Sony Music Entertainment has called on RoyaltyShare to take over the processing and payment of artist and mechanical royalties, according to both companies.
While Sony declined to comment on the move other than to acknowledge that it had occurred, sources said that RoyatyShare will hire 70 Sony employees involved in processing artist and mechanical royalties, who will remain in Sony's Lyndhurst, N.J., offices. As part of the deal, Sony will receive a small equity interest in RoyaltyShare, sources said. The deal was first reported by NorthJersey.com on July 7.
Initially, RoyaltyShare will continue to process Sony royalty payments using Sony's existing software and processes, but eventually RoyaltyShare will integrate its own systems with the goal of improving the royalty accounting process, according to people familiar with the deal.
While RoyaltyShare chairman and CEO Bob Kohn declined to provide details about the deal, he issued a statement to Billboard. "We are building an entirely new industry that will invigorate and revolutionize royalty processing, similar to the way payroll processing, human resources, and customer service has been revolutionized in other industries," he wrote.
The move by Sony to bring on RoyaltyShare is part of a trend by the majors to outsource tertiary music-industry functions, which so far has already included activities like manufacturing, distribution and warehousing music.
In addition to servicing the music industry, RoyaltyShare also works with books and other media industries where royalty-processing services are needed.