Sony Music Clears Out Artists’ Decades-Old Debts

Sony Music has written off the debts of lots of artists who signed to the record label before the year 2000.

This means that a lot of them will now, for the first time, make their own money when their songs are streamed on services like Spotify and Amazon Music.

Sony said it was unable to name the eligible acts due to the confidentiality agreements, but a source confirmed that it would include household names. Some artists were said to stand to receive many thousands of dollars per year.

Pop icons TLC were stuck with debts worth millions of dollars, all thanks to the record deal made with LaFace Records in the 1990s

Musicians, most times, automatically take on debt when they are first signed into a record label. They are given a lump sum, mostly known as an advance, to make payments for recording studios, distribution, video shoots and other expenses. This money is expected to be paid back when their music is sold.

However, a lot of these artists never make enough money to repay this lump sum, most times because the royalty rates gotten from their own record companies are most times unfavourable. Heritage black artists have been particularly victims of this.

And until they can repay this debt to their label, these artists are not eligible to receive income from streaming, and other royalty payments.

What does Sony say?

Sony has announced in a letter addressing artists on Friday, a copy of which the BBC also holds.

“We are not modifying existing contracts, but choosing to pay through on existing unrecouped balances to increase the ability of those who qualify to receive more money from uses of their music,” it said.

This simply means, the debt owed hasn’t been entirely cleared out yet – but Sony will choose to ignore this and still pay royalties to affected acts, backdated 1 January 2021.

“Many of the record deals [made] before 2000 didn’t recognize that streaming platforms would ever exist,” she said. “Therefore, artists didn’t have the right mechanisms in place to see those revenues.”

Why did Sony choose to do this now?

Sony was prompted to do this due to the mounting pressure on the record industry to be more straightforward about the way it handles money, particularly that made from streaming services.

Gomez musician Tom Gray, who was a part of the founders of the campaign, said Sony’s move was incredibly welcome. “From the perspective of somebody who’s been running a campaign to try and get these companies to behave more ethically and transparently, it feels like a win,” he told the BBC. “I think this is a sign of labels recognizing that there is pressure coming from not only artists but fan bases, and it’s increasingly being talked about publicly,” she said.