Sony Music has announced it will wipe out all unrecouped advances paid to artists on contracts signed before the year 2000, in a pre-emptive move ahead of a UK government report on how money generated by music-streaming services is split.
The company said on Friday that it would wipe out the historic advances and had chosen 2000 as a key dividing line between the CD and digital music eras. It said it would not alter contracts but that money previously set aside against that debt would now flow directly to the artists and producers behind the work.
Ron Sweeney, a lawyer and former Sony Music executive who has lobbied for the change, said it would put pressure on other major labels to follow suit. “I’m happy they took a step in the right direction that I wish Universal and Warner would follow. It’s the right thing to do,” he said.
The move comes ahead of a report by the UK’s Department for Digital, Culture, Media and Sport into the economics of the music industry in the streaming age, which could recommend that the competition regulator investigates how revenue flows through the industry.
The Broken Record campaign has called for more transparency and a higher rate of royalties to be paid to artists. Some musicians and songwriters told MPs they were struggling to survive, despite their songs generating millions of listens on Spotify, because of onerous contracts and low royalty rates.
One music industry executive said: “Sony were very strategic to get this out before the DCMS paper hits.”
The music industry has returned to growth thanks to the streaming boom, which has also attracted a new breed of investors looking to invest in the sector.
Sony Music, led by British executive Rob Stringer, incorporates a large number of labels including Epic, Columbia and RCA. Its biggest-selling artists include Elvis Presley, Pink Floyd, Bob Dylan, Beyoncé and Britney Spears.
Sony Music declined to comment on which of its artists would benefit from the change, citing contract confidentiality.
A person with direct knowledge of the contracts said that some acts could earn tens of thousands of dollars more per year, including “household name” acts, especially if their music was unsuccessful in the CD era but has grown in popularity in the streaming age.
Sweeney said that more than 50 per cent of these “heritage” Sony Music artists would earn more money as a result of the move and that the figure could be as high as 90 per cent, given old contracts loaded a “tremendous” amount of cost against the musician’s share of the royalties.