The Fair Trade Music certification program is one of the main tools we use in helping to bring about an equitable music ecosystem that treats everybody in the music value chain fairly. This program certifies individual music releases to provide consumers with the information they need to make better choices when streaming or purchasing music.
In order to achieve this, Fair Trade Music International formed a working group in 2016 to define a set of certification criterion for ethical behavior. This group included recording artists, songwriters, composers, copyright and entertainment attorneys, music publishers, record labels and music accountants, among others.
An applicant wishing to certify an individual release with Fair Trade Music should exemplify the following ethical business practices:
A record label or similar entity releasing an FTM certified release (“Applicant”) will regularly disclose through full, complete, and comprehensive accounting statements, any and all forms and levels of gross and net revenue and remuneration relating to the Certified Release, to the music creators and rights holders downstream of that revenue and remuneration. These criteria apply whether or not the Certified Release is in a recouped position.
This disclosure would include, but not be limited to the following:
- physical distributions and sales, and related revenue and remuneration;
- music service subscription, streaming and download revenue and remuneration;
- any other revenue and remuneration derived from the exploitation of the Certified Release;
- advertising revenues and remuneration related to music access; and
- music-related data mining revenue and remuneration.
Applicant will pay the applicable recording artist(s) no less than fifty (50) percent of net revenue derived from the Certified Release, and will pay all applicable creators and rights holders their royalties and payments due at a rate of no less than 100% of any and all statutory and industry-negotiated royalty rates, which rates shall not be subject to contractually-based deductions other than recoupment of advances (if any) rendered directly to such third parties.
Applicant will efficiently, accurately and comprehensively distribute royalty earnings no less than semi-annually, and will engage best practices with respect to financial distribution methods as new and improved technologies emerge.
Applicant agrees to use, disseminate and respect the integrity of up-to-date standard identifiers (i.e. metadata in the digital realm) including the following examples where applicable: for sound recordings – ISRC, for musical works – ISWC, for authors – IPI, for publishers – IPI, and for performers – IPN.
- Regularly account to the applicable creators and rights holders, and do so in a comprehensive, accurate and accessible manner. Reporting should include all costs and deductions related to the Certified Release, including without limitation recording, production, marketing, and distribution costs.
- Use best efforts to employ up-to-date technologies, real-time reporting and online portals wherever possible.
- Refrain from including contractual language specifying that failure to object to a particular accounting statement within a time period shorter than any applicable statute of limitations shall constitute a waiver of rights.
- Ensure the creator(s) is entitled to a right, upon reasonable notice, to have a certified public accountant (or applicable equivalent in a given jurisdiction) of his/her choosing and at his/her expense (unless otherwise agreed) audit the books and records of such Applicant no more frequently than once per year.
Applicant agrees and acknowledges that an independent accreditation organization has the right, at its own expense, upon reasonable notice, to perform a monitoring audit with respect to the Certified Release, no more frequently than once every 3 years.
Applicant will disclose third party and all other equity stakes connected to potential conflicts of interest to all applicable creators and rights holders, and will engage in fair sharing of all revenue and remuneration derived from such equity stakes and similar compensatory arrangements.
Applicant must demonstrate that if Certified Release is subject to a so-called “360 Deal,” the terms of such agreement comply with the following:
- There shall be no cross-collateralization among or between income derived from different representation categories (i.e., master rights, publishing, merchandising, touring, etc.);
- All such representation categories shall be no longer than the master rights period, which master rights shall be subject to reasonable rights of reversion/termination and standard re-record provisions; and
- Maximum thresholds of Applicant remuneration shall be fair subject to industry norms.
The First Fair Trade Music Certified Release
In July 2016, the new album by Edward Sharpe & the Magnetic Zeroes “PersonA” became the world’s first release to carry the “Fair Trade Music” certification.
The band’s label Community Music, chose to split the profits from all album sales equally between itself and the artist; a decision which has entitled the release to carry the Fair Trade Music seal.