Warner Music Group will share revenue from equity stakes in digital music services with artists2000p Warner Music Group Logo Svg

Warner Music Group will share revenue from equity stakes in digital music services with artists

Warner Music Group, one of the ‘big three’ record labels, will share proceeds from its equity stakes in digital music services with its artists, in the event of a sale. Warner’s CEO Stephen Cooper announced the news with investors during the company’s quarterly earning calls. Among these services are Spotify, which is currently preparing to go public, and Soundcloud.

Currently, WMG shares ‘digital breakage revenue’ with artists, which encompasses advance payments, minimum guarantees, and non-recoupable payments. Cooper’s entire statement is below:

Streaming is on a trajectory to become our primary source of revenue. As there is an on-going debate in the media regarding how artists should be paid for use of their music on streaming services, we wanted to take the opportunity to address this issue head on. While the main form of compensation we receive from streaming services is revenue based on actual streams, there are some services from which we receive additional forms of compensation. First, there is compensation that is commonly referred to as ‘breakage’ – which includes advances, minimum guarantees, non-recoupable payments and audit settlements. We are proud to have been recognized as the first major to implement a breakage policy, sharing this revenue with our artists since October 2009.

Second there are equity stakes in some streaming services for which we have not paid. Although none of these equity stakes have been monetized since we implemented our breakage policy, today we are confirming that, in the event that we do receive cash proceeds from the sale of these equity stakes, we will also share this revenue with our artists on the same basis that we share revenue from actual usage and digital breakage. This policy stems from our desire to build deep and lasting partnerships with our artists. We strongly believe that aligning our interests with those of our artists is not only good for our artists, but also good for us and the health of the music industry.

H/T: Music Week

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