Warner Promises To Share Equity From Proceeds Of Streaming Service Sales

While much of the blame for low payouts to artists from streaming has been laid at the feet of the services themselves, the opaque nature of how things are handles by major labels deserves a lot of the blame as well. Warner Music Group is looking to gain a little goodwill from their artists in a new announcement today, saying that the label would share some of the equity from a potential sale of a streaming service that it is invested in, like Spotify.

This news was revealed by Warner CEO Stephen Cooper on an earnings call this morning, Feb. 4, discussing the possibility of sharing revenue from a potential IPO or sale from a major streaming service. It is rumored that Spotify is looking to go public and Warner has equity in Deezer, which abandoned its planned IPO last year, citing poor market conditions.

"Although none of these equity stakes have been monetized since we implemented our breakage policy, today we are confirming that in the event 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 as we share revenue from actual usage and digital breakage," Cooper explained via Billboard.

In the call he mentioned that Warner has already been sharing revenue from the streams and then from other forms, known as "digital breakage," which include advances, minimum guarantees and audit settlements.

"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," he touts in the call via Music Week.

This move is a clear attempt to try and make WMG a more artist friendly destination for its clients as opposed to its larger rivals in Sony and Universal Music Group. The only issue is that it is unknown how much equity they have in these companies and how much they would actually share with their artists. If other streaming deals are to be an indicator, don't expect it to be much.

Tags

Warner Music Group