© 2019 Billboard. All Rights Reserved.
Billboard is a subsidiary of Valence Media, LLC.
In signing her new global deal with Universal Music Group, Taylor Swift used her considerable clout to secure a victory for all UMG artists.
“There was one condition that meant more to me than any other deal point,” Swift posted on Instagram Monday morning (Nov. 19). “As part of my new contract with Universal Music Group, I asked that any sale of their Spotify shares result in a distribution of money to their artists, non-recoupable. They have generously agreed to this, at what they believe will be much better terms than paid out previously by other major labels…"
While it's not clear that UMG's payout terms will be better than Sony Music Entertainment's, its plan will likely be more favorable than Warner Music Group's for some artists. Swift's request that UMG share its Spotify stock proceeds with artists in non-recoupable payments, matches what Sony Music Entertainment put into place with its artists and distributed labels when it sold half its Spotify stock earlier this year for roughly $750 million. Some artists received up to $1 million in the cash out.
In August, Warner Music Group sold its entire stake in Spotify for a value of $504 million. The $126 million artists share from the sale was credited to artist accounts on their royalty statements -- but was not non-recoupable. In other words, if an artist had yet to recoup, the payment went toward the balance the artist still owed WMG, as opposed to a no-strings-attached royalty. Distributed labels also shared in the windfall per their contracts.
UMG remains the last of the big three to hold onto its Spotify stock -- its 5 percent equals around $531 million, through the quarter ending June 30. The company has not announced any intention to sell, although in March, it noted that it would share proceeds with artists should it unload its Spotify stock. Making the royalty payments non-recoupable -- meaning no-strings-attached, regardless of whether an artist still owns the label money -- was Swift’s request, though sources say that UMG was leaning that way to begin with. For now, any sell off is likely on hold as UMG parent Vivendi plans to sell up to 50% of the company.
The artist-friendly move makes sense as labels face increasing competition for talent in the streaming era with acts having more options than ever before, including bypassing traditional labels altogether.
This is not the first time Swift has used her powers of persuasion to help all artists: In 2015, Swift wrote an open letter to Apple CEO Tim Cook calling the company out for its plan not to pay artists and producers royalties during a 3-month free trial to promote the launch of Apple Music. Cook reversed Apple's policy.
Swift's history with Spotify has been an uneasy one: she pulled her music off the streaming service for three years--from 2014 to 2017-- because she felt the Spotify paid artists too small a royalty.
Swift considers UMG’s assent “as a sign that we are headed towards positive change for creators—a goal I’m never going to stop trying to help achieve, in whatever ways I can. I’m so happy to have Sir Lucian Grainge as a partner in these efforts.”
UMG declined to comment.
Ed Christman and Hannah Karp assisted in preparing this story.
The Biz premium subscriber content has moved to Billboard.com/business.
To simplify subscriber access, we have temporarily disabled the password requirement.