
And in that IPO play, the labels, name artists, managers, etc., all have the same end game and that is to cash out on the IPO.
The three major labels – Universal, Warners, Sony, have an 18 per cent share of Spotify’s stock.
Merlin, the licensing agency backed by the independent sector, also took an equity stake.
The end game here is not to fix the music business, it is to cash out on the IPO.
For those who don’t understand IPOs:
Initial public offering (IPO) or stock market launch is a type of public offering in which shares of stock in a company usually are sold to institutional investors (that price the company receives from the institutional investors is the IPO price) that in turn sell to the general public, on a securities exchange, for the first time.
Through this process, a private company transforms into a public company. Initial public offerings are used by companies to raise expansion capital, to possibly monetize the investments of early private investors, and to become publicly traded enterprises.
A company selling shares is never required to repay the capital to its public investors. After the IPO, when shares trade freely in the open market, money passes between public investors.
Being transparent, I am heavily invested in Alibaba. The recent IPO of the Chinese Internet giant was the largest in history, raising over 24 billion dollars on the first day of the IPO. The IPO number was $68.00 per share. The IPO opened to the public at $92.70, it is currently trading at $114.56 per share.
The original people who had equity in Alibaba, like Yahoo and Softbank, made billions of dollars the day of the IPO. In fact, the IPO made Jack Ma the richest man in China and Masayoshi Son the richest man in Japan, on the same day.
The only way the Spotify equity holders can make their fortune is to get all of you to believe the hype, believe it’s the answer. They need you to buy into it so they can run an IPO and cash out.
It’s all a game and all a lie.
I hate to admit this, but it’s true. When we trade stocks, we don’t care about the health of the company, the future of the company, we care about one thing, the profit on moving around shares.
It’s an evil game, and yes I play it, but my family’s future is more important to me than anything else.
To be honest, if I could take a pre IPO equity position in Spotify, I would. If I could get “friends & family” pre IPO shares, I would.
It’s instant money, instant profit.
You’re being fooled and I really wish you would pass this information around.
Spotify will get it’s IPO eventually, and everyone with equity will cash out big.
You will still be left with a decaying music business.
Jack Ponti, November 9, 2014
About the author
Jack Ponti is an American musician, songwriter, record producer, manager, label executive, and consultant (with an estimated 100 million plus records sold worldwide). Jack Ponti posted this November 9 on a closed Facebook Group called “So You Really Want To Learn About The Music Business?” and asked the group members to spread his post. (Screenshot at the end of the page)
Summary of links added in the text
FYI, these links were added by myself (not the author) for those seeking further information or proof.