Now Warner scraps unrecouped balances for heritage artists. Will Universal be next?

Last summer, Sony Music Group shocked the global music industry by doing something historic: announcing it was disregarding unrecouped balances for thousands of heritage artists and songwriters who had signed to the company in previous decades.

Today (February 1), in another milestone moment for the music business, one of Sony‘s biggest rivals has stepped up to do the same: Warner Music Group.

WMG, the world’s third largest music rights company, has just confirmed that it is introducing a “legacy unrecouped advances program”, which will go into effect on July 1.

In Warner’s own words: “[We’ve] announced a legacy unrecouped advances program where, for our artists and songwriters who signed to us before 2000 and didn’t receive an advance during or after 2000, we won’t apply their unrecouped advances to royalty statements for any period beginning July 1, 2022 or after.

“The program will also benefit other artist royalty participants such as producers, engineers, mixers and remixers.”

Or if you’ll allow MBW to put it another way: Are you an eligible artist or songwriter whose streaming royalty money is being kept by Warner each month because you remain unrecouped on historical advances? Well, from this summer, that money is going to start landing in your bank account.

Today’s new follows other artist and writer-minded updates Warner has made to its streaming terms over the past 15 years.

Notably, since 2009 WMG has been sharing all advances and minimum guarantees from streaming services with artists – “treating breakage like other digital revenue”.

And in 2016, Warner became the first major music company to confirm it would be sharing any proceeds from the sale of its equity in Spotify with its artists.

(Warner subsequently did just that, after selling its entire Spotify stake for $504 million in 2018. However, unlike Sony it didn’t disregard unrecouped balances when paying this money out to its roster.)

As well as causing celebration amongst the artist community, today’s news is also sure to trigger a big question: Will Universal Music Group be the next major music company to announce it is disregarding unrecouped balances for catalog artists?

UPDATE: MBW sources are telling us, categorically, that Universal is introducing a policy that will effectively wipe unrecouped balances for many heritage artists and songwriters on the firm’s books. This policy is expected to be announced in the coming weeks.

Universal has already committed to sharing its Spotify equity proceeds with its artists whenever it sells its shares in the streaming company.

UMG, prompted by Taylor Swift, has also committed to ignoring unrecouped balances when it passes that money through to artists.

However, Universal is yet to sell its Spotify equity.

UMG is believed to own somewhere around 3-4% in Spotify – a stake which, despite Spotify’s recent market valuation drop, is estimated to be worth over a billion dollars.

Warner confirmed its new unrecouped advances program within its inaugural Environment Social Governance (ESG) report, which it published today.

Warner calls this document “a vehicle to communicate to key stakeholders and a baseline for WMG to measure its ESG progress in areas including employee wellbeing, Diversity, Equity, and Inclusion, social impact, and climate change”.

Spearheaded by Samantha Sims (Vice President, ESG) and WMG’s ESG Executive Oversight Committee, the report was created with the input of more than 70 employees.

Its other highlights include details on action Warner has taken on issues of the environment, social (including mental health programs for employees), and Governance.

You can read Warner’s full Environment Social Governance (ESG) report through here.Music Business Worldwide