HITS Daily Double


Concessions on Contractual Deductions Could Mean More Money for Artists
In a move being hailed by artist representatives as a significant step in the right direction, Universal Music Group has made a proactive move to change the economic relationship between artists and its record labels vis-a-vis paid music downloads.

Market leader UMG has initiated a new download policy, meant to make downloads more financially meaningful to artists, including the following provisions:

—The group has changed its royalty rate for downloads from the single rate to the album rate, according to each artist’s contract. The album rate is usually 25% higher than the single rate.

—The 20% new media deduction has been eliminated.

—The 25% packaging deduction has been eliminated.

—The 15% free goods deduction has been eliminated.

The move, which makes UMG the first of the Big Five to take a step toward its artists on download compensation, is aimed at getting the Group’s labels and artists on the same page regarding downloads. Previously, artists have maintained that they were paid so little for downloads that they might as well be giving them away, which is what several artists in fact did.

From an artist’s point of view, if he or she were (hypothetically) being paid 16 cents per download, less 20% for new media, less 25% for packaging, less 15% for free goods, the net would end just over 6 cents. Multiply that small payment by the small number of paid downloads actually being sold, and it isn’t hard to understand why many artists haven’t been overly concerned with that particular revenue “stream.”

By increasing the amount artists make on downloads, UMG is hoping to provide an incentive for them to become more involved in finding ways to successfully monetize online music while working to thwart piracy—a challenge to the business at large in which both parties obviously have much at stake.