Apple has led a $ 50 million round of investment in UnitedMasters, an American start-up trying to capitalize as more artists try to bypass record labels and distribute their music online.
Founded in 2017 by former record executive Steve Stoute, UnitedMasters is setting itself up as a disruptor to the major label system that has dominated the music business for decades. The latest round of funding values the company at $ 350 million.
UnitedMasters provides artists with the tools to upload their songs to streaming services, while retaining control over the copyright of their own music – a topic that is becoming more controversial after stars like Taylor Swift fought for it.
Stoute started his career in the 1990s as manager of rapper Nas and then worked for decades at major record labels, including Sony and Interscope. He founded UnitedMasters with a $ 70 million funding round led by Alphabet.
“When music started streaming, it was very clear to me that no more CDs and vinyls were being pressed and that all that intensive work and distribution had disappeared,” Stoute said in an interview. “When that was removed it felt like the lion’s share [of revenue] must go back to the artist. “
Stoute has now raised an additional $ 50 million from Apple, Alphabet and Andreessen Horowitz, leveraging his connections with Eddy Cue, the head of Apple’s services company, whom he has known for a decade.
Cue said, “The contributions of independent artists play an important role in driving the continued growth and success of the music industry, and UnitedMasters, like Apple, is committed to empowering creators.”
Stoute expects the partnership with Apple will level the playing field for artists who sign with UnitedMasters rather than a major label, as the iPhone maker can help with marketing and promotion of its music streaming service.
In traditional record contracts, the music label takes ownership of an artist’s intellectual property in exchange for investment in their development. In this system, even stars like Swift are limited by contracts they signed before reaching the grand.
However, the rise of online streaming has made it more viable for independent musicians to distribute their music worldwide, spurring an emergence of so-called DIYers – and companies looking to offer them some distribution tools from a label.
The ‘big three’ record labels – Universal Music, Sony Music and Warner Music – still control most of the world’s music.
However, their share is shrinking. The major labels and Merlin, a group representing independent artists, accounted for 78 percent of all streams on Spotify in 2020, up from 87 percent in 2017.
UnitedMasters cuts 10 percent of their artists’ royalties and does not retain any copyrights. The company also offers a $ 5 monthly subscription, which allows artists to keep 100 percent of their royalty payments.
The company has collected 1 million artists and is profitable, according to Stoute. He plans to use the $ 50 million to invest in engineering talent and expand UnitedMasters into South America, India and Africa.