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SPOTIFY PROFIT PAYOUTS: WHAT’S THE FAIREST WAY TO RECOMPENSE ARTISTS?

MBW-  The following blog comes from the CEO of the UK-based Music Managers Forum, Annabella Coldrick (pictured). She dissects the different ways that major and independent labels are distributing proceeds from Spotify share sales – and ponders what it all might mean for the lump sum coming from Facebook…

 

For the artist and management community, the most controversial element of Spotify’s transition to a publicly traded company was how (and if) the three majors and Merlin-member labels would share the proceeds from sale of their equity holdings. 

These stakes were agreed as far back as 2008. At the time, music streaming was in the earliest stage of adoption (Spotify gets a mere two mentions in the IFPI’s 2009 Digital Music Report) and, although there were sensible rationale for the largest rights holders to demand equity, a lack of transparency surrounded these arrangements and the basis on which they were agreed. 

We now inhabit a different world. Streaming has evolved into the record industry’s dominant revenue stream (IFPI reported a 41.1% increase in streaming revenue in 2017) and Spotify the dominant global service. 

The Music Managers Forum has consistently argued that, if the combined value of all repertoire / market share was used as a means to secure equity stakes, then morally it should be shared with all artists regardless of previous commercial arrangements. 

“ESSENTIALLY, WE’RE TALKING ABOUT MAKING THE UNATTRIBUTED ATTRIBUTABLE. THERE’S A LOT TO UNTANGLE.” 

In other words, the ideal scenario would be to treat these divestments as a one-off payment – from which all artists would gain. This is not, of course, a process without challenges. Essentially, we’re talking about making the unattributed attributable. There’s a lot to untangle. 

At the MMF we understand that equity payouts are not that easy to calculate, particularly if artists and labels have changed business partners over the term the equity was held. In practice, it will likely be impossible to make distributions to everyone’s agreement. 

We also think it’s important to manage expectations. Although the overall sums are large, when divided between thousands of artists they are unlikely to constitute a retirement fund. 

However, if these deals were made on a broad-brush basis of ‘market share’ then, arguably, they should be returned to the widest cross section of artists – regardless of whether they’re still signed to a label, or whether they’re signed to a label distributed by another label. That would seem fair to those whose music was traded for equity in the first place. 

Since April, a clearer picture is now emerging of what’s likely to happen. Or at least a little clearer. 

So, what do we know? 

Sony wrote to artist and managers in June saying they would also be sharing net proceeds of the $750m equity they have divested so far (half their holding) minus the actual costs related to acquisition and sale on a royalty basis, using an illustration of their US standard 16% royalty with deducted producer royalties. 

Post Malone Breaks First-Day Streaming Record Set By J. Cole's "KOD"

HNHH- 

"Beerbongs & Bentleys" is doing big numbers out the gate. 

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