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Warner Music says 4500 artists benefiting from unrecouped advances programme, though no extension of the scheme yet

By | Published on Friday 27 January 2023

Warner Music

Warner Music says that 4500 music-makers have benefited from its commitment a year ago to start paying through royalties on pre-2000 record deals where the artist has yet to recoup. However, the major has not extended that commitment so that it applies to old deals on a rolling basis.

Under conventional record deals, labels can recoup any advances paid to an artist – and often some other upfront costs too – out of the artist’s share of income generated by their recordings. Which means that the artist won’t receive any new money into their bank account until all of those recoupable costs have been covered.

With streaming greatly boosting the value of the record industry’s catalogue recordings, many in the artist and management community began arguing that unrecouped balances should be written off after a certain time period so that all heritage artists can share in that boost.

After all, they argued, because artists usually get a minority share of the money their recordings generate, a label often goes into profit on its investment in any one artist long before that artist ‘recoups’.

Some indies – most notably the Beggars Group – already had a policy of writing off unrecouped balances after a period of time. Then, in 2021, Sony Music announced it was introducing a similar policy, paying through royalties to unrecouped artists who signed their original deals before 2000.

That commitment came towards the end of the UK Parliament’s inquiry into the economics of music streaming. MPs welcomed that development and urged Warner Music and Universal Music to follow Sony’s lead. Which they both did last year via their respective Environment Social And Governance reports.

It’s in its latest Environment Social And Governance report that Warner provides an update on its ‘legacy unrecouped advances programme’. It says: “In 2022, we launched our legacy unrecouped advances programme, meaning we no longer apply unrecouped advances to the future royalty earnings of eligible artists and songwriters who signed with us before 2000 and didn’t receive an advance during or after 2000”.

“In its first year”, it goes on, “the programme has seen approximately 4500 artists and related producers benefit globally, and we expect this number to grow as we connect with all eligible participants. We’ve also begun to reach out to Warner Chappell Music songwriters who could benefit from this programme, with over 1600 accounts eligible globally”.

Which is all great, although last year Sony stepped up its commitment in this domain by saying it would pay through royalties to any unrecouped artist who signed their record deal more than 20 years ago, thus ensuring that a new batch of heritage artists benefit from that commitment each year. But currently Warner’s commitment still only applies to pre-2000 deals.

Artists and managers are also calling on the majors to follow the Beggars Group with another artist-friendly commitment, which is to pay a minimum modern royalty rate across their catalogues. Some labels, including the majors, generally pay heritage artists whatever the CD royalty rate was in their old record contracts on streaming income, which is usually considerably lower than the streaming rate that an artist would expect in a new record deal.

The majors have so far resisted the calls for a catalogue-wide minimum royalty rate, arguing that the commitment to pay through to unrecouped artists is in itself a significant artist-friendly gesture. Artists and managers don’t agree and – while nevertheless welcoming the commitments on unrecouped balances – are also increasingly scrutinising how those commitments are working.

They have also been pushing for Warner and Universal to follow Sony’s lead in making the commitment on unrecouped artists a rolling commitment. Which means artist and manager groups will be disappointed that the update on Warner’s Legacy Unrecouped Advances Programme doesn’t include an extension in line with what Sony introduced last year.

You can access Warner’s ESG report – which also runs through the music major’s various environmental, diversity and social projects – via this link here.