BMG's Audit Finds Disparities in Black Artists' Old Record Contracts - Rolling Stone
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BMG Finds Financial Disparities in Black Artists’ Old Record Contracts

The music company’s audit found that black artists from four of its labels had “significant disparities” in the royalty rates of their old record contracts, providing them with smaller payouts than non-black artists

Blackout Tuesday

Rolling Stone

On Thursday, label and publishing company BMG shared the results of its long-awaited review of historical record contracts, which it had initially announced this summer as a response to Blackout Tuesday.

The report revealed that music catalogs from four of the 33 labels BMG had acquired since its founding in 2008 exhibited “significant disparities” for royalty payouts between black and non-black recording artists — but did not share much else in the way of data points or financial details around these historical contracts.

The audit, BMG says, ends the first step of its review process. With the royalty disparities identified, the company says it will now scrutinize the catalogs in question to find definitive answers for what caused the disparities, whether racial bias, another kind of discrimination, or other factors. BMG says it will take “measures to benefit the lowest-paid recording artists across all of its catalogs” regardless of its next findings, although the company didn’t specify more beyond that.

“We have found a number of both black and non-black artists with terms in contracts signed decades ago which we feel are not appropriate,” BMG COO Ben Katovsky, who spearheaded the audit, said in a statement. “While these legacy contracts may have been entered into willingly, are fully legally enforceable and we paid the previous owners full market value for them, we feel we can do better. We will shortly bring forward proposals designed to do just that.”

BMG made waves in June when CEO Hartwig Masuch said that the company would audit its contracts and share results within 30 days. “Mindful of the music industry’s record of shameful treatment of black artists, we have begun a review of all historic record contracts,” Masuch told BMG clients in an email this summer, as Music Business Worldwide reported.

On Thursday, it shared a few specific figures on their findings — for instance, that royalty disparity for the affected artists ranged from 1.1% to 3.4% — but, when asked by Rolling Stone, the company declined to share how many black artists in total saw lower royalty rates, what the average for how much lower the rates were or the amount of money black artists may have missed out on with these disadvantaged contracts. Citing data-protection compliance regulations, BMG said it couldn’t release the names of the four labels where the unequal contracts were written. The review process, which took five months longer than the 30 days Maruch originally stated, also focused exclusively on royalty payments, without analyzing other granular aspects of record deals, like advances and recoupment, distribution fees, and non-financial terms that could contribute to lopsided record deals for black artists.

 “We did what could be practically achieved in a relatively short space of time. This was a way we thought we could find a methodology to get across a large scale of the contracts in a sensible amount of time,” Katovsky tells Rolling Stone. “As it turns out, it’s been an incredibly complicated process, even from what we thought would be a relatively sensible way to get across the volume. If we’d gone another route, we probably wouldn’t be at this point at all, well into next year where we could make some kind of meaningful conversation or audit.”

BMG points out that the review is the first of its kind for a music company of its size, but admits that the audit doesn’t cast much light beyond royalties: “It has nothing to say about other facets of the relationship between the original labels and black artists and cannot therefore be relied upon as either proving or disproving discrimination against black artists in terms of expectations, label commitment or other non-financial parameters,” the company said in its own release.

Yet, while BMG’s report wasn’t as broad as the industry may have initially expected, it is still one of the most tangible introspective actions the industry has taken since companies paid lip service to the idea of addressing racial inequality amid Blackout Tuesday. The major labels Warner Music, Universal Music, and Sony Music have donated hundreds of millions of dollars to non-profits focused on addressing racial disparity, and Universal recently announced an internship program specifically for historically black colleges and universities — but they have yet to meet most of the the demands that advocates have outlined for a better music industry, such as publishing diversity reports or confronting pay disparities for employees.

Binata Niambi Brown and Willie “Prophet” Stiggers, co-chairman for the Black Music Action Coalition, lauded BMG’s royalty review and called for the rest of the music industry to execute internal audits on their own artists’ deals.

“We welcome this initiative by BMG and believe if all other labels were to follow suit, this could be a game changer for Black artists throughout the industry,” Brown and Stiggers said in a statement. “We cannot fix what is wrong if we do not investigate and hold ourselves accountable for whatever the results may be.”

In This Article: bmg, Racism

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