Apple has led a $50m investment round in UnitedMasters, a US start-up aiming to capitalise as more artists try to circumvent record labels and distribute their music online.
UnitedMasters, founded in 2017 by former longtime record executive Steve Stoute, has pitched itself as a disrupter to the major label system that has dominated the music business for decades. The latest funding round values the company at $350m.
UnitedMasters offers artists the tools to upload their songs to streaming services, while keeping control of the copyright to their own music — a topic becoming more contentious after stars such as Taylor Swift fought to do so.
Stoute started his career in the 1990s as the manager to rapper Nas, then spent decades working at large record labels including Sony and Interscope. He founded UnitedMasters with a $70m funding round led by Alphabet.
“When music went to streaming, it was very clear to me that there was no more pressing of CDs and vinyls and all of that intensive labour and distribution was gone,” Stoute said in an interview. “When that was removed, it felt like the lion’s share [of revenue] should go back to the artist.”
Stoute has now raised an additional $50m from Apple, Alphabet and Andreessen Horowitz, leveraging his connections with Eddy Cue, the head of Apple’s services business, whom he has known for a decade.
Cue said: “The contributions of independent artists play a significant role in driving the continued growth and success of the music industry, and UnitedMasters, like Apple, is committed to empowering creators.”
Stoute expects partnering Apple will “level the playing field” for artists who sign with UnitedMasters rather than a major label, as the iPhone maker can help with marketing and promotion on its music streaming service.
In traditional record deals, the music label takes ownership of an artists’ intellectual property in exchange for investing in their development. In this system, even stars such as Swift end up restricted by contracts they signed before they struck it big.
The rise of online streaming, however, has made it more viable for independent musicians to distribute their music globally, fostering a rise of so-called DIY artists — and companies looking to offer them some of the distribution tools of a label.
The “big three” record labels — Universal Music, Sony Music, and Warner Music — still control the majority of the world’s music.
However, their share is shrinking. The major labels and Merlin, a group representing independent artists, made up 78 per cent of all streams on Spotify in 2020, down from 87 per cent in 2017.
UnitedMasters takes a cut of 10 per cent of their artists’ royalties and does not retain any copyrights. The company also offers a $5 monthly subscription, through which artists can keep 100 per cent of their royalty payments.
The company has amassed 1m artists and is profitable, according to Stoute. He plans to use the $50m to invest in technical talent, as well as expand UnitedMasters to South America, India and Africa.