It’s hard to find examples of major record companies stepping up for the artists they serve except under pressure, but it looks like we have one now. Sony Music announced in a letter to its artists that he will start paying royalties for his legacy acts, even though they still owe the label money. His new Artist Forward initiative is designed to ignore the unrecovered balance that an artist signed before the year 2000 might owe the company upfront.
This means traditional artists can now start collecting money from streaming retroactively at the start of this year. Sony Music artists with exceptional record engagements are undoubtedly rejoicing.
And that’s exactly what Artist Forward is designed to do – cultivate goodwill with artists. The company probably thought that most of the unrecovered funds were dead money anyway, so it’s best to write it off while still making the artists happy.
Sony’s letter states that this new policy is called the Legacy Unrecouped Balance program and states, “As part of our continued focus on developing new financial opportunities for creators, we will no longer apply existing unrecovered balances to income. artists and attendees generated as of Jan. 1, 2021 for eligible artists and attendees around the world who signed with SME before the year 2000 and did not receive an advance from the year 2000.
“Through this program, we are not modifying existing contracts, but choosing to pay on existing unrecovered balances to increase the ability of those who qualify to receive more money from the use of their music.”
But there are fine print
If you read carefully, the Artist Forward / Legacy Unrecouped Balance program doesn’t cancel debt an artist might owe, it just ignores it for now. There is no doubt that while the artist still sells CDs and vinyls, these earned royalties are still charged against debt, and if a new delivery format emerges that creates new demand for the artist’s material at a higher price, you can bet this will still be counted towards the payback.
It is also noted in the letter that the program does not apply to an artist who may have received an advance after the year 2000, although this probably does not apply to many legacy artists anyway.
The artist / label shock
Artists have traditionally had many complaints about record companies, ranging from insufficient marketing and creative interference, to executive champions leaving the company, to unfair deal terms, but the payback is perhaps the main problem that ultimately provokes dissent.
The typical scenario is that the artist puts all her heart and soul into creating a product that might sell well, but she will still end up owing the label money once all the recording, marketing and tour will have been totaled. At this point, the artist sees that she is supposed to pay for so many services that were thought to be free or the burden of the label, a nasty surprise of course.
The problem here is that the bill never goes away, and every statement is a constant reminder that there is always a large debt owed to a now anonymous entity, especially if close allies are no longer with the company.
With Sony’s latest move, artists will immediately start collecting royalties from streaming. However, these revenues can be much lower than expected, especially given the restrictive terms of existing agreements that have never been renegotiated to apply in the digital world. This will undoubtedly lead to another wave of “streaming is the devil because it pays nothing” rhetoric from artists, but the artist’s wrath will likely be aimed more at streaming services than Sony.
Regardless of this outcome, Sony Music made a well thought out strategic decision with far more advantages than disadvantages for the label and its artists.