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UnitedMasters’ Steve Stoute: ‘Record companies’ ownership in artists’ intellectual property will diminish.’

Twenty years ago, Apple launched the iPod, promising to put 1,000 Songs in Your Pocket.

Now, the tech giant has made a big bet on a company that wants to put an entire record label in the same space.

Late last month, independent artist distribution platform UnitedMasters secured a $50 million Series B investment led by Apple, with additional funding from two existing backers: Google parent Alphabet and Andreessen Horowitz. The new investment followed a $70m funding round led by Google/Alphabet in 2017.

New York-headquartered UnitedMasters launched four years ago to provide indie artists with music distribution services plus analytics and royalties tools. Today it says that it has a million “artist partners” on its platform.

UnitedMasters founder Steve Stoute, a former EVP of Interscope and founder of successful New York-based marketing agency Translation, tells MBW that UnitedMasters is on a “mission to become a full service music company in your pocket”.

Two recent developments from UnitedMasters highlight this goal. The platform launched a subscription tier in July last year which allows acts to keep 100% of their royalties from digital services. And in August 2020, UnitedMasters announced a deal that saw it become the first music distribution company to be integrated into short-form video app TikTok.

Stoute is excited by the rapid growth of the self-releasing artist sector which is estimated to have generated $1.2 billion globally in 2020. The UnitedMasters boss insists that “there are no opportunities that signed artists at record companies have over independent artists”.

“It used to be a stigma; if you were an independent artist, it was more of a cottage industry,” he says. “But now, with having the support of a company like Apple, it’s a big statement [about] how the playing field will be levelled and all the opportunities will be equally distributed.”

“TO HAVE GOOGLE, ANDREESSEN HOROWITZ AND APPLE BELIEVE IN THE FUTURE OF INDEPENDENT MUSIC IS A GREAT DAY FOR EVERY INDEPENDENT COMPANY IN THE WORLD.”

STEVE STOUTE, UNITEDMASTERS

Commenting further on the Series B round and participating investors, Stoute tells MBW that “to have Google, Andreessen Horowitz and Apple believe in the future of independent music is a great day for every independent company in the world”.

“I don’t care if you’re in music or not,” he adds. “This shows that independent creators have an opportunity now, better than they’ve ever had before, and there’s a spotlight on them.

“The biggest companies in the world are rooting for them and making steps to make sure that they have the same opportunities as everyone else.”

Here, Stoute tells MBW about what Apple’s investment means for UnitedMasters and for independent artists, and gives us his predictions for the future role of record labels in the music industry…


WHAT CAN YOU TELL US ABOUT THE SIGNIFICANCE OF APPLE’S INVESTMENT INTO UNITEDMASTERS and the ‘strategic partnership’ you say will go alongside it?

There is a growing community of independent creators. And from an audio perspective, we have to be able to fulfil their growth, their demands.

There’s more supply and demand than the legacy record companies can handle.

“THIS PARTNERSHIP IS GOING TO HELP US ACCELERATE ALL OF THE TOOLS AND SERVICES THAT WE OFFER.”

Our intentions were to build a platform that helps independent artists get their music distributed, gets partnerships with brands, [makes it possible] to get their music synched; to build essentially a system in which [UnitedMasters] is a record company in your pocket.

This partnership with Apple is going to help us accelerate all of the tools and services that we offer.


Kanye West

SINCE UNITEDMASTERS LAUNCHED BACK IN 2017, THERE HAVE BEEN A FEW HIGH PROFILE INSTANCES OF ARTISTS RAISING ISSUES SURROUNDING OWNERSHIP OF THEIR MASTERS. TAYLOR SWIFT AND KANYE WEST, for example. DO YOU FORESEE AN INCREASED FREQUENCY OF SUPERSTAR ARTISTS SPEAKING OUT ABOUT THIS ISSUE PUBLICLY?

Oh yeah. I mean, this has been going on since Prince. Prince wrote ‘slave’ on his face, let’s not forget that.

[What Prince was commenting on] was the unfairness of an artist doing the lion’s share of the work, but giving away a lion’s share of the profits, and giving up their rights. The intellectual property is the most valuable aspect of the asset.

“Why should record companies ever own your rights? It doesn’t make any sense.”

There have been complaints for years about this topic. There’s been movies about this topic. And now you’re seeing the next generation of artists complain about it.

It’s become increasingly obvious that record companies could have had a plausible argument [for that contractual setup] when they were doing something that was so cost intensive, like manufacturing vinyl or CDs, and distributing those CDs to thousands of music stores.

They’re not doing that anymore, so how could they have the lion’s share of the profit? Why should they ever own your rights? It doesn’t make any sense.


YOU PREVIOUSLY TOLD MBW WHY in your view the VALUE THAT A RECORD COMPANY OFFERS HAS DIMINISHED. DO YOU SEE ANY VALUE AT ALL IN SIGNING TO A RECORD COMPANY IN 2021?

No. Maybe if you’re a pop act, possibly. If you’re trying to be the next Ed Sheeran, maybe. Things like that, where you really rely on radio, and labels’ monopoly [of that format] through their historical relationship with radio.

“I DON’T KNOW WHY YOU WOULD EVER SIGN TO A RECORD COMPANY.”

But think outside of an artist who needs radio in order to get their career going. Think about hip-hop, or reggaeton, or grime, or afrobeats, whatever it may be, those art forms don’t need radio in order to get going.

Those [artists] are broken through social media, and their distribution platforms.

There are certain types of artists [where] radio is in desperate need for their existence. Unless you’re that type of artist, I don’t know why you would ever sign to a record company.


WHAT WILL THE RELATIONSHIP BETWEEN RECORD COMPANIES AND ARTISTS LOOK LIKE IN A DECADE FROM NOW, CONSIDERING THE RISE OF THE INDEPENDENT ARTIST SECTOR?

Big companies going forward will just be managers of catalog. I don’t see the need for a record company [beyond that] to exist. Unless it changes from what it currently is into something completely different.

If record companies  just try to maintain the model that they have now, where they buy artists rights in the beginning of their career in order to own their intellectual property, then I think they will just be managing the intellectual property that they’ve already obtained and garnered over the last 50 years.

Their ownership in artists’ intellectual property will diminish.


DO YOU THINK THE PANDEMIC HAS BOOSTED THE SONG-DRIVEN SIGNING MARKET, BECAUSE IT’S BEEN HARDER FOR RECORD COMPANY A&R TEAMS TO DEVELOP ARTISTS AT A TIME WHEN THERE HAVEN’T BEEN  LIVE SHOWS, AND HAVEN’T BEEN ABLE TO MEET PEOPLE IN PERSON ETC?

The record company A&R system has really been mostly betting on buying viral hits and overpaying for them. It’s like buying a lottery ticket, overpaying for something because it’s buzzing.

Therefore, a bidding war gets created as a result of that. That’s just record companies fighting for market share, regardless of what it costs.

“The record company A&R system has really been mostly betting on buying viral hits and overpaying for them.”

Generally speaking, the labels’ business is driven by overpaying or creating bidding wars for viral hits that the artist started on their own. [Then] the label comes in afterwards, and says that they’re going to make it global and make it the biggest thing in the world, put their engine behind it.

There’s still some great A&R guys in the industry. And the A&R skill set is a very valuable skill set. There’s some special talent out there in the industry, some that work with us and some that work at the labels.


A LOT OF PROMINENT INDEPENDENT ARTISTS GO ON TO SIGN RECORD DEALS or JV deals WITH MAJOR LABELS. HOW can UnitedMasters CONVINCE ARTISTS TO RETAIN THEIR INDEPENDENCE AND SHUN THOSE BIG MONEY DEALS.

A lot of artists are still gonna do that. A lot of legacy artists should probably stop.

Like if you’re if you’re a legacy artist and you have a name and a brand out there, I don’t know why you’d ever sign a [new] record deal. You don’t need a record company, you already have a name.

But if you’re an artist and you want to get the bag, you should take the bag. If you’re going to give up your rights in exchange for a big check and you think it’s worth it, then I’m not trying to change anybody’s opinion.

“If you’re a legacy artist and you have a name and a brand out there, I don’t know why you’d ever sign a [new] record deal.”

This is not even about changing people’s opinions, this is about creating another option, a formidable option. Not something that’s considered paltry and cottage. That’s really what this is about.

This is not a game where it’s like, ‘Do you think that UnitedMasters and independents are going to put the record companies out of business?’ No. I’m not even making that comment.

The comment I’m making is that the fastest-growing segment in the industry is independent artists. And independent artists are not going to be this stigmatized lower tier.


WHAT ADVICE WOULD YOU GIVE TO ARTISTS HOPING TO BECOME SUPERSTARS, BUT INDEPENDENTLY?

Whether you sign a record deal or not, just know that you have to do the work. It’s a very, very important truth: whether you sign a record deal or not, it’s extremely hard work.

I’ve known and know the biggest stars in the world. They work extremely hard. They don’t rely on the record company to make them stars.

Every touchpoint of your brand is something that you need to manage. Whether it be your music, the content you make, the videos, all your social media platforms and what you publish, you need to act like a star. You need to act as such, be as such 24/7 because that’s what the greatest stars in the world do.

The days of needing a record company to do those things have become less and less viable.

“There’s no secret button that record companies hit [to promote a song] and then all of a sudden, it goes.”

You couldn’t even imagine independent artists 25 years ago getting their videos in power rotation on MTV.  The thought of that just sounds crazy. But 25 years later, MTV doesn’t matter.

What matters is your social media accounts. That’s the new MTV and how you appear on that and how you approach that, and your strategy behind is extremely important.

There’s no secret button that record companies hit [to promote a song] and then all of a sudden, it goes.

It’s about the work. It’s the engagement with your fans. That’s what’s going to connect, and you keep building that. That’s what’s going to make you a star.Music Business Worldwide

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