Business News Digital Labels & Publishers

Universal to share Spotify equity loot with artists, Sony with distributed labels too

By | Published on Wednesday 7 March 2018


With Spotify now in the process of listing on the New York Stock Exchange – and with the record companies then able to cash in the equity in the streaming firm they secured as part of their original licensing deals – that big question has been raised once again: who gets to share in all that lovely money?

Why not throw it all in a pot and just have a massive three-day party for the entire music community? Every artist. Every songwriter. Every record producer. Every session musician. Everyone working in this business of music. And, of course, those who diligently write about this nonsense every day of the week. Don’t forget those who diligently write about this nonsense every day of the week. OK, we didn’t really contribute anything. But let’s not forget how diligently we wrote about this nonsense every day of the week.

Actually, I don’t like parties. Can we make it a sit-down dinner? I like sit-down dinners. But not one of those award-show sit-down dinners with tiny portions. A proper decent sit-down dinner. In a big fuck off ballroom. Actually, it’ll have to be really big fuck off ballroom if we’re inviting every artist, songwriter, record producer, session musician, music industry exec and all those people who diligently write about this nonsense every day of the week.

But what a dinner it would be! And then, when this whole streaming malarkey collapses into a sorry mess of broken dreams and bankrupt visions, at least we’ll all have that one night in Prague. We’re having this dinner in Prague, right? I really fancy a trip to Prague. Can we do it in Prague? Maybe wait until it’s summer. Let’s all meet this summer in Prague for the biggest fuck off sit-down dinner and toast the real future of the music industry. The cassette revival.

Anyway, where was I? Oh yes, so the three majors and indie-label repping Merlin all got some equity in the Spotify business when they first licensed their catalogues to the then streaming start-up. If and when they sell that equity, who gets to share the money?

By which we mean, will the artists see a cut? Yes said the indie label community back in 2014 when it launched its Fair Digital Deals Declaration. Well, what it actually said was that labels signed up to said Declaration promised to “account to artists a good-faith pro-rata share of any revenues and other compensation from digital services that stem from the monetisation of recordings but are not attributed to specific recordings or performances”.

Then, in 2016, Warner Music and Sony Music made similar commitments. But what about Universal Music? Despite Sony quickly following Warner’s lead on equity-share with a “of course we’re gonna share it – who ever thought otherwise!” statement, Universal remained silent on the issue. Although off the record it was implied that the mega-major would follow its rivals’ lead. Yesterday that was confirmed when a spokesperson told Music Business Worldwide that “consistent with UMG’s approach to artist compensation, artists will share in the proceeds of a [Spotify] equity sale”.

So that’s all lovely. But hey, here’s a question, what about independent labels distributed by the major labels. Will they get a share of the Spotify loot, so that they can in turn share it with their artists? That’s a supplementary question that hasn’t had an answer to date, and yesterday the Worldwide Independent Network – while renewing its commitment to the aforementioned Fair Deals Declaration – asked it anew.

WIN stated: “All three major labels have committed to sharing revenues from the sales of Spotify shares with the artists directly signed to their companies but WIN has further called on Sony Music Entertainment, Warner Music and Universal Music Group to give the independent labels distributed by them, and therefore those artists they represent, their corresponding share of any payout received”.

This time Sony Music took the lead by answering this second question in the affirmative. Yes, it will share its Spotify equity cash with the labels it distributes. In some way. Or, at least, that is what the major told Billboard yesterday.

Of course, even if Universal and Warner follow suit and commit to share the profits of their Spotify equity sale with both artists and distributed labels, the devil remains – as ever – in the detail. Despite all these commitments, for most artists and managers it remains unclear exactly how any equity sale profits will be shared out.

This all means that, as the Spotify listing finally occurs, there will be lots of scrutiny over what happens to the record industry’s shares and the profits from any share sales. Of course, it would be much easier to just all meet in Prague for one hell of sit-down dinner. Let’s do five courses!

If all this digital licensing shenanigans still seems like a bit of a mystery to you, then what you need to do is buy yourself a copy of ‘Dissecting The Digital Dollar’ – a bargain at just £15 over there on Amazon. And if enough of you buy a copy, I’ll throw us all a dinner in Prague to celebrate. Promise.