Stem, a distribution and payments platform empowering independent musicians and labels with tools to grow their business, has announced the launch of Recoup Rules, a tool that allows its clients to automatically track and recoup expenses before their splits are paid out on tracks and albums.
“Royalty accounting has been made to feel complex and burdensome. It scares most independent managers, artists and labels, to the point where they punt handling it so no one gets paid,” said Milana Rabkin Lewis, CEO of Stem. “Our goal was to demystify and streamline the accounting process. This is the latest step in our journey to modernise the music industry and give music business owners the tools, capital and technology to manage their operations more efficiently and on their own terms.”
Until now, the music industry’s opaque economic structure and inefficient payment systems left even the highest-profile artists unable to access or even track their earnings. For the first time ever, artists and their collaborators can now see the precise status of their recoupment progress when they log into their Stem accounts.
For example, if a manager paid $20,000 to produce a music video and another $30,000 in marketing expenses for a new project, that manager can create a Recoup Rule that will automatically recoup the $50,000 first before paying out the artist and their collaborators. Additional earnings greater than $50,000 will enter a reserve account for collaborators to review before ultimately being paid out according to the splits they set up.
In addition, clients will be able to:
● Recoup across multiple releases
● Recoup from external earnings such as sync, physical sales, vinyl, publishing, and more
● Enable dollar-one agreements and other deal types
● Provide collaborators with monthly recoupment updates;
● Control when recoupment ends and splits are applied to pay out royalties to all
participants.
“As a manager, it’s painful to be on the receiving end of ambiguous reporting from most labels related to costs my producer and artist clients stand behind,” said Tyler Henry, highly sought-after manager behind artists PARTYNEXTDOOR, Wondagurl, HARV, Los Hendrix, Nonstop da Hitman, and Peter Manos, “Now that STURDY, a multi-hyphenate creative company, is in the process of launching our distribution arm, we need to keep track of recoupment — but it’s such a tedious and expensive process. Having this streamlined now with Stem is crucial for our growth and success as a company that values transparency.”
“I’m an artist who buys a ton of cover licenses, but all of those expenses come directly out of my pocket. With Recoup, I’m now no longer losing that initial capital. I appreciate how clear and obvious it is for my shareholders to see when expenses have been recouped and when splits kick in,” said Alex Goot, singer-songwriter and multi-instrumentalist whose YouTube channel GootMusic has more than 800 million total views. “Transparency is what I like about Stem and what I’ve always liked about Stem.”
Recoup Rules are the latest step in Stem’s journey to revolutionise the music industry. Last year it introduced Scale – which offers artists and independent labels advances with the limit and fee based on their net share of income. Uniquely, Scale allows any of the content’s shareholders access to capital. Just a year later, Scale has received more than $60 million in requests from artists including Brent Faiyaz, Justine Skye, Billy Lemos and others.
