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Beatport to pay “trapped” royalties this week

By Andy Malt | Published on Monday 10 August 2015

Beatport has said that it will pay “trapped” royalties to labels this week, after saying last week that money would be delayed indefinitely while parent company SFX Entertainment is taken back into private ownership. It has also denied that preferential treatment was given to the major labels, although admitted that they had already been paid royalties due from quarter two this year.

As previously reported, in a memo last week Beatport told label partners that SFX’s “going private process” had “trapped certain earned label payments”, adding that it hoped to be able to release that money in a few weeks time when this process is completed. Though as it had previously been suggested that the buy-back could take until the end of the year, labels weren’t filled with huge amounts of confidence.

For dance music focussed labels, Beatport is a significant source of income, and with many of those companies running on tight cashflow, a gap in payments could cause significant problems. As a result, several distributors committed to advance royalties owed by Beatport.

But in a new letter late last week – published by US distributor Symphonic – Beatport announced that it would now be paying all delayed royalties this week, following negotiations with the still relatively new Association For Electronic Music trade body.

“We deeply regret any hardships this delay has placed on members of the creative community”, said the company. “Especially independent labels and artists, who are the lifeblood of electronic music culture and who have been long standing partners and suppliers to Beatport since 2004. We are truly sorry this has happened, and that we allowed payment distribution to get caught up in unrelated matters”.

It also admitted that the major labels had been paid on time, but said that this was not due to preferential treatment, adding that some indies had also received their money before payments were put on hold.

“While the majority of payments were delayed, some payments were made before the hold went into effect, and those included payments to major labels and some labels participating in the new Beatport streaming service. This was not preferential treatment in any way, but we understand how the optics may illustrate just the opposite”.

After closing by grovelling that “Beatport is nothing without creative partners”, head of SFX Robert Sillerman also apologised, saying: “I regret that unrelated elements made Beatport delay some payments for the first and only time in its more than ten year history. The way we handled this was inexcusable and should never have happened. The thousands of creators who have made Beatport what it is today deserved better, and I am deeply embarrassed, both personally and professionally, by what has happened”.

AFEM CEO Mark Lawrence added: “It’s been a difficult and delicate few days leading up to this positive outcome. I can’t commend Beatport enough for the way in which they have handled the resolution and I am pleased that AFEM was able to support both its member labels and Beatport”.

Meanwhile, SFX is still awaiting confirmation from Sillerman that he actually has the funds to buy back publicly held shares in the company. There also remains confusion over why one recent new investor suddenly sold its shares to another of Sillerman’s companies at almost a dollar per share less than the proposed buy-back price.