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Sony Music expands commitment to pay through royalties to unrecouped heritage artists

By | Published on Thursday 26 May 2022

Sony Music

Sony Music has announced that it is extending its programme to pay through royalties to artists on unrecouped old record deals, so that any artists who signed those old deals more than 20 years ago will now benefit, with a new group of artists qualifying each year.

When artists sign a conventional record deal, any cash advance they receive and – depending on the deal – possibly some of the other upfront costs incurred by the label are recoupable. That means the label can recoup those costs out of any income generated by the artist’s recordings and usually specifically out of the artist’s share of that income.

The artist will only actually receive new monies in their bank account once all those costs are covered and the artist is said to have ‘recouped’. But plenty of artists never actually recoup.

This meant that when streaming took off and the record industry’s catalogue surged in value, many heritage artists weren’t seeing the benefit of that surge because the new streaming royalties being generated were paying off old unrecouped balances.

This became one of the music industry practices that was regularly criticised as the debate about the streaming economy gained momentum – not least because labels often go into profit on their investment in any one artist long before that artist actually recoups, because the label’s share of recording income is usually significantly larger than the artist’s share.

Some indies had already adopted the practice of writing off unrecouped balances after a period of time – so artists would start getting royalty payments in their bank accounts – but Sony was the first of the majors to announce it would start paying royalties through to any unrecouped artist who signed their deal with the record company and hadn’t received any additional advances since 2000.

That announcement came last June as the UK Parliament’s culture select committee was finishing off its inquiry into the economics of streaming. The move was welcomed by MPs who called on Warner Music and Universal Music to follow suit, which they both did earlier this year.

However, those commitments specifically related to artists signed before 2000. Artist and manager groups – while welcoming said commitments – also said that the majors should make a long-term rolling commitment so that after a set period of time other unrecouped artists would automatically qualify to receive royalties. Which is what Sony has just done.

Sony Music boss Rob Stringer made that new commitment as part of an annual presentation to Sony Corp investors. He told those investors: “At Sony Music Group we take pride in our efforts to be the most creator friendly company in the modern music industry and we will keep searching for the most principled ways to represent our talent”.

“We became the first major company to pay through earnings to many long standing artists and songwriters regardless of any recoupment status”, he added. “And now, we are expanding that effort to include even more qualifying artists who have been signed to us for more than 20 years, by offering eligibility on a rolling basis”.

The new commitment means that unrecouped artists with pre-2001 deals will receive royalties from 1 Jan this year, with a new group of artists becoming eligible for such payments in each subsequent year.

Sony says that thousands of artists and songwriters have benefited from its previous commitment on unrecouped balances, together receiving millions of dollars in new royalties, and thousands more will benefit from this new commitment.

The UK’s Music Managers Forum and Featured Artists Coalition both welcomed the new commitment, with their CEOs – Annabella Coldrick and David Martin – stating this morning: “We welcome the news that Sony Music Entertainment are to disregard unrecouped balances on artists’ accounts on a rolling, annual basis. The policy echoes measures that the FAC and the MMF have long been calling for”.

“It means that every twelve months a new cohort of artists can benefit from the growth in music consumption and finally earn an income from their work”, they add. “Sony’s approach, writing off debt in this way, is the right one, marking a further step towards fairer and more collaborative relationships between labels and artists”.

Warner Music and Universal Music will presumably make similar commitments down the line, though we await to see when exactly.