Wen 丨 Music Herald (ID: nakedmusic), author 丨 Echo, editor 丨 Fan Zhihui
Following Sony Music's announcement last summer to waive musicians' outstanding legacy debt program ( Legacy Unrecouped Balance Program ) , Warner Music took a similar move on Feb. 1 of this year — waiving the legacy unrecouped advances program for musicians. Universal Music is also considering introducing a similar policy, which is expected to be announced in the coming weeks.
Similar to Sony Music, Warner Music's plans are for artists and songwriters who signed before 2000 but have not yet paid off their advances. The plan will waive their unrecovered advances and will take effect on July 1 this year.
That said, for artists and songwriters whose royalty income is set aside monthly by Warner to repay the upfront payment, that money goes into their own bank accounts starting this summer. What's more, the program will also benefit other behind-the-scenes creators, such as producers, engineers, and mixers.
At the same time, more and more tripartite companies are also providing funds for independent musicians in the form of advance payments, and seek to create a more autonomous and relaxed creative environment through new financial instruments. For example, beatBread, a music financing platform with data-driven as the core and offering a copyright-to-prepayment service, recently raised $34 million in seed funding.
Various trends suggest that the once ignored and instrumentalized community of creators is receiving more attention. Under the background of the development of the digital economy giving more space and convenience to creative labor, with the industry reality that the traffic dividend has peaked and the content competition is more intense, the value of creators that support the lifeblood of the music industry is being re-examined and evaluated by all parties in the market.
Musicians are being valued by all parties in the market
What is the significance of sony music and Warner Music's successive plans to waive the legacy of musicians? The answer to this has to be found in history.
In the traditional record contract, the record company will first give the signed artist an advance payment, which will then be deducted from the musician's royalty share, in addition to the advance payment, the musician will also pay other expenses in accordance with the contract, such as touring, packaging, marketing, etc. The sum of these two payments is called reimbursement. This means that even if a record starts to make a profit, it won't actually get revenue until the royalties are due to the musicians to offset the reimbursement, and the traditional record label's musicians usually don't share more than 25% of the profits.
As a result, it is not uncommon for artists to not be able to receive royalties decades after signing a contract, especially before the 21st century, when artists were in an absolutely weak position relative to record labels. And for musicians who haven't paid off their advances for more than two decades, the royalties from streaming today may be their entire income. But musicians are still paid very little, with music streaming in the UK now generating more than £1 billion a year, but musicians only get 13%.
That said, plans like Sony and Warner may not bring much real revenue to creators who have not yet made money from music, but at least promise that these pre-millennial signed artists can enjoy today's streaming dividends.
More importantly, it's the music industry's response to the revenue woes of musicians who haven't improved from the age of records to the age of streaming.
In addition to waiving the remaining reimbursement, the record company has also shared its streaming revenue with its artists. In 2016, Warner Music became the first major music company to share the proceeds from the sale of Spotify's stake with artists, and Sony Music followed suit. Driven by Taylor Swift, Universal Music has also made a commitment to this.
Whether it's waiving the legacy debt of signed artists or sharing the proceeds of streaming shares with them, the cascade effect that any record company with global reach can have on the creator's inclusive behavior is something to look forward to for the industry as a whole.
As the streaming media platform that dominates the new music market, it also has its future development vision on creators, spotify founder Daniel Ike proposed in the fourth quarter earnings call that it will vigorously develop the "creator economy", and compared the 50 million active creators on the platform to 50 million small and medium-sized enterprises.
Recently, the "creator economy" that puts creators at the forefront of the value chain has been hotly discussed, with some calling it "one of the biggest opportunities for the Internet" and others calling it "the biggest lie". Although it is not yet known whether this model can be realized, it reveals the industry trend that the creator community will receive more and more attention.
For Spotify, which has not achieved profitability for a long time, and domestic music platforms after "de-exclusive", directly attracting and cultivating creators is a necessary means to help platforms compete in content and create revenue.
As early as the summer of 2018, Spotify began to pay small-scale record labels and agent advances on the Spotify for Artists platform, and domestic music platforms were bound in advance with artists with popularity potential through musician support programs and deep bundling cooperation.
However, Spotify's blatant efforts to grab artists have been protested by mainstream record labels, and in the summer of 2019, Spotify canceled the experiment that creators can upload music directly. However, independent musicians have not returned to the arms of record companies, but have allowed more third-party companies to sniff out the business opportunities. In recent years, the rise of the indie music self-distribution market has been accompanied by a variety of new music financing instruments, the former requiring the latter to provide sufficient cash flow and win competitiveness.
Before music financing platform BeatBread raised $34 million, independent music distribution platform UnitedMasters partnered with it last year. At the time, UnitedMasters announced two new financial instruments for independent musicians, the first of which was launched in partnership with BeatBread, which enabled UnitedMasters to offer upfront payments ranging from $10 million to $1 million for eligible musicians.
But where does the money come from?
BeatBread's ChordCash technology engine evaluates musicians' streaming and social data to generate upfront quotes. It claims that intelligent algorithms built from billions of data points can maximize the guarantee that investors will receive the ideal return on every bet, thus attracting investors to pay upfront for musicians. UnitedMasters isn't the only distribution/services music company to partner with BeatBread, with companies like Symphonic Distribution, Horus Music, and Indie Amplify also recently signing deals with the company.
UnitedMasters' second major new financial partner is Paperchain, which also leverages algorithms to predict a musician's royalty income, and then makes the musician's streaming revenue instantly available through a digital wallet.
As Peter Sinclair, CEO of BeatBread, puts it: "BeatBread's team shares a vision with UnitedMasters to expand musicians' access to capital without sacrificing their ownership or choice. ”
Whether it is the emergence of new things such as self-distribution platforms and music financing tools, or the active changes made by record companies and streaming media platforms, this undoubtedly indicates the direction of the entire music industry.
Why are musicians getting more and more attention?
As Daniel Eck mentioned on the conference call, "the rapid specialization of creators" is "one of the biggest opportunities on the internet."
Driven by the head effect of the Internet, the era of "large-scale amateurization of production" is evolving to the "accelerated specialization of amateur production", the UGC platform is gradually combined in the game with PGC, and in the music industry, it is manifested as the "independence" of traditional recording artists and the "corporatization" of independent musicians are happening at the same time.
Correspondingly, the emergence of MCN institutions on various platforms is to reap the benefits of "cultivation" in the process of helping creators to professionalize, and the musician support plan of domestic platforms is also based on this logic.
The support for creators is essentially the emphasis on content output, and in addition to the musician support plan, whether it is the new content business lines added in the major adjustment of Tencent's music organizational structure last year, investing in a large number of local record companies, or NetEase Cloud Music's launch of multiple music studios on the cloud, hurricane, Qingyun lab, bullets, etc., is to strengthen content investment and enhance the content production capacity of the platform.
In the bottom-up logic of the content, independent musicians also have more opportunities to get ahead.
For the past hundred years, record companies have mastered the production, dissemination and sale of sound recording technology and phonograms. Today, most of the working musicians can already do it independently, and the music company can do more to provide services in the communication and marketing links. As all-round singer-songwriters become the main genre of independent musicians, they have more requirements for the dominance of music, and they even know how to market their music better than companies growing up on the Internet.
Therefore, more and more record contracts are turning to "service contracts", musicians self-distribution, music financing and other three-party platforms have emerged together, and the relationship between interest organizations and musicians in the music market is undergoing a shift from copyright control to musician services.
According to a 2019 report by market research firm Midia Research, "The Age of Empowerment of Independent Musicians", musicians have seen rapid growth in their distribution revenue since 2015. In 2018, the global self-release revenue of independent musicians reached $643.1 million, an increase of 34.6% over 2017 and 2.5 times that of 2015.
In 2021, data released by Midia Research also shows that the market share of independent musicians continues to grow, and music uploaded by independent musicians through third-party platforms generated $1.2 billion in revenue in 2020, an increase of 34.1%.
The track of independent music distribution services is becoming more crowded, and various financial instruments to protect creators' income to a greater extent have also followed. In the final analysis, this market blue ocean is due to the long-term unmelted income plight of the creator group in the music industry, and the increasingly fierce protests of musicians are also urging the industry to change.
Is the good times for musicians really coming?
The music industry as a whole has remained profitable since the rise of streaming in 2014, but musicians have shown time and time again that the industry's new wealth has not penetrated most of them. The complex mechanics of unfair record dating and streaming profit distribution have, to some extent, excluded them from economic turnarounds.
A poll by the British Union of Musicians found that 82 per cent of respondents earned less than £200 from streaming platforms throughout 2019, compared to £1 billion in streaming in the UK that year. Especially when mainstream platforms ignore the feelings of musicians with their monopoly positions, the situation of music creators is even more difficult.
Take indie musician MIRI, who debuted the single "Trends" on Sonstream, a music streaming site that claimed to be "pay-per-play" on November 19 last year, and then released it to other major platforms at the same time a week later, but the result was that "within two weeks, I made more than £20 on Sonstream, while on two of the other two larger platforms I only made £0 and £1.08... This made me realize how bad musicians trade on mainstream music platforms. ”
In the past two years, the economic downturn brought about by the epidemic has made the complaints of music creators more intense and concentrated, such as the #BrokenRecord movement in the United Kingdom, which is lobbying Parliament to legislate to restructure the industry, the American Federation of Musicians UMAW and the recent US Royalty Commission CRB, which has recently complained about the low royalties of streaming platforms, as well as catalyst Sound, a small streaming service co-operated by 30 avant-garde musicians, and Sonstream, mentioned above. Their common goal is to urge the industry to pay musicians more fairly.
The protests did pay some success, with Apple Music claiming to pay musicians £0.01 per stream a month after Spotify launched its "Loud and Clear" transparency program. Previously, revenue per stream on Spotify was as low as £0.002 to around £0.0038, and on Apple Music it was about £0.0059.
Has the good times for creators really come? We are cautiously optimistic. Fortunately, the bottlenecked music industry has had to face up to the importance of creators again, and in the creator-centric industry shift, independent musicians have also been given more opportunities.
While a similar waiver of twenty years of unpaid advances is not a feat, at least the hardships of creators have received more attention as a result, and the industry has been slow to achieve self-sufficiency for musicians, but change is quietly happening.