BPI and AIM have recommended that their member labels adopt a set of principles when renegotiating old record contracts with their artists.
The Council Of Music Makers believes all artists should be receiving a ‘modern digital royalty rate‘ without deductions or discounts.
WHAT IS A MODERN DIGITAL ROYALTY RATE?
By ‘modern royalty rate’, we mean what an artist would expect to receive if they entered into a new (but conventional) record deal today. If you have an artist lawyer, you could ask them for guidance on what a modern royalty rate might be. However, as a guide…
- The European independent labels association IMPALA commits all members to paying a contemporary digital royalty rate without defining what this means.
- The Beggars Group applies a minimum streaming royalty rate of 25% across its catalogue.
- During the January 2021 streaming inquiry in Parliament a major label representative said that the average modern streaming royalty rate was 20-25%.
- A 2022 report by the Competition & Markets Authority said that “the average royalty rate (before recoupment) for all UK artists signed to majors is 26.3%”.
Some old record deals allow a label to make deductions on income received before calculating the artist’s royalty or to apply discounts to the royalty rate in certain circumstances.
For example, some pay a lower rate on overseas income or reduce royalties when certain albums have had TV advertising or special packaging on physical records (even if decades ago).
CMM believes that these deductions and discounts should never be applied on streaming income.
STEP ONE: DECIDE WHETHER TO RENEGOTIATE
If you are not receiving a modern digital royalty rate – and/or if deductions or discounts are being applied – we recommend you seek to renegotiate your deal, especially if you haven’t renegotiated your deal since streaming became the primary recorded music revenue stream in the late 2010s.
If you are not sure what royalty rate you are receiving OR if deductions or discounts are being applied, you should begin by asking your label for that information.
Any labels that are members of BPI or AIM have signed up to a transparency code that says they must “state remuneration terms clearly” including “whether the royalty rate in respect of streaming applies to label ‘at source’ income or net receipts”.
STEP TWO: APPROACH YOUR LABEL
When you approach your label about renegotiation, under the BPI principles, they should respond within 60 days and provide “clear information on factors the label may consider during a negotiation”.
If you don’t know who to approach to access contract information or seek renegotiation, ask any contacts you have at the label stressing that, under the transparency code and renegotiation principles, labels have committed to make that information available.
If your contact cannot help – or you don’t have any contacts – please get in touch with whichever CMM organisation you are a member of.
STEP THREE: START THE NEGOTIATION PROCESS
You should tell your label that industry best practice is for labels to pay a ‘modern digital royalty rate’ without deductions or discounts. To illustrate this, you can point out that the European independent labels association, IMPALA, of which AIM is a member, recommends that labels “pay artists a fair contemporary digital royalty rate”.
However, your label may seek to secure additional rights or commitments in return for offering a better rate. It may also offer other benefits, such as a new advance, rather than a better rate. If that is the case, you should seek advice from your lawyer or from whichever CMM organisation you are a member of before agreeing to the new terms.
STEP FOUR: ESCALATE INTRANSIGENCE
Your label may simply refuse to renegotiate your old deal. If so, inform any CMM organisation you are a member of, so that we can raise this with your label and with the government.
We will of course respect confidentiality and be led by you on any action taken. If your label has made you sign an NDA, still get in touch and we will find a way to discuss your situation without putting you in breach of any NDA commitments.
We can also help advise on your options. We cannot force a different outcome but we can flag when the negotiations are not “in good faith” as promised in the principles recommended by BPI and AIM.
We also intend to keep an anonymised record of re-negotiations that resulted in improvements for the artist(s) and those that didn’t, as this will be helpful as we campaign and negotiate with the government and labels for better terms on a blanket basis.
STEP FIVE: OTHER CONSIDERATIONS
The major labels have also launched schemes that are offering marketing tools and support for legacy artists. These may be useful, though you should consider if putting time into promoting recordings you do not control is the best use of your time and resources.
We would strongly urge you to ensure you are receiving a ‘modern digital royalty rate’ without deductions or discounts (or alternative support of equal value) from your label before using these tools.
THE ONGOING CAMPAIGN FOR BETTER MUSIC-MAKER REMUNERATION
The Council Of Music Makers believes that each label should adopt a catalogue-wide policy to pay a ‘modern digital royalty rate’ without deductions or discounts to all artists.
Some independents already do this. The majors argue that this is not required because they renegotiate deals on a case by case basis. The BPI principles are meant to ensure this process is more accessible to all artists.
However, we are still campaigning for an industry wide solution, whether through voluntary agreement or copyright law. We need your help with this work.
Please keep an eye on member communications from the CMM organisations explaining how you can help.
THE PRINCIPLES AS PUBLISHED BY BPI
BPI recommends all UK labels provide bespoke support for legacy artists designed to
improve their streaming outcomes by:
● Responding meaningfully to initial queries and requests to renegotiate legacy
contracts within 60 days from the date of receipt, although the actual renegotiations
may take longer.
● Advising legacy artists who are seeking to renegotiate legacy contracts on key
elements, including clear information on who to contact and factors the label may
consider during a negotiation.
● Acting reasonably and in good faith in response to requests to renegotiate.
● Taking a bespoke approach to each individual contract renegotiation and in coming
to a determination consider holistically all elements of the contract and the context of
the commercial history between the artist and the label.
By way of example this may include:
– The label’s investment to date in the artist’s career including by way of
personal advances, recording costs, marketing and promotional support and
tour support;
– The nature of the artist’s musical genre (eg classical or pop)
– The level of sales of the artist’s recordings
– The artist’s existing royalty rates
– The artist’s unrecouped balance (if any)
● If a renegotiation is appropriate then the outcomes of such a renegotiation may
include some of the following:
– For artists whose royalty accounts remain unrecouped, disregarding some (or
all) of any unrecouped balance or paying through a proportion of the artist’s
royalties without regard to any unrecouped balance
– Adjusting artists’ royalty rates on some formats and/or in some territories
– The artist and label agreeing to new product and/or promotional commitments
● Where an artist considers that a label has not engaged meaningfully in responding to
a request to renegotiate within the 60-day timeframe, they should contact their most
relevant trade organisation to escalate further dialogue with the label in question.