Stem adds Recoup Rules accounting tool

The expenses will be recouped before royalties are paid out on distributed music releases. The tool works across multiple releases and can be applied to physical sales, sync and publishing on the platform.

Stem provided an example of how the service works: “If a manager is 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.”

When the threshold is reached, additional income will go into a reserve account, which will then be split among the appropriate shareholders of the track.

“Royalty accounting has been made to feel complex and burdensome,” Stem CEO Milana Rabkin Lewis said. “It scares most independent managers, artists and labels, to the point where they punt handling it so no one gets paid. 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.”

Lewis told Billboard that the company, which was launched in 2015, had wanted to build the tool for a few years, and spent six months working with managers, lawyers and accountants optimising the product.

“Our goal is to iterate on this every couple weeks and release enhancements to it,” Lewis said, adding that “Stem’s next priorities are around producer agreements and dollar-one agreements.”

Last year, Stem introduced Scale, a funding service that lets the company disburse more than $100 million in advances to its indie artists. The company says it has received requests for more than $60m in advances from artists like Brent Faiyaz, Justine Skye and Billy Lemos, among others.