Last week, we published a Lady Gaga contract showing exactly how major labels avoid paying anything to their artists from streaming services like Spotify. But it turns out there are a few more tricks for paying artists absolutely nothing while pocketing millions in streaming revenues.
According to Rich Bengloff, head of independent label group A2IM, these dirty tricks are currently being employed by Universal Music Group, which just happens to the be Gaga’s label. Bengloff spilled this three-step process to Billboard this week:
(1) “Universal Music makes the per-stream rate as low as they possibly can so they have to give the artist very little money.”
(2) “Then, on top of that, they have something called a ‘listener hour guarantee,’ which they know is going to up their compensation by about 40% — since it’s per listener hour, not per track, the artist gets screwed because it’s not attributable to a track, so the artist doesn’t get a royalty. That’s not fair, that’s not the way we do business.”
(3) “The third thing they do is get a minimum annual guarantee or an advance if they know the service isn’t going to reach that level of business and be able to recoup — it’s what’s called [digital] breakage and they also don’t share that with the artists.”
And this is the future of recorded music…