Beatport Freezes Payments To Labels – And Gives Artists Just 5% Of Streaming Money

Music Business Worldwide:

In a letter to music rights-holders sent last night and obtained by MBW, Beatport told labels that SFX’s ‘going private’ procedure had “trapped certain earned label payments”. Beatport believes the process will be “coming to an end in the next few weeks, at which time all payments will be able to be made”.

The big problem for the small labels we’ve spoken to is one of cash flow: this blocked payment covers three months of income, from April-June, and was due to be paid last Thursday (July 30). With Beatport accounting for 90% of digital income for some dance labels, such a delay in a primary revenue source risks badly damaging their stability.

This is pretty bad news for the labels concerned, and I'm sure Beatport's actions here are not as villianous as some in the online world are making it out to be. They are a corporation, and this is the kind of thing corporations do. However, any label deriving 90% of its digital income from one source -- and one that's outside of its control -- should be prepared in advance for situations such as this. (And -- broken record time -- that also applies when labels depend on something like Facebook for their entire fan outreach strategy.)

Meanwhile, Beatport is now taking on SoundCloud by permitting anyone to upload and monetize their own original tracks onto the platform. But there’s a big catch for artists: according to the terms and conditions of Beatport, it will only pay a measly 5% of income for plays of these user-generated streams. That’s for all rights, too.

I was hopeful when Beatport was just setting this up … I spoke to someone there about how they were aiming for this service to be seen as a monetizable alternative to SoundCloud. Using embeddable players that might pay some royalty would be a game-changer, as long as including advertising on our content wasn't the trade-off. This 5% figure is disappointing, but I don't understand where it's coming from. This implies there's another 95% that is going elsewhere. Their agreement speaks of the payment coming from a 'pro rata share of funds made available for the payment of streams.' So, there's a pool of funds for this royalty (as I understand it), and then a set share of that pool designated for each play, but the label / artist only gets 5% of that. Hmm? Anyway, I look forward to someone explaining this further.

Update: Sources Tell Music Week Beatport Has Paid 'Trapped' Royalties To Majors

According to Music Week sources Beatport has already released those “trapped” royalty payments to major labels, but neglected to do the same for indies. Music Week understands that the UK’s indie trade body AIM hasn’t taken kindly to the treatment and has contacted Beatport demanding to see its members paid within 24 hours.

Whoa, if true, but not surprising. The three majors presently have a hold on the 'new music economy' via their consistent threats of litigation and non-participation. The Louis CK model more and more seems like a great idea for indies and self-released musicians who want to avoid getting involved in the mess.