Movies of War

Taylor Swift performs onstage during "Taylor Swift | The Eras Tour" at Wembley Stadium on Aug. 15, 2024 in London. Gareth Cattermole/TAS24/Billboard Trending on Billboard Universal Music Group chairman and CEO Lucian Grainge said on Tuesday (April 29) in an earnings call that the company’s board had approved the sale of half of UMG’s equity stake in Spotify, and that a portion of the proceeds will go to UMG artists. But none of that was accidental, as UMG artist Taylor Swift sings in “Mastermind.” In March 2018, UMG pledged to give artists a share in any future Spotify divestment, following similar commitments from Warner Music Group and Sony Music Group. Seven months later, when Swift announced she was leaving her longtime label home, Big Machine, to join UMG’s Republic Records in November 2018, she said she negotiated a clause in her contract specifying that any such payout could not be clawed back. Related Universal Music Reports Quarterly Revenue of $3.3 Billion on Light Release Schedule Elizabeth Dilts Marshall In announcing the deal on Instagram, the “Shake It Off” singer wrote, “As part of my new contract with Universal Music Group, I asked that any sale of their Spotify shares result in a distribution of money to their artists, non-recoupable. They have generously agreed to this, at what they believe will be much better terms than paid out previously than other major labels.” At the time, that distinction — recoupable or non-recoupable — was at the heart of an industry conversation around labels sharing divestiture revenue with artists. When Warner and Sony first announced in 2016 that they would share any profits from a sale of a stake in the streaming service with artists, there were concerns that any money earmarked for creators would be applied to outstanding advances, and that many artists would not actually receive these proceeds. Warner and Sony later clarified that they would structure payouts to artists according to their record contract terms, without factoring in recoupable balances. Two years later, when UMG said it would also share this income with artists, the company did not specify whether it would factor in recoupment — until Swift’s deal was announced in November. That could be a big boon for many artists, including those who still owe back advances to the labels that initially signed them. While there is no data on how many artists have outstanding balances on the books (record contracts are generally private), Warner Music said in 2023 that a program it instituted to wipe out unrecouped balances for legacy artists had benefited some 4,500 artists in its first year of implementation. (Sony and Universal also announced similar initiatives, following the lead of Beggars Group a few years before.) How much individual artists stand to earn is not known. The decision by UMG’s board to sell half of its Spotify stake follows UMG investor Pershing Square’s suggestion that the company make this divestment in a non-binding offer Pershing made for the company on April 7. In a letter to UMG’s board proposing a merger with its Pershing Square SPARC Holdings, Pershing founder Bill Ackman estimated UMG’s share in Spotify to be worth 2.7 billion euros ($3.1 billion), and said that if his offer were approved, Pershing would sell the stake and give 750 million euros ($865.4 million) to artists and use the remaining 1.5 billion euros ($1.7 billion) of net proceeds after taxes to fund the transaction. Now that UMG plans to sell half its stake — it has not sold any as of yet, the company confirms — that could lead to hundreds of millions of dollars in payments to artists. UMG said in a statement on Wednesday (April 29) it would pay out part of the proceeds from the divestiture in accordance with artists’ contracts. “Consistent with the company’s approach to artist compensation, artists will share in the proceeds,” the release stated. “UMG’s share will initially be directed towards its buyback program.” Grainge announced the board’s approval for the partial divestiture during the company’s first-quarter earnings presentation alongside a doubling of the label’s share buyback program. A representative of UMG declined to comment further. Additional reporting by Dan Rys. Daily newsletters straight to your inbox Sign Up Leave a Comment Your email address will not be published. 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