Last month, sources pointed Digital Music News to sizable ownership stakes in Beats by the three major recording labels. But those shares are bigger than initially thought: according to an announcement issued this morning by parent Vivendi (above), Universal Music Group carried a 13 percent share in Beats prior to the sale, which translates into a massive, $404 million payout from the Apple sale.
The same sources, which include a major label attorney, have noted that none of that money will make it back to artists, based on the language of most artist contracts. The standard contractual language stipulates that one-time payments to the labels from streaming services, either in the form of upfront advances or equity cash-outs like this one, are simply not shared.
How Streaming Services are Screwing Lady Gaga (and Every Other Artist)
In other words, if it isn’t a stream directly attributable to an artist on the label, there is no payment. “They will get nothing,” one major label attorney flatly told Digital Music News, while insisting on anonymity.
I’ve been in this dumb industry for nearly 6 years now.
The biggest thing I have learned, don’t ever be the Artist, terrible mistake of gargantuan proportions.
Of course you get stroked off by a bunch of people who are duped into thinking you are special, but mostly it’s a get pissed on and shit on and screwed over and no money etc.
Being the artist is not worth it at all. Being on the end that sticks it to Artists, much better way to make a living in this World.
“The biggest thing I have learned, don’t ever be the Artist”
That’s probably the general idea at the moment. And it’s a conclusion that will have huge consequences for a long time.
But you can still make it if you’re special, as long as you don’t sign with major labels (or Google).
Not without Money or a lot of people who help instead of hinder.
The only people I see having success like that are mostly trust funders, kids with parents who get them in young enough and foot the bill for the most part and label family relatives. Of course the game can still be pimped, but that always results in a label, which these days kills all artistic credibility.
Hit my age with my bank account and it’s a no go.
I can still make music though, when I have the time and the energy and the money too, cause it’s truly just a loss leader for other things, IF you have the fans that are buying junk, otherwise its just a loss leader, and personally I don’t have the fans or the junk, so it’s just for fun, but it makes me miserable, so who knows what it is, stupid stuff. haha
The only people making anywhere in America are the children of the wealthy and it is not because they are talented; it is because they are buying their way to success.
This will lead to America’s downfall in every industry as the weakest and worst become the standards we define our products by while our best and most talented are left behind to hard-scrabble low-wage labor and give up trying. Then the rest of the world will out-produce us in talent and leave us behind.
Imagine if you will, with the bail outs, we have now defined America by failure, as long as you are rich or part of the special class we put any amount of money and influence behind your dreams but if you are poor, smart, talented or middle class we will do nothing for you; we will aid you in no way because your life has been pre-determined to be a life of a servant to the upper classes dreams and companies.
Word up on that!
It’s true, no matter how much anyone wants to disagree with it or not believe it.
I recently had a product manufactured in the US, fell apart immediately, probably should have left that shit up to China!
The bailouts should have been the beacon, the loud ringing siren, the warning sign that if you ain’t rich, you are fucked and are at the mercy of the rich, a slave, a peon, a low level serf working all the time to help others.
The fact you can have a full financial meltdown due to greedy assholes pimping algorithms etc. and then get bailed out to a huge amount and have every citizen responsible for funding that bail out, well that is super scam city all the way. We are slaves to the rich, we are slaves to debt and slaves to money, all while they get to break the laws and have fun and make gargantuan sums of money, screw anyone over in the process, and get away with it scott free while others pay the bill.
Awesome life, awesome world, so fucking glad I’m here.
If I wasn’t such a pussy I’d just man up and blow my brains out and head on home.
Being the guy being whipped to drag that heavy stone around for some egomaniac narcissist assholes pyramid all to maybe have a few crumbs of grain tossed my way at the end of the day ain’t my idea of living or life and if that is what I am here for I desperately need to find a way out.
It’s whoever’s got the biggest gun and the coldest heart that rules the land, the ocean, the universe and the galaxy.
Run motherfuckers RUN!
I guess it’s just frustrating, cause it’s all just a show for their rich kids and their rich kids friends, and still they trying to grease money out of me and get me to buy their shit.
Everything is set-up and scammed out.
Oh but they are the special superstars remembered by History as the greatest ever because they truly have talent and skills and abilities hahahaha
You are right Sir, America looks pretty darn doomed with the way they are operating.
Of course, Canada ain’t looking much better, it’s just a slave ship up here too. Oh well, is what it is. Don’t have kids unless you are rich is one of the best pieces of advice I can give.
oh and I ain’t hatin, just telling it like it is, at least as far as I know it.
I see marrying a rich beauty queen Cinderella as my only chance to ever have a family, be a stay at home Daddy raising the kids properly, so it isn’t like I’m taking the other side and making them all my enemies.
It’s what they should be teaching kids in School, instead even that is just a glorified bragging center for the Europeans and the wealthy, with the odd Ghandi mixed in here and there, who had those high level connections anyways.
They ain’t teaching about money, they ain’t doing anything but using Schools as a corporate slave breeding ground, and then forcing the kids to go to a University and actually pay for just another corporate slave breeding ground.
Bah, anyways, I’m just a traveler here, will definitely have it out with my travel agent when I get home, pretty sure there has been a big mistake, this clearly isn’t the vacation spot I chose, else their marketing is lying.
The ‘Equity Share’ issued by Venture Capitalists in Silicon Valley to major labels for access to their deep music catalogs necessarily means not a single artist will get paid- because the major labels will never retro-actively and pro-actively revise artist contracts as these monies become available.
Universal recording artist Dr Dre made a bit from this acquisition i hear. 🙂
Probably not as much as he originally thought he would make.
A couple points:
1. I don’t think artists are entitled to $ from the sale of Beats Headphones. UMG made a financial investment and like any investor, deserves to reap the rewards for said investment. Artists/athletes that endorsed the headphones were often given stock and/or an upfront payment.
2. As for Beats’ streaming services, it’s true that none of these services would exist without the artists’ music. ‘ This includes artists who aren’t even signed to UMG, but rather clients of TuneCore and other distributors. Like UMG, these indie artists also made large investments, although indirect. They often finance their own demos, equipment, payment to session players, etc. This in turn makes it possible to provide Beats’ with inventory that they spend $0 upfront to acquire (majors are the exception).
I don’t know of any other business where you can acquire inventory for no money and then only pay pennies when someone uses it. I believe the solution is intervention from Congress that requires streaming services to pay equity payments to indie artists / writers. Congress should also require that that labels share equity payments with their artists and that this obligation cannot simply be contracted away. Just my 2 cents.
I can think of literally hundreds.
While I don’t think artists are entitled to equity payments for the sale of Beats’ headphones brand, I do think there’s an argument to be made for the streaming service. Indie artists make huge investments to provide Beats and other streaming services with inventory (e.g., financing demos, equipment, paying for distribution services, etc). Without the inventory, Beats would be a shell. Yet, the most shocking part of this relationship is that Beats and others don’t have to spend any money to acquire their inventory (majors being the exception). These artists deserve an equity payment.
Congress should intervene and require streaming services to pay equity payments to artists’ on their service. It should also require majors to share these equity payments w/ their artists since they often have to invest their own money into their career too (e.g., equipment, independent publicist, demos prior to signing, etc.)
If Universal lost money on the deal, are you suggesting that loss would also be charged to the artists?
If Universal invested in Beats, that’s a fair question. But I think the general assumption is that Universal was given stock in Beats (or sold stock at a nominal price) as part of the deal for use of their catalog. If so, there is no downside to Universal other than potential loss of record sales, which of course also impacts on artists. The difference being that artists don’t get a share in the equity. And as I’ve said before, deals of this kind (if they exist as alleged) are close to fraud, and certainly a breach of the implied term of good faith in the contracts between labels and artists. Class action, anyone?
Quote “and certainly a breach of the implied term of good faith in the contracts between labels and artists. Class action, anyone?”
That might be the only real option.. If enough artists banded together..
Why would an artist get any money if they didn’t directly invest in beats? The second half of this makes no sense. Iovine convinced board members to pony up some money. What does that have to do with streaming revenue?
The sources do not claim that the labels invested in Beats.
Well they either invested OR in allowing Jimmy Iovine to do business outside of his ACTUAL job they are required a certain % since they are paying him a crazy salary..
I just made that shit up tho so who knows..
For what valuable consideration would a startup hand over 13% of the company? If Universal put in $10 million, well… OK. If they put in zero, then the only consideration Universal has to give is access to its artists music for the service. It ain’t rocket surgery, folks. Dark Money wins again!
Lucky payout to UMG for Beats entering UMG/Ek invented all inclusive streaming nonsense!
Timing was just right or Beats without streaming would also sale for $3B
It’s time for UMG to go back to MUSIC SALES!
Internet is made for music monetization.
well no surprises there, app store developers wouldn’t get a payout if the app store was sold.
only direct investment results in direct profit (or loss), regardless of fluffy ethical & legal considerations
Except in this case, where there’s no evidence of any “direct investment.”
Read the WIN Fair Digital Deals Declaration and then ask yourself why did a group of global indie labels decide to release such a public declaration at this very moment in time? http://pitchfork.com/news/55909-indie-labels-unite-to-launch-fair-digital-deals-declaration-initiative/
Read The International Music Managers Forum released statement about digital deal structures – http://immf.com/immf-unites-artist-manager-organisations-around-word-respond-recent-winyoutube-dispute-issues-digital-music-business/
It’s a matter of public record that the major labels got equity stakes in Spotify as part of the compensation package to license their music to Spotify. Ask yourself, why would the major labels PAY for equity in Beats when they’ve already demonstrated that they’ll trade music licenses for equity (and lower per stream royalties)?
There are some of us who KNOW what’s going on but we can’t speak on record. The best we can do is point you to all the evidence. The digital streaming economy is being choked from benefiting artists by the major labels who are seeking (and getting) revenues that are not performance based (and therefore do not have to be shared with artists) in exchange for discounted royalty rates that are the small portion that is shared with artists (and is what indie labels who assign their digital rights and accept as is deals from distributors and services).
Same as ever, do not be the artist, well, don’t be the artist if you want to have any life and any security and be treated fairly and decently and maybe have the ability to have a family and enjoy life.
Definitely not worth it. My time as an artist has been terrible, for every good thing theres about a million bad. You really have to want to be famous or something cause I don’t know what else is in it.
Music is a brutal hobby too.
Seems like a clever scam. Guess the labels aren’t that stupid after all.
The majors have never been stupid when it comes to paying artists as little as possible and keeping the rest.
If Spotify is sold at $6 billion USD, and the 3 Major Labels own 21%, they would get between them
$6 billion x 21% = $1.26 billion
Just read an article over at Moses Supposes by Moses Avalon wherein he speculates the real reason Apple bought Beats is because of the ‘perpetuity license’ of all of Universal’s music. That’s important as Sony was also difficult to work in licensing their content to iTunes. Beats ‘in-house’ now with Apple means they got Universal’s catalog forever.
I’d say they are lucky to make anything at all. In all my time in, the only advice I can honestly give people is to avoid the Music Industry like the Plague and not to even touch it with a 10 Mile Pole.
Leave it to the richies, the wanabes and those desperate for attention and fame. Anyone wanting to do things right and provide results etc. etc. Don’t even bother.
Digital Music has some pretty decent jobs listed, too bad they all require bachelor degrees, oh well, everywhere i look i lack the qualifications, the piece of paper or the experience, meh, flippin burgers for people that eat garbage seems to be working out ok for now. 🙂
BE YOUR OWN LABEL!!!!!!
It is so frikkin EASY to do.
I did it.
And I am a stoned dumbass I am frequently told.
Just do your homework there are many distribution networks for indie artists now.
IT IS EASY!!!!!!
Except when you make really good music and do other good stuff you become the Industries #1 enemy, kind of takes all the fun out of it to be honest with you.
Labels have become mostly glorified banks, with a lot of people to help get the jobs done and still certain vice grips on some areas of the business. Arenas for the most part are pretty closed shop, without muscle or money you ain’t playin Arenas.
I don’t have a banks money, its lending or its borrowing power.
To make money from your music, in almost all instances, it takes massive marketing and promotion, which takes money and/or time and people.
You spend a lot of time doing administration work, maintaining websites etc. that labels have people for.
Maybe the biggest thing going for labels still, is their muscle. They deal in moving music and with their gangster bully tactics, and similar to what I said in the first point, they have the people and the muscle to help turn profits.
Do you need a label?
Not at all, overall it can be done and isn’t overly difficult.
Does it cost money and time?
Can it sap you of precious energy?
Can it make you highly hated and in a position open to be attacked and drug into whatever current War they are fighting?
All I am saying is, it ain’t always greener on the other side.
As a label I can offer certain Artists reduced recording and distribution and design costs, meaning they wouldn’t have to recoup much, but I personally don’t have the pockets to float advances to anyone nor do I have the team to really mount up a full on assault for a bunch of artists, and in most instances that’s where labels win, they scoop Artists up when the Artist is desperate for money and the advance is still like the lottery to a lot of people, so really when someone is the label for themselves, it’s really just DIY hobbyist stuff because competing is nearly impossible, unless you have some money and people. When doing it the independent route, operating like a real label is near impossible. It’s like Pseudo labelism.
But that is also why you do see some people successful going that route, because they have money, a trust fund, born rich, maybe went to a really good school got a nice piece of paper and worked a really good paying job for some years to save the money needed, joining sororities and schmoozing on campus etc. to increase their circles and people. And they do have people, lots of people. You see that sort of frat boy kind of circle, they seem to really all be in it together, who have money and trust funds, obtaining a lot of success with what looks like a reasonably organic and Indy push right now aided by social site marketing etc. So they are using it like a Posse who has muscle to get those stats up and fans gathered, making it seem very doable for the independent artist to achieve high levels of success, but peel away the onion and check the back stories, and you see you need large circles of people working towards the same goals, you need massive muscle and some money to take a lot of leaps and chances to get to a point where you can get those live fees to the point you might actually catch on and gain traction and make some money.
I spent $30k to get nowhere. My old business partner invested the same amount. Luckily for us we didn’t do it on a loan, we only spent money we made above and beyond our normal day to day living costs. We got a lot done, made what we believe to be some phenomenal music, but ultimately at the end of the day without the money and the people, it’s hard to get anywhere or to make anything happen and subsequently we may as well not have even existed. So while others go down in History as massive successes and the greatest ever etc. we won’t go down in History, to be forgotten forever, remembered by a few that know as possibly Musics biggest failures ever, and that stings. That is what can happen trying to forge ahead all on your own, so just be careful. Not complaining, just don’t want to see anyone else deal with the pain and agony and embarrassment that we have to deal with on the steady.
So it can be done, but I wouldn’t really advise it unless you have a lot of money, else it’s kind of a waste of time and energy, as it ain’t like Labels are hiring anyways especially after you post up as their enemy so you won’t really have any transferable skills or experience to utilize for other jobs or opportunities.
I have learned so far that all my years in Music has ultimately left my resume with a large void, as so far it seems most people look at the music skills and accomplishments and awards as a negative and a red flag or a warning sign, because after all, it is still music.
Yes it can be done, just be smart and careful and save up money and make a lot of friends, schmooze schmooze schmooze is kind of the most needed attribute to obtain music success besides money that is.
Yet again when I read an article like this it springs to mind two points:
1 – Artists signed a deal they was good – if they didn’t like the fact that their contract didn’t include a clause which gave them a cut of any company equity from equity buy outs then they shouldn’t have signed the deal
2 – Given that only 1 in 10 artists actually recoups where do you think this cash will go? More than likely to help finance new artist advances and costs
Right, everyone signs a deal with their eyes open, or at least a signature says that you have read and accept terms of a deal. That’s how business and the legal system operate, in the US and many other countries.
That said, there may be an issue of predatory contracts and unscrupulous business practice here, especially since almost every artist signed their deal prior to the practice of taking equity shares in companies like Beats (this is a relatively new strategy). So, even the lawyers reviewing the deals on the artist side were probably unaware that such a massive windfall would hit UMG’s books in the near future, or that this was something that was part of UMG’s business plan.
And, if they did know about it and didn’t advise their clients, well…
See the problem?
Would you know if Universal put up cash for their 13% stake, or if the equity was given to them by Beats in exchange for a lower royalty rate? If the latter is the case, I would think the artists have more of an argument for a piece of the payout. Or, at least the artists’ lawyers should have foreseen such a scenario and negotiated accordingly.
Also, these equity deals are not really so new. The majors all have a piece of Vevo, and it’s debatable how much that company would sell for. Obviously the artists won’t take a hit if Vevo sells at a loss.
2 – To the already ridiculously inflated salaries of major labor officers, and investors in the labels..
Artists should not reap any benefits from a return on an investment that UMG makes out of its own coffers. That said, the real travesty here is that so much of the income from streaming services comes from massive advances or these equity stakes that are given to the labels AS PAYMENT TO LICENSE THE MUSIC (i.e., no different purpose than the per-stream royalties, just a different line-item on the balance sheet). This means streaming services are negotiating lower royalties (what the artists see) in exchange for higher advances or equity stakes (what probably only the top 1% of artists might get a piece of) and the vast majority of artists are losing in the process.
The whole licensing, royalty BMI/ASCAP/SESAC/MADOFF and Major label Ponzi scheme has run its course.
This is not a music industry. This is a government mandated criminal enterprise run by wanna-be stars who by the time they fiqured out the www, they were to late.
Only fools would play in their jukebox.