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How Equity Shares Are Emerging As A Fair And Just Business Model For Artists
At the Recording Academy, our members have championed the financial interests of music creators for generations. But with digital platforms, new dimensions are emerging in label-artist relations that could provide new streams of compensation.
Enter Taylor Swift's recent UMG deal, which stipulates that all UMG artists — not just herself — will receive shares of any future Spotify payouts resulting from the label’s sale of its equity in the streaming giant, marking a major step forward in artist-label relations.
"Last week's announcement by Taylor Swift and @UMG provides yet more evidence of the ongoing trend towards creators becoming more empowered in their business partnerships. (1/2)
— Music Managers Forum (@MMFUK) November 26, 2018
"As part of my new contract with Universal Music Group, I asked that any sale of their Spotify shares result in a distribution of money to their artist, non-recoupable," Swift wrote on Instagram. "They have generously agreed to this, at what they believe will be much better terms than paid out previously by other major labels."
While the particulars of the deal have not been revealed, the deal goes far to accomplish Swift's stated goal of "positive change for creators," but as Reed Smith attorney Gregor Pryor noted, this trend goes beyond the details of how one major distributes proceeds from its sales of Spotify stock. In an interview with The Guardian, Pryor said, "The world is changing very quickly, and part of that is artists taking control of their own business interests."
The creation of Tidal by Jay-Z is another example of how the next steps in digital disruption might include rights deals where artists have each other's backs.
Once upon a time, it was considered revolutionary for artists to administer their own publishing or control their master recordings. Artists were isolated, and the deals they reached with music labels were strictly individual. It remains true that sales are a vital way to repay advances and that even successful artists face financial challenges impacting their ability to create. But in 2018, an artist’s work with a label can take many forms including personal imprints, creative control, and business arrangements where artists benefit from greater ownership. Given the way music is leading the growth of high-tech tie-ins, the time could be ripe for new deals embracing the business end of label-artist creative partnerships.
Many of the developing topics we track point to this new dimension of artist-business crossover due to music's starring role. Music is what engages social media users most. The most common activity for early adopters of voice-navigated smart speakers is music streaming. In-car powerhouse SiriusXM acquired Pandora Media, reaching outside the car. Even with the uncertainty surrounding competition between internet platforms, their investment was directed toward future tech-based innovation. They could have focused their dollars in the automotive sector instead. Even business-to-business music licensing is an area where fresh possibilities, powered by the internet, point to new dimensions and platforms ahead.
Audio art and entertainment has long provided the soundtrack of our lives, but 24/7 engagement online is opening up new spaces for how our lives and dollars will be spent. Rights-deals and artist-label relations are not just trailing behind these developments. Equity shares in developing high-tech businesses offer a new frontier where artists and labels can pursue their common interests together.
The intersection of art and business has always been an edge-space where new things can happen, and Swift's big "positive change for creators" could lead to investments in innovation that open up new types of remuneration for artists in our ever-evolving music ecosystem,
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