On 11th June 2021, Sony Music made a landmark announcement that has shaken the music industry across the globe and that will certainly be of great impact across record labels and the entire industry. Yes, Sony Music has written off all the unrecouped balances for heritage catalog artists. This has been a long-awaited move, following numerous calls for such unrecouped balances to be written off. Sony finally did it!
This is no doubt a big win to these artists. Especially artists who had long cut ties with Sony Music almost 10 years ago. For once, they will actually be able to earn their royalties instead of the same being cut by the record labels as a way of recouping their balances. Many people have actually fought for this including Ron Sweeney.
Following the Black Lives Matter demonstrations that were carried out in late 2020, various record labels offered to donate money to support the movement. In his letter, however, Rony Sweeny thought (among others) that these record labels should consider writing off unrecouped balances of Black artists that had signed with the record labels before the year 2000. And that this would ensure that they receive such royalties and be able to support themselves.
Well, that actually happened!
In their letter, Sony Music indicated as follows;
“As part of our continuing focus to develop new financial opportunities for creators, we will no longer apply existing unrecouped balances to artist and participant earnings generated on or after January 1, 2021, for eligible artists and participants globally who signed to Sony Music before 2000 and have not received an advance from 2000”
If Sony is writing off unrecouped balances for qualifying artists, why is it that the balances will still show on the ledger? Well, the answer to this is probably related to any claim that might arise in times to come about recoupment. For instance, where an artist is claiming reversion rights, Sony will have to track the recoupment records. And they cannot do that if they remove the unrecouped balances from the ledger.
In simple terms;
Well, Sony’s policy on writing off unrecouped balances also applies to participants which include distributors who have directly signed with Sony Music and music producers among others.
You may be asking; How do I know my Sony’s unrecouped balances have been written off? Well, you do not have to worry anymore because Sony had already indicated that they will inform all those who are eligible for the Legacy Unrecouped Balance Program. So yeah, just stay put. If you are eligible, you will definitely be notified
When artists record their songs, they usually have to sign up with a record label or a suitable music company. This is usually very expensive given all the funds that go into making sure the song is released. Therefore, these artists are usually given something known as an advance, which is like a loan, to facilitate all the other expenses to ensure the song is released. Once the song has been released and it starts generating royalties, the artists have to first pay back the loan(advance) before they can start earning from their songs.
What happens, however, is that the royalties their songs generate are never enough to pay back all the advances, and therefore it usually takes some time for many artists to actually earn from their songs. This has been a huge drawback, especially for heritage black artists.
What Sony is doing, therefore, actually means a lot for artists because it writes off the loans of artists who signed up with them before 2000. Now that’s huge! Imagine having a loan with the bank and the bank tells you that they have written off your debts! Well, that is what Sony’s direction on writing off unrecouped balances means to artists.
Are there other labels, who just like Sony Music, have written off Artist’s Unrecouped balances? Well, currently, Sony is the only major label to make this move. However, Beggars Group, which is an independent record label had done the same- writing off unrecouped balances. The question then is;
We still wait to see what happens. But as stands, we cannot deny the pressure other record labels now face, to wipe out the unrecouped balances on advances especially for artists who signed up with the labels decades ago.
Sony may indeed have just pioneered the way for other record labels.
What are your thoughts on this move by Sony Music Entertainment? Do you think it was well overdue? You can go ahead and let us know your position on this through the comments section below.
