Business News Digital Labels & Publishers Top Stories

Featured Artists Coalition backs indie community’s Digital Deals Declaration

By | Published on Thursday 17 July 2014


The UK’s Featured Artists Coalition last night welcomed the indie label community’s Fair Digital Deals Declaration, via which hundreds of labels have pledged to better communicate to artists how digital deals are structured, and who is paying what to whom. The Declaration also sees signed-up labels promise to “account to artists a good-faith pro-rata share of any revenues and other compensation from digital services that stem from the monetisation of recordings but are not attributed to specific recordings or performances”.

The pledge to better explain how digital licensing in the record industry works follows a CMU artist panel survey ahead of The Great Escape earlier this year, which showed that many artists had been left in the dark about how deals were being done and what royalties were being paid.

Meanwhile both the FAC and the Music Managers Forum have been increasingly vocal about the problems the ‘non-disclosure agreements’ that cover so many digital deals cause, meaning that, bizarrely, beneficiaries of those arrangements often aren’t allowed to know what exactly was agreed.

And another issue for the FAC and MMF, in theory addressed by the indie community’s new Declaration, is what exactly happens to any advances or equity taken by the labels when they strike up a deal with a new digital service provider. Though the majors are assumed to be the big beneficiaries of such arrangements, and the indies, artists and managers may now put pressure on them too to sign up to the World Independent Network’s new pledge.

Welcoming the WIN initiative last night, the FAC said in a statement: “We applaud how this sets the bar for industry-wide transparency and best practice in its dealings with artists. In recent years, there have been widespread reports, shrouded in the secrecy of Non-Disclosure Agreements, that digital deals with distributors contain huge upfront payments”.

“These ‘catalogue-access fees’ or ‘non-artist specific advances’ are rumoured to run into hundreds of millions of dollars with long-term royalty rates being significantly lowered in exchange. Unfortunately, it is these rates upon which artist payments are based and excess income that is not attributable to individual artists goes straight to the bottom line of the companies concerned”.

“We understand the financial risk involved in licensing new platforms, especially given the volatile and highly competitive nature of the digital environment. But surely artists should participate in all revenues that derive from catalogue value, however the financial deals are structured?”

While welcoming WIN’s Declaration, which the indies said was needed to ensure “fairness” in the recorded music sector, the FAC goes one step further, by arguing that labels have a fiduciary duty to their artists to represent their interests – as well as those of their shareholders – when negotiating digital deals.

The FAC statement concludes: “WIN describe this in terms of fairness. The FAC would go one step further and say that all labels should have a fiduciary duty to artists, as well as their shareholders, to protect and grow the value of the copyrights which are core to their business, and conduct third-party agreements with artists’ best, long-term interests in mind. This declaration is a huge step forward for the record business and their relationships with artists and we look forward to seeing the list of participants grow to encompass all those who invest in those artists”.