Latest / Clone Wars: The Spinoff / How Indie Artists Can Unlock Mechanical Royalties and Non-Recourse Advances

Transcript

How Indie Artists Can Unlock Mechanical Royalties and Non-Recourse Advances · Clone Wars: The Spinoff

• 0:00
  Welcome to the show, everybody!
• 0:01
  I'm Dangerous Zygos, C.E.O.
• 0:04
  of Currency Development, and I'm joined by DJ Universe, Calvin Blingwell,
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  and Dandy Market.
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  DJ Universe, I need to start with a date and a number that should be on every
• 0:14
  independent artist's radar: January 2026.
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  As of that month, the mechanical royalty rate in the U.S.
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  jumped to thirteen point one cents per physical or digital download,
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  and on the streaming side, the songwriter and mechanical share is on a climbing path
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  to hit a fifteen point three five percent cap by 2027.
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  Fifteen point three five percent.
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  Now, to a lot of bedroom producers or indie artists, that sounds like pocket change,
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  but when you multiply that across a hundred thousand or a million streams on Spotify
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  or Apple Music, that is real rent money.
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  The problem I see every single day managing talent is that guys think because
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  DistroKid or TuneCore put their track on the platforms, they are fully covered.
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  They do not realize mechanical money is a completely separate lane from performance
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  royalties.
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  Man, you are preaching to the choir.
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  Coming up in Baton Rouge and now being out here in Calabasas,
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  I had to learn this the hard way.
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  Unsigned artists are leaving thousands on the table because they do not understand
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  the money trail.
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  If you are not registered with a Performance Rights Organization like ASCAP or BMI
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  for your performance side, AND the Mechanical Licensing Collective,
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  the MLC, for your mechanical side, that money does not just wait for you forever.
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  It absolutely does not.
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  You have to stay lit to survive in this game, and letting your money sit in some
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  black box pool is the opposite of lit.
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  If that money goes unclaimed for too long, the MLC is legally allowed to pool those
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  unclaimed royalties and distribute them to the major publishers based on their
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  market share.
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  You are literally funding Universal and Sony's holiday parties with your unclaimed
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  streams.
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  Think about the absurdity of that.
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  Your lack of administrative discipline is actively subsidizing your biggest
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  competitors.
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  From a currency and business development perspective, ownership without
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  administration is like having a gold chain without the clasp.
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  It looks great, but you are going to lose it the second you walk out the door.
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  You have to get your paperwork right before you start looking for a deal.
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  And let us talk about the beatmakers and the producers specifically.
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  I work with so many engineers and producers who get a cool placement,
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  they get their name in the description, and they think they made it.
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  But did you secure your publishing splits?
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  Did you clear that sample?
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  Did you sign a co-write agreement?
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  If you do not have those split sheets done, that thirteen point one cent rate or
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  that fifteen point three five percent streaming cap means absolutely nothing to your
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  bank account because the system does not know who to pay.
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  Exactly, but the game is changing in how artists can leverage their catalog once the
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  paperwork is tight.
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  We are seeing these new financial models pop up, like TuneCore partnering with RoyFi
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  to offer what they call non-recourse royalty advances.
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  This is not the old school record label trap.
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  Hold up, let us break down what "non-recourse" actually means for the artist on the
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  ground.
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  Because when I was trying to fund my first tour run from Baton Rouge,
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  the sharks wanted everything.
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  In a true non-recourse deal, the lender gives you cash upfront,
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  they recoup that cash solely from your future music royalties,
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  and once that specific amount is paid back, the claim ends and your rights revert
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  one hundred percent back to you.
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  They cannot come after your car, your house, or your future touring revenue if the
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  streams dry up.
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  That is a massive structural shift from traditional debt, but as a finance guy,
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  I have to urge extreme caution here.
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  The fine print is where they get you.
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  You must confirm that the contract explicitly states "non-recourse" in writing,
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  and you have to scrutinize the recoupment language.
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  What is the fee structure?
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  Are they taking a percentage of your entire catalog's distribution,
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  or just the specific tracks you collateralized?
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  Right, because if you are an indie artist, you can use that upfront bag to fund your
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  operation.
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  Instead of signing away your masters to a major for a fifty thousand dollar advance,
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  you take a ten thousand dollar non-recourse advance.
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  Now you can pay for your tour gas, order a massive run of custom hoodies for the
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  merch table, put down hotel deposits, hire a real videographer for your next three
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  single rollouts, and run targeted social ads.
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  You are funding your own ecosystem without letting a major label own your kids'
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  future royalties.
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  Man, that is how you build real generational wealth.
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  My granddad back in New Orleans used to tell me that knowledge plus understanding
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  produces wisdom.
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  Knowing your numbers is not just boring admin work; it is self-mastery.
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  If you can track every single stream and understand how your royalties flow,
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  you are building a real business that is going to outlive your current hot single.
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  So let us give them the exact blueprint to protect their bag this week.
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  Five moves, no excuses.
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  Move number one: verify your PRO registration with ASCAP, BMI,
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  or SESAC.
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  Make sure your current email and bank info are actually correct in their system.
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  Move number two: register every single song in your catalog directly with the MLC if
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  you are in the U.S., or your specific territory's mechanical rights body.
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  Do not assume your distributor did this for you.
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  Move number three: if you are unsigned and do not want to manage this headache
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  yourself, hire a reputable publishing administrator like Songtrust or TuneCore
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  Publishing.
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  They will take a small cut, but they will collect that global money you cannot reach
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  on your own.
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  Move number four: audit your last quarter's distribution statement.
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  Specifically look for the line items labeled "mechanicals" or "songwriter
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  royalties."
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  If you do not see them, your setup is leaking money.
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  And move number five: before you sign any advance deal, whether it is RoyFi,
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  Beatstars, or a boutique distributor, get a lawyer to confirm the non-recourse terms
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  and the full rights reversion language in writing.
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  Do not take a rep's word over DMs.
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  Keep your business tight, keep your music lit, and we will see you next time.