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IMMF on major labels’ equity share commitment: “It’s how you share that makes it fair”

By | Published on Thursday 11 February 2016

Volker May

Following last week’s announcement from Warner Music and Sony Music that the majors will share the profits from the sale of their equity in Spotify – if and when that occurs – with their artists, Volker May of the International Music Managers Forum has called for more clarity on quite how such a profit share would be organised.

Although last week’s news regarding what the two majors will do when they cash in their Spotify shares was good news for the artist community, it also put a new spotlight on the biggest issue that dominates every label/artist relationship in 2016: transparency. It’s not yet clear exactly how any Spotify equity money would be shared between label and artists, and ultimately that’s the key. Or in May’s words, “It’s how you share that makes it fair”.

Noting last week’s Warner and Sony announcements, he says: “Whilst this is most welcome, managers have expressed concerns over the vague use by labels of terminology such as ‘profits’, ‘surplus’, ‘net proceeds realised’ and even the variously defined buzzword ‘breakage’. At a time when transparency is at the forefront of creators’ concerns, these unclear, unfocused distractions do not serve to progress discussions concerning artists’ entitlements or labels’ duties of care and trust”.

Reckoning that legal and PR pressures were always going to force the majors to follow the indie labels’ lead and pledge to share the profits of their streaming service equity sales, May goes on: “The problem [indie label repping] Merlin, Universal, Sony and Warner have is not IF they will share this money with artists, but HOW they or their labels will share it. We are waiting for the first label group to comprehensively say how it will develop an appropriately defined mechanism that is fair to all concerned for sharing this money with artists”.

In his statement, May then asks an assortment of questions about that mechanism, including whether artists signed since the major got its equity will benefit, and whether equity profits will be shared based on number of streams or some other form of weighting?

He goes on: “We don’t feel as artists and artist representatives that we have the entirety of experience to create the perfect weighting system on our own, but then again neither would the labels, without first holding a wide debate with artists and their representatives, and also seeking expert external advice. Merlin and the Worldwide Independent Network have made some progressive and encouraging moves towards tackling the problem of sharing money and have engaged expert external advice”.

Concluding, he says: “We urge all label groups involved to participate in a community debate, to frame guidelines for a fair template for sharing money across a catalogue. A widely accepted template would be used as a basis for future opportunities like equity sales but also for other scenarios, and would save record companies a lot of PR and legal anxiety reducing tensions between artists and their labels”.

All of this, of course, links into the wider issue of transparency – or a lack thereof – which was very much raised by the UK’s Music Managers Forum in the ‘Dissecting The Digital Dollar’ report last year, which sets out to explain how streaming services are licensed, and the specific questions artists and managers need to ask. Transparency will also be a key topic at this year’s CMU Insights @ The Great Escape conference, more details on which here.