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."

Comments

The little guy gets paid?

[VinceWuzHere]

I wonder if this means the lyrics writers and all the other "little people" behind the scenes will get paid twice - finally the value of what they are worth...

Re:The little guy gets paid?

[lucabrasi999]

I wonder if this means the lyrics writers and all the other "little people" behind the scenes will get paid twice

Are you insinuating that the "little people" in the record business don't get paid their fare share? That the lawyers and record executives, have, for decades, kept all the money themselves and screwed over the songwriters? That record companies are huge, bloated bureacracies that add little value to the creative process? That....

OK, you sold me.

Re:The little guy gets paid?

[Frymaster]

Are you insinuating that the "little people" in the record business don't get paid their fare share?

well, if we're keeping track of who's doing the insinuating, add me to the list.

steve albini's the problem with music is a well-documented accounting of how bands on major labels get hooped by clawback clauses. read it. no, really.

Re:The little guy gets paid?

[gcaseye6677]

I highly doubt the record labels will pay out twice. They'll say something along the lines of "We're not paying you twice, if you don't like it, sue us." We can all imagine just how much of a chance an artist has at prevailing in a suit against the well funded RIAA.

Let me quote Nelson Muntz,

[IvyMike]

Ha-Ha!

Re:Let me quote Nelson Muntz,

[Anonymous Coward]

Ahh Nelson, always the voice of reason when compared to the ??AA

let me be the first to say...

[wo1verin3]

(or maybe second)

That wow, that sucks eh? Having to pay more to ship your product? Poor little labels.... spending money to infringe on customers fair use rights didn't work out for you? *light punch in arm* Aw com'on slugger, it'll be okay.

Re:let me be the first to say...

[Condor7]

So the small record labels can ship CDs with no copy protection. Problem solved.

Re:let me be the first to say...

[i_r_sensitive]

First off, they aren't paying for anything, people who buy music are, they aren't going to eat that cost, just pass it along. After all, the money they've spent has been in reaction to a perceived threat to their revenue stream, this is not a cost I would expect anyone to happily defray.

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. If you are talking about the try then buy "right" then I would suggest you explore how much that relationship is based on trust, and what little reason the other side has to trust the average consumer in view of the rampant exhcange of illegally copied/distributed material.

Back in the tape to tape or CD to tape days these concepts had meaning. It wasn't easy to perform large scale unlawful copying. The music industry turned a bit of a blind eye to the whole affair because it was not perceived as a negative. Throw in the internet and peoples (mistaken) impression that it is nothing more than unlimited freedom with no responsibility, and that equation changes drastically, and rapidly. Factor in that people seem to now expect the music industry to accept that people can defraud them of their due revenues by unlawful copying and distribution is not only narcisistic and short-sighted, it is unrealistic and plainly not going to happen.

I would suggest you consider what you think is fair use, is it really fair? If it is fair, is it predicated on trust that has been abused and broken? Would it be fair from the other side of the equation? Is it fair to the artists who ultimately produce the work in question? Is greed a sufficient justification to deprive these folks of what they are due from their creations? Hey even if you know that they are getting ripped off by the label worse than the consumer, please explain to me how it is depriving them of what revenues they can generate demonstrates aawareness of or support for their plight?

Bottom line, there are consequences, this is just another one, a slightly humorous one, but just another consequence. Go ahead, keep on pulling the Kitty's tail, that will make it better...

Re:let me be the first to say...

[nathanh]

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.

two for the price of one?

[Matey-O]

The labels are thus selling two copies of each song, and may be required to pay twice as much to music publishers.

Only if the people involved are idiots...oh...nevermind.

Canadian Artists

[tobechar]

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

Where does it all go? Well, at least we know where it doesn't go.

Re:Canadian Artists

[i_r_sensitive]

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.

Re:Canadian Artists

[schon]

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).

Re:Canadian Artists

[schon]

This page addresses most of your questions and misunderstandings.

Of course you know what will happen next...

[Cherveny]

If the payments are made, then of course the labels profits will fall. So, what will they say next quarter to make their shareholders happy? "It's all because of those damn internet pirates. We need more legislation against them, or our profits will continue to fall."

No problem

[mao che minh]

The record industry will just price-fix in the added costs, problem solved.

THAT'S OK!!

[Anonymous Coward]

They can just pass the cost on to the consumer. Problem solved!

FNORD

[virgo cluster]

Might this be the lame excuse for the shift to Digital Restriction only CDs? Because it serves the customer because it doesn't have to be twice as expansive?

Solution: CD with DRM Software

[G4from128k]

Why do they have to put copies of the tracks in both formats on the disk? Why can't the labels create a small software application that hides the raw data tracks from PCs and "allows" the CD owner to create DRMed files? This would bypass the "pay royalties twice for distributing two copies of each track" problem.

Re:Solution: CD with DRM Software

[MikeXpop]

I'm sure my stereo will love that.

I don't see the problem...

[smack_attack]

They already charge twice as much as a CD is worth.

That's ok

[freidog]

the labels will just double the price of CDs and blame it on file swapping.
You didn't think the consumer would get out of getting screwed did you?

Let me quote Ross Perot

[Texas Rose on Lava L]

If you take one cent, and double it, you get two cents.

Re:Let me quote Ross Perot

[ejaw5]

int cent = 1;
double double_cent = new double(cent);

System.out.println(double_cent);

Uh....I think it comes out to:
1.00000000000000000 cent

When will they learn

[rhetoric]

That any CD I can play, I can rip. It's AUDIO rofl. At very worst I can just play it back and record it to another device, unprotected. Big deal.... DRM for audio is such a joke.. This isn't intended to be flamebait, it just seems so ludicrous to me.

Indeed! (and do pass the butter)

[tmoertel]

JoeLinux wrote:

RIAA is hung by their own batard . . .

Yes, so it would seem. First, they baked it, and then they hung themselves by it. Quite sad, really, as it is rather tasty: After all, if you're going to hang yourself from a loaf of crusty, delicious bread, you ought to at least have a taste before meeting your untimely demise.

So everything is a standard now

[Anonymous Coward]

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.

This is so unfair!

[rjelks]

How can the labels stay in business if they have to pay double royalties to the greedy artists. The artists are already getting a fat $0.50 for every $17.00 CD sold. First the record companies lost billions in sales to the evil pirates and now DRM is going to cost them more profits. Will the RIAA be able to afford their paratroopers now? What will this do to their lawsuits. This is a travesty of justice! Why oh why won't someone think of the children? - p.s. - HaHA! - nelson -

Let me see if I understand this...

[Copperhead]

Customer : I should be able to rip music off the CD I just purchased for my own personal use without having to pay for a new "license". I bought this CD with the understand that I was purchasing the music for my personal use, and don't need to purchase a license for each new copy.

Record Labels : No way... just because you bought the CD does not give you the right to all the contents to do with as you wish. However, just to be nice, we will give you a low-quality, non-transferable rip of the song.

Artists : Wait... aren't you making another copy of the song? Since are selling two different copies of the song for every CD you sell, we're going to charge you twice the royalty.

Record Labels : No, we purchased the song from you for a particular customer, not for an individual copy of the song. As long as a single customer uses the song, we can do whatever we want with it.

Customer : Wait... isn't that what I just said?

What about the lyrics?

[Nakito]

Consider this: on almost every album since Sgt. Pepper, the record labels have included printed lyrics along with the album itself. Lyrics are, of course, copyrighted. 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?

Wgat will be the impact on consumers

[Crypto Gnome]

I hate to be such a downer, but if past performance is any indicator, these "additional costs" will be hoovered directly out of consumers bank-accounts.

Look at the whole "audio+data" CD phenomenon (from the consumers perspective) in the first place.

• Yesterday you sold me a CD which was (more often than not, to all intents and purposes) full to capacity with standard CD audio format music
• Today you sell me a CD which is now only partially filled with aforementioned "standard ... music" - (because some of the space previously used for standard cd audio format music is now being used for DATA (in this case, a second copy of the music)

Don't look now, but you the consumer just paid the same amount for less music.

Just to be clear here, they sold you TWO copies of the music, in the same amount of space ====> so you received LESS MUSIC than you "normally/previously" would, for NO LESS MONEY.

Given this trend in the music industry, in the near future they'll be selling us Holographic Storage DISCs with a terabyte of data-space, with only one (3 minute, CD-Quality) song on it (the rest of the space is 'computer format' of the same song, plus anti-piracy technologies). It'll still cost $25-$35 in most cases, and will ONLY play on a custom media player that is specific to that music-label. Due to the intricacies of the technology, swapping HS-DISCs takes approximately 5 minutes, and the "music subscription" on HS-DISCs expires in 24 hours.

Is this about the atrists, then?

[Milo Fungus]

Until last year, it was the record labels that were widely viewed as the stumbling blocks to taking the music industry into the digital age...

...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. Ordinarily wielding far less power, and commanding far fewer financial resources than the record labels, this scattered group of individuals and associations now is proving a more potent force in the digital transformation.

The music industry has been saying over and over again that piracy hurts the artists . Their crackdown on p2p filesharing, their use of DRM schemes (such as the copy-protected CD's in question), and their public relations FUD are all supposedly motivated by their uncompromising zeal to protect the livelihood of artists.

Really? No foolin'? Well, this is a golden opportunity to show us all that you really meant it. If all of these efforts are about protecting artists, then you would never think to violate a publishing contract over it. Right?

[Silence... A leaf blows by...]

Oh. Well, that's what we all suspected, I guess.

It follows the labels own ideas

[gr8_phk]

The labels want you to pay for every version of a song you use. You pay for the ability to use it in a CD player, again to use it on an iPod, again to use it in some other form. Using the same thinking, they should pay the artists for each time you buy a song in one of these forms. They just didn't think about it when they released the twofers and now it's a problem.