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Should Spotify windfall lead majors to cancel unrecouped debts for legacy artists?


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Musician Tom Gray of British band Gomez – currently firing up crowds on the 20th anniversary tour celebrating their ‘Bring It On’ album – has an idea for major labels about how to follow up their windfalls from Spotify’s public listing.

In short: he thinks they should cancel the unrecouped debts of the legacy artists whose music was part of the catalogues that ensured they got equity in Spotify before its launch 10 years ago.

Gray outlined his thoughts in a tweetstorm this week.

“The majors are all making huge profits from the sales of their Spotify shares and they say they will distribute monies to artists based on the number of streams they’ve had,” he wrote.

“However, this is flawed. The ability of the companies to buy those shares in the first place (and at such a reduced cost) was based *entirely* on the leverage of owning all the existing copyrights going back 70 years. Spotify needed the owners of most existing copyrights on board or their model couldn’t work.”

Gray’s view is that it is “morally questionable” to only pay that money to artists who have already benefited from Spotify, rather than also the others whose music “leveraged the ownership of the shares”.

“Now, many of you will know that many artists (especially those signed before 2001) are trapped in contracts that are *heavily* in the companies favour,” he continued.

“An example: a band had a sub-20% royalty and are given £200k (for recording and living); another £100k was spent on marketing; they sold 200k copies; the company made around £700k profit; the artist is still £100k in debt. These deals abounded and, when you speak to most “legacy” artists, you’ll find that most of us have the same story to tell.”

Gray’s alternative idea, then: “Cancel the unrecouped debts for all artists that were profitable to them and set the remaining debts at whatever the actual loss to the company was. I think it’s morally justifiable anyway, but seeing as how you’ve just made billions, and these artists are still not making a single penny from their work. It’s hard not to see the logic.”

He added that such a policy could cut major labels’ accountancy fees; reduce the number of expensive audits; and give artists who haven’t been fully behind streaming “a stake in the game”.

“We have a new model built on the bones of an old (highly broken and unfair) model. Let’s admit that and reset the clock. Everyone deserves to benefit from what’s been gained and where this is going. Not to mention the enormous amount of positive PR and good will it would gain.”

There is actually a precedent for this, from the independent music community. In November 2017, I interviewed Beggars Group’s digital boss Simon Wheeler at the Slush conference in Helsinki, and he talked about a decision made by that company:

A few years ago, Beggars Group boss Martin Mills took a policy decision: that for older catalogue-artists who hadn’t released a new record for a certain amount of time, if they had an unrecouped balance, it would be written off.

“So that when the streaming royalties came through, they actually got paid something, rather than it just going to offset the unrecouped balance,” explained Wheeler, adding that the total amount of the write-off was “a really big number” – albeit one he wasn’t able to share.

“Martin said he’d made up his mind that he was never going to get that money back, so it was kind of gone for him. And then because he has very much an artist-friendly take on things, that was his way of saying now there’s actually some money coming through from listening, we are going to pay that through on a very generous streaming rate,” said Wheeler. “Hopefully it’s going to make some difference to a number of our artists.”

What do you think: could major labels follow what Beggars has done, or come up with another twist on Gray’s idea? The comments are open for your thoughts on this idea, and the general situation around streaming, legacy artists and Spotify windfalls for rightsholders.

(Also, why not stream or indeed buy ‘Bring It On’ in its 20th anniversary reissue? It’s a marvellous album…)

Stuart Dredge

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