If your label is so transparent, why can’t you see any of the numbers? Here are 9 questions to demand from your label (major or otherwise) regarding your Spotify and streaming payouts.
If you can’t get straight answers, you’re probably getting ripped off.
(1) What are you actually getting paid per-stream?
The most basic question, but also one that very few artists receive. Not only is there a massive difference between free (ad-supported) and paid per-stream royalties, but every single stream can have a different royalty attached depending on multiple factors. This level of complexity may be intentional, though your label should be able to show you incredibly detailed, play-by-play spreadsheets that break down every single stream for ever single platform.
From there, you can calculate your blended average and see if it makes sense. If it doesn’t…
(2) Why is your blended per-stream average below industry average?
Spotify says artists should be making about $0.005 per stream, or half-a-penny. If your blended average is way below that, ask why. If you get an answer back that makes zero sense or is needlessly complicated, you might have a problem.
(3) Why is a giant artist on your label having a problem?
Lady Gaga’s former manager, Troy Carter, openly admitted that her label, Interscope, never paid on streaming. Before that, an industry attorney leaked a Gaga contract showing exactly how she was getting ripped off. All of which shows this: if Lady Gaga can’t get paid, what about you?
Ask around: are bigger artists on your label having difficulties? Call their managers: if they’re getting screwed, they’ll probably tell you about it. You should then ask your label to explain what is going on.
(4) What exact portion of Spotify’s (or other streaming services) blanket payments are you receiving?
Sony Music Entertainment says they’re paying every artist a piece of every Spotify payment, regardless of the source. That includes blanket payments and guaranteed minimums that are not directly attributed to a specific artist (ie, you).
So if that’s really the case, ask your label what those specific streams are, and what your specific percentage payouts will be. If your label can’t supply that to you or merely states you’re ‘unrecouped,’ you might have a problem.
(5) Why does your contract specifically state that you CAN’T get paid on certain streaming payments?
Here’s a copy of Lady Gaga’s contract, leaked to DMN. It specifically indicates that UMG division Interscope isn’t obligated to pay on royalty payments that aren’t directly attributable to Lady Gaga. In other words, if Spotify offers an equity share or upfront payment for their entire catalog, none of that gets paid to specific artists.
Look at section 10.06 in this contract. Now, look at your contract. Is there something similar? If there is, your label isn’t obligated to pay you anything unless it’s directly attributable to you. That also includes payouts from any IPO, including Spotify’s upcoming IPO.
(6) Can you have your contract amended?
If you’re signed to a major, you probably have language like this in your contract. But Warner Music Group and Sony Music Entertainment are now stating publicly that they are paying on blanket licenses and broader, non-artist specific payments. If this is the case, changing or amending your contract should not be an issue.
If your label refuses to change your contract, then you won’t be getting paid.
(7) What is your specific payout from an IPO?
Earlier this week, Warner Music Group CEO Stephen Cooper said that every artist on its roster would be paid money from Spotify’s upcoming IPO. Sony echoed that sentiment, though neither label explained what those payments would look like, or when they would be paid.
Remember: if it’s not in your contract, you probably won’t get paid. And it’s practically guaranteed that there’s no stipulation in your contract giving you a piece of a partner streaming service IPO.
(8) What is your specific payout from the sale of a streaming service that your label has equity in?
In 2014, Beats Music was sold to Apple for north of $3 billion. We know of only one artist that got paid on that deal: Dr. Dre. As of today, we know of no other artists receiving a cut, even though Universal Music Group parent Vivendi publicly recorded earnings for more than $400 million on the deal.
Again, if your label is claiming that they’ll pay you from an IPO or sale of a company they have a stake in (and are supplying your music to), ask them to put the specific payout terms in writing. Either in a contract amendment, or a separate, signed agreement.
If they can’t do that, you won’t get paid anything. Guaranteed.
(9) What is your windowed release strategy?
The biggest artists window their releases to maximize their revenues. There are all sorts of variations, though they usually prioritize physical and downloads ahead of streaming.
Can your label do this for you, and if not, why not?
Remember: if you just distributing by yourself (let’s say by CD Baby), you could easily do this. If your label doesn’t want to help you window, they might be prioritizing their interests above yours (go figure).
Image by dynamosquito, CC by 2.0.