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Tuesday, 2 October 2012

What price Parlophone? Should artists share in the sale proceeds?

There's been so much written about the UMG / EMI takeover but I spotted an interesting Independent article on the perspective of artists. In particular, Blur "leading the revolt" against being treated as 'assets' in the sale of Parlophone.

It's always struck me as a sad irony that, when catalogues change hands, none of the sale proceeds flow back through artist and writer royalty statements. I'd argue that, without the artists' copyrights, Parlophone would have no value to potential bidders. Yet, whatever UMG secures from the sale, it certainly won't be shared with the artists that made Parlophone the great label that it is. Equally, the artists involved appear to have no say in the sale, nor control over the final destination of their recordings.

You can see why Blur's Dave Rowntree feels aggrieved and it's an interesting development that those artists affected may withhold their future product and consent to regain some leverage.

All this points to the underlying problem of the traditional recording agreement. Artists pay (by way of advance recoupment) for their recording costs, yet the label owns the actual recording - which is then free to be sold elsewhere. The sale benefits the vendor of the catalogue but not the talent. Is this unfair? How might this be changed going forward?

Given that advances to new artists are considerably smaller than in the days when Blur were signed, many artists now choose to retain their IP in recordings & simply license it to labels. A further protection might be to include a reversion of such licence in the event of a sale of the licensee company.

A more traditional method was the inclusion of a key man clause in the recording agreement, typically for the A&R man (& it usually was a male executive) that originally signed the artist. In this way, where the clause was breached (as a result of the catalogue being sold to a new company), the key man clause was invoked in order to free the artist from the recording agreement.

So, while securing a record deal always way (and for some still is) the key objective for new artists, it comes at a big cost. You may eventually be helping to line the pockets of the label owner through a trade sale, but not share in the proceeds.

Let's hope that Dave Rowntree secures some concessions.

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