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Record Labels May Have to Pay Double Royalties

douglips writes "News.com.com.com brings us this article explaining how record labels may be bitten by CD copy protection. At issue is the mechanism that places duplicate WMA tracks on the CD. The labels are thus selling two copies of each song, and may be required to pay twice as much to music publishers. So not only is the DRM ineffective, it also could be a huge legal liability for labels."

19 of 388 comments (clear)

  1. Muhahahahahaha!!!!!!!!! by JRHelgeson · · Score: 2, Informative
    They've underrmined their own authority by means of their own greeed!

    They've made their bed, and now they're finding they don't want to sleep in it?

    Why, thats just awful...

    --
    Good security is based upon reality and common sense. Common sense is a function of having common knowledge.
  2. So everything is a standard now by Anonymous Coward · · Score: 5, Informative

    For the billionth time, AAC is a standard

    Most digital music players won't touch the things. Sure it is a "standard". But if you stretch the standard like that, the Commodore 64 graphic Koalapad format is a "standard" as well.

    And you use it exactly as you would any other format, including MP3.

    Except that it will hardly play anywhere compared to MP3, and the files are hard to use due to noxious DRM.

    1. Re:So everything is a standard now by Anonymous Coward · · Score: 1, Informative
      Actually, there are more iPods out there than all the other portable compressed-audio players combined, so "most" players will play AAC.

      AAC is the audio layer of MPEG4, just as MP3 came from... you guessed it, the audio layer of the previous MPEG standard. Five years from now, you will not see many AAC devices will outnumber MP3 devices. (In the HD-based portable player market, they already do, because there are more iPods out there than everything else combined.)

    2. Re:So everything is a standard now by harlows_monkeys · · Score: 2, Informative
      Actually, there are more iPods out there than all the other portable compressed-audio players combined, so "most" players will play AAC

      Incorrect--you've confused dollar sales with unit sales. Apple has about 30% of the units, but because iPods on average cost more than other players, they have more than half of the dollar value of the market.

  3. Re:Canadian Artists by i_r_sensitive · · Score: 5, Informative
    Every Candian Band that has received a SOCAN grant since the CD-R tax started is living proof of the fallacy of that statement.

    No, you are correct, the monies are not paid directly to the artists, but rather to SOCAN, which then uses those monies for grants, etc. etc. A little of what you recorded now going to the artists of tomorrow, but the money does go to the artists. I also believe that some of that money is distributed to SOCAN members as royalty payments as well, but I'm not 100% on that one.

    --
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  4. Re:Yet another reason to not buy CD's by sirReal.83. · · Score: 2, Informative

    I'd personally use Ogg Vorbis. 99% of my collection is mp3, but Vorbis can give the same quality in smaller files. Plus there's no patent issues, and it's an open standard.

  5. Re:Canadian Artists by schon · · Score: 4, Informative

    So far in Canada, artists have not been paid a cent from the CD-R royalties we all pay.

    Not true.

    Most of the money ($28M) collected for 2000 and 2001 has been distributed, with 66% of it going to songwriters, and ~19% going to musicians/singers. (The remaining ~15% went to record labels.) They say they should have a good start on distributing the money collected for 2002 ($26M).

  6. Re:Canadian Artists by schon · · Score: 5, Informative

    This page addresses most of your questions and misunderstandings.

  7. Re:FNORD by Have+Blue · · Score: 2, Informative

    The number of standalone CD players in the world is orders of magnitude greater than the number of PCs. It will be a very, very long time before that switch makes economic sense.

  8. Re:What about the lyrics? by Potor · · Score: 2, Informative

    usually when lyrics are printed, the booklet says something like "used by permission." this does not mean that nobody is getting screwed, but at least there is some sort of formal notification of rights being stated.

  9. Re:Are you sure? by aonaran · · Score: 2, Informative

    He's got his stats mixed up... one more example of why I hate it when people quote statistics and don't give sources.

    Ipod is the #1 selling HDD based MP3 player,
    Apple has a 31% share of the portable MP3 player market in terms of units sold

  10. Re:What about the lyrics? by poot_rootbeer · · Score: 2, Informative

    Consider this: on almost every album since Sgt. Pepper, the record labels have included printed lyrics along with the album itself.

    Almost none of the CDs I've bought in the past 5 years have included any lyrics.

    So the copyrighted lyrics are provided twice, in two different formats: once printed and once sung. Does this mean that lyricists have been cheated for 35 years?

    No, because there are two different types of copyright in play here.

    The printed words are covered by mechanical copyright. The audio version is covered by phonorecording copyright. While the lyricist may/may not posess mech. copyright for the words they've written, the phono. copyright almost invariably belongs to the record label.

  11. Re:This is so so so unfair! by civilizedINTENSITY · · Score: 2, Informative

    "As a result, the focus on digital licensing has switched to scattered music publishers and songwriters, which typically receive between 7 and 8 cents for each physical copy of a song sold."

  12. Re:let me be the first to say... by nathanh · · Score: 5, Informative
    Secondly, what is this fair use rights? I strongly suspect in the end it boils down to your assertion that you should get something for nothing. That is an incorrect assertion.

    That's right, you've made an incorrect assertion.

    If you are talking about the try then buy "right"

    And another one.

    Fair use rights means the right to use your legally purchased goods however you see fit. That's why it's called fair (as in unobstructed) use (as in application).

    If I buy a pair of scissors then I have the fair use rights to use those scissors to cut paper, or cloth, or as a substitute screwdriver. They're my scissors. How I use those scissors is nobody's business but my own.

    When I buy a CD I also have these fair use rights. I can listen to the music in my car. Or my house. Or on a portable player. I can use it as background music while I wash the dishes, or play it loud and throw my arms around like a pretend conductor. I can use that CD as I see fit.

    And this includes using the music on that CD in ways that the seller did not intend. That includes using it on a portable MP3 player, or in a compilation disc for my car. My fair use rights gives me that permission.

    DRM takes away my fair use rights because it unfairly stops me using the music in perfectly legitimate ways. DRM is an obstruction to my usage of the CD and the music. That's why it's not fair.

    So when you equate "fair use" with piracy and illegal copying, you are incorrect. Fair use has nothing to do with piracy. It has everything to do with fair use of the goods you have already paid for.

  13. Re:What about the lyrics? by kfg · · Score: 2, Informative

    The printed words are covered by mechanical copyright.

    You've gotten this backward. The audio recording is covered by mechanical royalties. No permission is needed, per se, to record and sell a song, simply a remission of royalties due who's maximum is set by law (assuming the song has already been recorded. First right to record is a right held by the author or his agent). You need to arrange a license, but that license cannot be refused and its terms are preset.

    Hence the term "mechanical."

    Performance of ip (such as walking down the street and whistling a tune) is clearly of a different class than copying a written work and a recording of such which may be traded commercially is again of a clearly different class. Hence the modern invention of mechanical rights for recorded performance.

    When you buy a play script all you have done is purchase a book. Standard copyright for printed matter applies. You may read it, recite it to yourself. Copy it within your fair use. Resell it for whatever the market will bear, etc.

    It's just a book.

    When you perform a play you owe royalties per performance.

    So for sheet music. It's just a book until you sing it.

    The right to print and to sell that printed matter is strictly a matter of private contract.

    (Now if you perform music during a play or movie things change again. There are no mechanical royalties for this. You pay what is called a "Sychronization Fee" which is strictly a matter of private contract. The soundtrack recording of that music, however, is subject to mechanical royalties. See, clear as mud. :) )

    I'd add that virtually every record label also owns a publishing house, and if the music/lyric author is not aware of these issues he may find that he has assigned his copyright of the written work as well as the recorded one.

    Always consult your own private lawyer, i.e. not even the one the label "recommends" to you.

    KFG

  14. Re:Disney by dgatwood · · Score: 2, Informative
    A lot of CD and DVD manufacturers have a similar policy, but they don't publicize it much. Of course, after about two years you should be able to buy that DVD complete with packaging for $10 at Wal-Mart. All they're really doing is taking off the "early adopter" penalty for people replacing media, which is really not the same thing as licensing it and providing reasonably-priced replacement media as many software vendors do.

    $10 to replace the media for a $300 piece of software: reasonable.
    $10 to replace a the media for a $20 DVD: unreasonable.

    Besides, at $10, they're just cutting out the wholesaler, the distributor, and the retailer. At least for books (and presumably similarly for other media), the publisher gets maybe 35% of the final price after everybody gets their cut. Even if that DVD costs $30 on the shelf, they would make about $10, and would give up a piece of DVD media, a case, booklet, etc. Instead, they give up 37 cents postage (I'm sure they just mail the media in a cardboard media mailer) and a DVD with no case and no printing. Their net profit comes out better on the replacement than it did on the original DVD, but you get a lot less.

    It's pretty clear cut, IMHO. They're selling you the media. Anyone who says differently is kidding him/herself.

    --

    Check out my sci-fi/humor trilogy at PatriotsBooks.

  15. Re:Disney by DA-MAN · · Score: 2, Informative

    $10 to replace the media for a $300 piece of software: reasonable.
    $10 to replace a the media for a $20 DVD: unreasonable.


    Agreed. Too pricy, considering that I can make my own copy on my dvd burner for .79 cents (shop4tech.com).

    It's pretty clear cut, IMHO. They're selling you the media. Anyone who says differently is kidding him/herself.

    Also agreed. The thing that bothers me is that the RIAA/MPAA try to get the luxury of selling it as though they were selling licenses, but with the drawbacks associated with purchasing media.

    If they saw it as buying the media, as you and I do, then it should come in a format I can duplicate for my backups, no exceptions. I should be able to back it up and make copies. I should have ALL fair use protections.

    Else I want what comes with licensing the movie/music. When the new Higher quality formats come out, I should be able to get everything I own in those formats for a nominal fee. I want to be able to access my licensed data anywhere I see fit.

    --
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  16. Re:Yet another reason to not buy CD's by DarkVader · · Score: 2, Informative
  17. Re:let me be the first to say... by srleffler · · Score: 2, Informative

    Stores legally must accept returns of defective merchandise. If the DVD won't play on your TV, it is defective. They are free to replace the defective DVD with another DVD of the same movie, but if that is defective too you are free to return it as well. Keep going until you run through their entire stock or they give in and give you your money back.