United Masters Same Day Payouts & The Rise of Music Distributor Advances - What You NEED to Know

Let's talk about Real-Time royalty payouts with United Masters and why advances are becoming a core feature for distribution companies.

First, we're going to talk about United Masters and their new feature, and then we're going to get into the more expansive topic of advances being offered by digital distribution companies in general.

United Masters

United Masters has Real-Time Royalty Payouts. They're saying, "Get paid daily, only on United Masters. No more waiting a month or more to get paid, just faster access to money you've earned." The feature is only available to select members who earn at least $20 a month. This sounds great. Get your money in advance. Don't wait a month or months to get paid. But the devil, as they say, is in the details. United Masters charges 5% of whatever money you're being advanced. If you make $100 a month and you're withdrawing your money every month as an advance, then you end up paying UnitedMasters $5 a month. Collectively, that is $60 a year. The subscription fee for the UnitedMasters Distribution Service is $60 a year. So, at $100 a month, getting advances every month, you're paying $60 annually for Real-Time Royalties. It's effectively another service that you’re being charged an annual fee for.

That annual fee is not capped, like the distribution fee is, because it's a percentage. Making $100 a month, withdrawing your money every month as an advance is $60 a year. $1,000 means you're paying $600 a year. $10,000 a month means you're paying $6,000 a year. The more you make and withdraw as an advance, the more you pay. 

Music Distributors & Advances 

Now, let’s dive into the broader topic of the rise of these offers and why they’re becoming a core feature for distribution companies. 

Distributors charge artists a flat annual fee for unlimited distribution. You pay, say, $50 a year, and no matter what you earn, the distributor gets $50 a year. You make zero, they make $50. At the same time, if you make money, they don't get a piece of it. Let’s say you make thousands of dollars, guess what? They still only get $50 a year. If you make millions of dollars, they still only get $50 a year. What advances allow them to do is to backchannel a revenue share. On top of their safety net flat annual fee that allows them to make money even if you don’t, they get a share of your revenue if you happen to find success, despite receiving NO support.  It’s a covert hedge.

When you have distributors offering unlimited distribution for as little as $20 a year while allowing you to keep 100% of royalties, asking for a flat fee, plus a percentage, isn’t a competitive offer. As a business model, it’s the most profitable pathway, so distributors have found another way to get there. The revenue share comes without any PR support, Editorial playlist pushing, or advanced customer support so it’s new money without any new or additional work. Great for them, not so great for you. These types of loans are primarily aimed at artists who are either financially illiterate or desperate.

In my book, The Ultimate Guide to Music Monetization, we examined an offer from BeatBread, which is used by Too Lost distribution to power their Advance service. We found the same kinds of fees you’d find in predatory loans hidden by coded language, things like origination fees and early payoff fees on top of a recoupment rate.

Recoupment rates are what you find in recording contracts. I want to record an album. I come to you to fund the project. You agree, but request an 80% equity stake, and I have to pay you back, but the money comes directly from my 20% share of revenue. If you’ve given me $1,000 and the release earns $1,000, you’ve earned $800, and I’ve earned $200, so I’ve only paid $200 down on the advance. My recoupment rate is 20%. When the album earns $5,000, I’ll pay off the advance because I have paid you $1,000 at the rate of my share of the proceeds.

BeatBread starts you off at an 89% recoupment rate for an advance of 1 year of your royalties, which is nice, but every additional year reduces your recoupment rate, which increases the amount you pay for the advance.

• $2,000 advance for 1 year at 89%, you pay back $2,247
• $2,000 advance for 2 years at 80%, you pay back $2,500
• $2,000 advance for 3 years at 68%, you pay back $2,941

Additionally, they charge $278 to issue the loan and charge 2.8% of the advanced amount as a separate fee. If you took a 3-year advance here, you’d end up paying back $3,275 for $2,000. On top of that, they don’t disclose what happens if you pay the loan off early. For example, if you take a 3-year loan but you pay it all in year 1, do they continue to collect for the remaining 2 years? If so, that adds to your losses. The only reason anyone would pay $3,275 for $2,000 is if they’re financially illiterate or desperate.

Cash App offers instant deposits in exchange for 1% of the deposit amount. It’s likely to take only 3 days for the money to find its way into your bank account, so there’s no major incentive to pay the fee. But, if you're contacted by the electric company and they say they’re turning your lights off tomorrow unless you pay the bill in the morning, your bank account is on E, but you have the funds in Cash App, you’ll pay the fee. You’re desperate and have no choice.

That brings me to this sobering reality on artist advances, they’re taking advantage of artists facing financial hardships. Music distribution companies should have emergency fund programs that artists can turn to in such times to receive interest-free advances. Their personal troubles shouldn’t be exploited for financial gain.