How To Stop Piracy: Raid CD-R Moguls

An anonymous reader writes "In what appears to be a not-so-legal move, Mexico's equivalent of the RIAA used federal police to raid the installations of Grupo Mekong, responsible for 200 of the 400 million virgin CDs imported each year, accusing them to be "capos" of the Piracy bussiness in Mexico. What is the rationale? Record companies buy only 20% of Mekong merchandise, so the other 80% must be going to pirates! Yeah, Never mind computer users ,independent labels or other legal uses. You can see the article here but what amazes me is the behaviour! What will the next step be? Raid the truck companies who deliver the CDs? "

Comments

Re:CD's not CDR's?

[lpontiac]

Yes, but I'm sure RIAA skillfully ignored all those COMPUTER SOFTWARE DISCS that have to be pressed.

And AOL probably presses more discs than every record label in the world combined..

CDs in the 50's? (Plus Royalty contract example)

[droopus]

.. that back in the days (50s and 60s), when a lot of pressing plants used the Mafia to deter organised labour, there used to be a grey market kick back to the Mafia in the form of pressed CDs that weren't registered on the books of the record companies.

Um, while James Russell (I think) did actually come up with the concept for what would become the CD in 1965, Sony and Philips didn't popularize the format till 1983. So, no CDs were kicked back in the 50's - 60's.

Also remember that even today, record contracts include at least a 10% "breakage" or "container: allowance off the worldwide gross prior to calculating how many rolls of pennies the artist will get, after recouping all expenses. What they do with that 10% (since CDs don't break in shipment like the shellac records for which the breakage allowance was instituted) is a mystery. Some labels actually skim 25% off the top. No need for CD kickbacks there.

Yep, 25%. You want to see just how egregious some record contracts are? The following is clipped from an actual label contract presented to the prospective band last week. All identifying brands and names have been removed:

ROYALTIES

Company shall accrue to Artist the following royalties for the sale by Company, its licensees or assigns, or long playing Albums derived from the Master Recordings against which all sums paid to Artist herein shall be recouped.

(a) With respect to records sold up at Company's or its distributor's "top line" price level in the United States, a royalty at the rate of ten percent (10%) computed on the (SRLP) list price less a 25% container deduction.

(b) With respect to each particular type of record sold in Canada and Japan (including records exported to third parties in Canada and for which Company is paid by such third parties), royalties shall accrue at Eighty Five percent (85%) the rate applicable under subparagraph 6(a).

(c) With respect to each particular type of record sold in Germany, Austria, Switzerland and the European Economic Community (including records exported to third parties for such territories and for which Company is paid by such third parties), royalties shall accrue at Sixty Five percent (65%) the rate applicable under subparagraph 6(a).

(d) With respect to each particular type of record sold for any territory throughout world not specifically mentioned in subparagraph 6(a), 6(b) and 6(c) (including records exported to third parties in such territories and for which Company is paid by such third parties), royalties shall accrue at Fifty percent (50%) the rate applicable under subparagraph 6(a).

(e) With respect to records sold at Company's or its distributor's "mid line" price level through normal trade channels, royalties shall be at Seventy Five percent (75%) the rate set forth in subparagraph 6(a).

(f) With respect to records sold at Company's or its distributor's "budget line" price level through normal trade channels, royalties shall be at Fifty percent (50%) the rate set forth in subparagraph 6(a).

(g) Sales of any Singles, Extended Play Singles and recordings in the United States which are not long playing Albums shall be paid at the rate of Ten percent (10%) computed on the (SRLP) list price less container deductions and any taxes. Sales outside the United States shall be proportionally reduced according to the formula specified in 6(b), (c) and (d) above.

(h) With respect to the licensing of the Master Recordings to third parties, including but not limited to usage such as record clubs, compilation records and synchronization usage, royalties shall be at the rate of Fifty percent (50%) of the net amount of any such fees received by Company, its licensees or assigns.

(i) No royalties whatsoever shall be payable to Artist hereunder with respect to records (i) distributed to any person or entity primarily for purposes of promotion, (ii) sold as "scrap", "overstock" or "surplus", (iii) distributed as "free goods" (limited to no more than 20% or "bonus" records).

(I'm surprised there isn't a clause about shaking the artist by the ankles on a monthly basis to get his loose change.)

Beyond that, the more common kickback to organized crime in the music business in the 50's - 60's was cash applied to payola to help the "investments" of organized crime climb the charts.