'Everyone's Being Super Petty': Labels Battle for Credit, Market Share as A-List Collaborations Flourish

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Paul Tuller
          

"Feature tracks" used to be something of a novelty -- no more.

Whenever a performer appears on another artist's track -- like Justin Bieber with Ed Sheeran on "I Don't Care" or Maroon 5 and Cardi B on "Girls Like You" -- the stars and their labels inevitably haggle over royalties. Then comes another discussion that's often more contentious: how the track affects the market share of the labels involved. What percentage of the sales of "I Don't Care" are allocated to Bieber's label, Def Jam, and how much goes to Atlantic, which has Sheeran?

"It's happening every time, and it's always a fight," says a record-label source. "It's happening every day with every label, and everyone's being super petty."

The still-unreleased "Don't Call Me Angel," from the Charlie's Angels soundtrack due this fall, is performed by Ariana Grande and Miley Cyrus, featuring Lana Del Rey, and sources say the market-share negotiations were intense even though two of the stars involved, Grande (Republic) and Del Rey (Interscope), record for Universal Music Group. (Representatives for those labels and RCA, which has Cyrus, did not comment.) "Labels compete with other labels, both under the same roof and not under the same roof," says a major-label source. "You try to give your sister label a little bit better treatment, but you know they're still your competitor."

On the surface, at least, what's at stake has less to do with finances than bragging rights -- even when the labels involved are owned by the same company. At least some executives have a personal interest, though. "There are bonuses tied to this stuff," says Josh Binder, an attorney at Rothenberg Mohr & Binder who represents Kendrick Lamar, Marshmello, Daddy Yankee and others.

In a business where information on the finances of individual projects isn't easy to come by, market share plays an important role in corporate valuations -- Universal's dominant 40% U.S. market share is one reason analysts have valued the company at between $33 billion and $50 billion. Market share also affects the advance payments that labels receive when they license their catalogs to Spotify and other streaming services.

"Feature tracks" used to be something of a novelty -- Whitney Houston and Mariah Carey made news for their duet on "When You Believe" for The Prince of Egypt in 1998. Back then, whichever label distributed the album received the bulk of the market share. As recently as five years ago, labels would "borrow" an artist for a track in exchange for an appearance fee. 

These days, feature tracks dominate the music business: The Billboard Hot 100 now includes six collaborations in the top 10, from Lil Nas X and Billy Ray Cyrus' "Old Town Road" to Shawn Mendes and Camila Cabello's "Señorita." At a time when Spotify's Today's Top Hits playlist has nearly 24 million followers, even one hit collaboration can swing a label's market share.

"It's picking up steam as there are more and more collaborations," says another source at a major label. "Sometimes it's dead easy but some people are a little more greedy than others." The source adds that such discussions force rival label executives to communicate more frequently with one another -- and cooperate. "Do you go out of your way to punish somebody who's an asshole? No, probably not," the source says. "You have to be realistic about it coming back to haunt you."

Feature tracks usually begin with an artist or label's creative decision -- and the negotiating usually only begins after the performers record. The finances are the easy part: A rapper who contributes a single verse to a superstar single might receive an upfront fee of between $25,000 and up to six figures for a formidable star. Artists have their own relationships, too, as powerful management companies sometimes trade favors, offering good terms on one appearance for the promise of another. But artists and managers rarely discuss market share. 

Only when that's done do the business-affairs departments at the artists' respective labels start their own negotiations -- over fees and artist royalty splits, plus the shares of revenue, market share and chart share allocated to each company. Any fees and deals the artists agreed to can complicate matters. Unsurprisingly, how to divide profit is usually the most contentious issue. "All of those things can be calculated independently or correspondingly," says the source. "Artist B's label could say, ‘The little tiny royalty you're proposing, we don't think that's fair, we actually want a piece of the profits.' The most egregious negotiation is the profit share and the money."

Discussions about market share often go to label lawyers -- and artist representatives aren't always privy to them. "That's happening at a really high level," says Todd Rubenstein, an attorney who represents Khalid and others. "The mega-adults' table."

The company with the bigger act has more leverage: An appearance on a track from an artist like 21 Savage is certain to boost streaming, so his label would be in a position to command more market share. Since smaller artists usually have less pull, their labels often argue that "my artist has all or most of the vocals on the song, and that's how the percent should be determined," as one label source puts it.

"It can get intense," says Jean Nelson, president of Blueprint Group, which manages G-Eazy, Lil Wayne, The Roots and others. "Sometimes it'll get so intense that they don't get the clearance because one side doesn't buckle."

After all that, labels often land on round market-share numbers. "We probably see more 50-50 [splits] than anything else," says Dave Bakula, Nielsen's senior vp industry insights. In some cases, the answer is obvious: Bieber and Sheeran are both big stars, so "I Don't Care" was almost certainly a 50-50 split, says Binder. "There's so much horse-trading nowadays that everyone has to try and hold on to as much as they can." When things do get more complicated though, even the most cutthroat label executives don't want to destroy future relationships.

"One thing's for sure: If they're asking you to clear something, you'll be asking them to clear something [later]," says one of the major-label sources. "And whatever deal you've taken a hard line on will turn against you."

This article originally appeared in the July 27 issue of Billboard.


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