We know from Sony Music’s recent financial results that the label group generated around $768m from the sale of some of its Spotify shares earlier this year. Now we’re finding out more about how the major label is distributing the windfall to its artists.
Variety has confirmed previous reports that Sony will *not* be counting the payments against artists’ and labels’ unrecouped earnings. Instead, it will be divided up “according to individual artist and label contract terms and based on earnings over the last 10 years” – reflecting the period since Spotify launched.
“The formula Sony used is fairly straightforward: the company looked at the 10-year period during which it owned equity in Spotify, then looked at its revenue from Spotify and overall revenue for the time and divided it up by revenue generated by the artist or label,” explained Variety’s piece.
“So if an artist had $5 million in sales over that period, and Sony registered $30 billion in revenue, that contribution (.016%) would be allocated to its portion of the Spotify payout and paid to the artist according to the act’s contract terms for digital royalties.”
Sony Music is already winning praise from managers for its approach to distributing the windfall, and could thus raise expectations for Universal Music Group in particular, which has yet to announce how it plans to distribute its own windfall as and when it sells its Spotify shares.