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BMG calls on industry to follow its lead to tackle discrimination in old record contracts

By | Published on Monday 21 December 2020


BMG revealed on Friday that four of the 33 label catalogues it has acquired over the years show statistically significant differences between the royalties paid to black and non-black artists. It now plans to dig deeper into the contracts relating to those catalogues to identify the reasons for the differences, while also committing to “bring forward measures which will benefit the lowest paid recording artists across all of its catalogues”.

Following the Black Out Tuesday initiative earlier this year, BMG announced it would review all of the contracts relating to its recording catalogues in a bid to identify whether black artists had been historically discriminated against when it came to remuneration. Most of those contracts relate to catalogues the current incarnation of BMG acquired from other music companies in the decade after its launch in 2008.

Publishing a number stats relating to that review – which was independently audited – BMG said on Friday that the 33 label catalogues it acquired feature music from 3163 artists of whom 1010 – so 32% – are black.

Fifteen of the catalogues feature both black and non-black artists. With eleven of those catalogues there was no evidence of racial disadvantage, so black and non-black artists were getting more or less the same terms in their contracts. However, “in the case of four labels there was a statistically significant negative correlation between being black and receiving lower recorded royalty rates, a difference ranging from 1.1 to 3.4 percentage points”.

BMG also reviewed the 800+ new recording agreements it has directly entered into with artists since 2008. It says “the inquiry established there was no negative correlation between lower recorded royalty rates and black artists across those deals”.

While BMG will now further investigate the catalogues where black artists were less well remunerated and seek to address those seemingly discriminatory contract terms, the company is also calling on the wider music industry to follow its lead, noting that its acquired catalogues account for a relatively small share of black music history.

The sample is sufficiently small that BMG’s findings can’t really be seen as representative of the industry at large. However, it believes its approach to reviewing legacy contracts in this way could be employed by other music companies.

BMG CEO Hartwig Masuch said: “Since before the dawn of rock n roll, virtually all pop and rock music has its roots in black music. Yet music’s history books are littered with tales of discriminatory treatment of black musicians. It is time for the music industry to address its past”.

“Making good on our commitment to search for racial disadvantage in our historic acquired recorded catalogues has been an enormous and highly complex task”, he added. “We have learned a lot and there is still more to discover. We will act on this knowledge. We invite other labels to join us in this mission – to turn the promises and hopes of Black Out Tuesday into action”.

Before publishing its findings, BMG presented the results of its contracts review to the US-based Black Music Action Coalition. Its Chairs Binta Niambi Brown and Willie ‘Prophet’ Stiggers have likewise called on other music companies to follow BMG’s lead.

“Gathering, understanding and sharing data describing historic inequities in the music business is a core activity of the Black Music Action Coalition, which was formed to advocate for an end to structural and systemic inequality in the music business and broader society”, they said.

“We welcome this initiative by BMG and believe if all other labels were to follow suit, this could be a game-changer for black artists throughout the industry”, they added. “We cannot fix what is wrong if we do not investigate and hold ourselves accountable for whatever the results may be”.

Legacy record contracts are back in the spotlight for reasons other than racial discrimination, of course, thanks to the ongoing and evolving debate around the streaming market and how digital royalties are shared out across the music community.

Some legacy artists whose catalogue has been revitalised by the shift to streams are not really seeing the benefit because of old contract terms that provide low royalty rates and sometimes allow labels to make further deductions before even calculating that royalty. Many artists, managers and lawyers argue these old-fashioned terms should not apply to new income streams.

BMG has also committed to end one of the more controversial of those terms, the so called ‘controlled composition clause’ that was common in US record contracts, which reduces the payments a label must make to songwriters and music publishers with physical releases.

Under that term, where an artist is also the writer, they are forced to provide the label with a discount on the standard rate set under US copyright law. BMG announced in October that it would remove that clause from its new and legacy record contracts.