In a move to prioritize “transparency with creators in all aspects of their development,” Sony Music has cancelled the debts of thousands of artists signed to the label prior to 2000 and will pay affected legacy acts royalties, even if they still owe the label money.
Under its Legacy Unrecouped Balance Program initiative, Sony will no longer deduct unpaid balances, which will allow artists currently repaying their debts to earn money when their music is streamed on platforms like Spotify and Amazon Music.
Musicians often take on debt once signed to a label and given an “advance” to cover studio costs and other marketing expenses, including video and photo shoots, which is then paid back once the artist starts to sell their music. Some cannot repay these advances due to unfair royalty rates, which block them from receiving any future income, including future royalties and streaming revenue until their debt is repaid to the label.
Artists signed before 2000 had more restrictive contracts that didn’t take into account revenue from streaming services that didn’t exist at the time of cassettes and CDs, which may impact the percentage of revenues they receive from these platforms now.
Sony’s program comes at a time when the industry is being scrutinized for its distribution of monies to artists, particularly from streaming services. British independent label Beggars Group (Jarvis Cocker, The xx) recently waived unpaid balances from older acts, but Sony is the first major label to offer this forgiveness to its artists.
“As part of our continuing focus on developing new financial opportunities for creators, we will no longer apply existing unrecouped balances to artist and participant earnings generated on or after January 1, 2021 for eligible artists and participants globally who signed to SME prior to the year 2000 and have not received an advance from the year 2000 forward,” said the company in a letter to artists on June 11. “Through this program, we are not modifying existing contracts, but choosing to pay through on existing unrecouped balances to increase the ability of those who qualify to receive more money from uses of their music.”