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Japanese Musicians Defy Sony by Joining iTunes
Homework Help writes "Japanese musicians under contract by Sony are defying their contracts by using Apple's iTunes service to deliver songs. Rock Musician Hotoharu Sano points out: 'It is an individual's freedom where that person chooses to listen to music. I want to deliver my music wherever my listeners are.' Sony Music Entertainment and Apple are still locked in talks and no agreement has been reached so far. Apple's offering of its iTunes service at lower cost in Japan is greatly attributed to their success." From the article: " Before iTunes' arrival, Japan's top music download service, which is backed by Sony and includes Sony recording artists, averaged about 450,000 downloads a month. By offering its service for lower prices, Apple is undercutting such online music services. Japanese are accustomed to paying twice as much as Apple is charging in Japan, which are still higher than the 99 cents charged in the U.S."
The fellow's name is Motoharu Sano, and his band is called the Hobo King Band. Apparently, their music is not currently available on the American version of iTMS.
How long before places like iTMS become the main source for distribution? The record companies should be getting nervous... once upon a time both artists and listeners needed them for distribution. Now they're useless.
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Everything certainly isn't more expensive in Japan (many electronics and restaurants are a cheaper in Japan than the US, for example, and anybody who's spent a while there will agree), but media is definitely more expensive there. I recently went to a movie theather in Hokkaido where two tickets cost exactly ¥3600 (about $34). This is pretty normal I learned, and CDs are uncommonly expensive everywhere. As an aside, renting CDs is very popular among the Japanese. So, that means that a large portion of the population either listens to these rented CDs until they return them or simply copies them into their MP3 collections...in other words, purchasing CDs is less common.
Music CDs are typically $20-$30 in Japan, so I can see why iTunes would be popular there.
-- Hot Wasabi over & out --
they take cd's from cdbaby.com don't they? isn't that in effect nearly like taking cd's from anywhere. (won't cd baby take anyone who'll give them some small token of money?)
------- Oh damn.... the Sigfile escaped... -Great OM
More importantly, it's a loan from which the costs of recording are paid. In other words... Out of that advance, Britney has to pay:
1. The studio
2. The producer
3. The musicians
4. The songwriters
5. The backup singers
6. The business agent
7. The manager
8. Security
9. Staff
10. Personal assistants
11. Music techs
12. Sound engineers (yes, they cost extra)
13. Transportation
Usually, the entire advance gets spent on all of the above... the artist is now sitting with zero in the bank or even a negative balance after all is said and done.
Now here's where it gets scary...
The entire advance is a loan... That's right... it's owed back to the record company.
Recoupment works like this...
If Warner Bros. pays you a $500,000 advance for album 1, and has you optioned for three more...
First you have to recoup the $500,000... but you don't recoup it at the gross MSRP of the albums sold. You recoup it at your royalty rate.
The royalty rate an artist gets is not based on the MSRP. In other words, if an album retails for $15.98, the artist's cut... probably around 14% for Britney... is not 14% of $15.98. It's 14% of the royalty base less gross margin, i.e. about $7.98 ... after deducting marketing, distribution, packaging, promotions, and related costs.
So now, that's about $1.12... pretty high actually for a Britney, believe it or not. But let's be generous and say that her royalty is $1.12.
She has to recoup the $500,000 at that rate... $1.12 per album. So, she has to sell 446,428 albums just to pay back her advance.
Now... UNTIL she pays back her advance, she does not get to keep a DIME of royalties. So, given that with a $500,000 advance she's probably spent every last dime of it, she's going to be broke if her album doesn't go gold. What's worse, she's still tied to her contract until she delivers the other optioned albums.
But wait, it gets worse...
If she gets a larger advance, she now has to sell even more albums to pay back the advance, meaning it takes even longer before she gets paid a dime... and usually when artists get a larger advance, they still blow every dime of it on all the aforementioned expenses.
But here's what's more... If she has any contracts with band members or producers to get paid royalties... their percentage take comes OUT OF that $1.12... Then the business agent and managers take their cut... 15% of what's left? No, 15% of $1.12 per album.
It still gets worse... the artist is the last person to get paid. The business manager handles all disbursements (just like a lawyer on retainer)... everybody else gets paid, then the artist takes what's left.
It gets worse, still... If any tracks on the demo submitted to the A&R department are rejected, Britney has to go back to the studio and record some more...but if she's blown her advance already, then the additional recording costs come out of her pocket.
It gets even worse, even now...
If Britney's album is a failure and lets say $200,000 has not been recouped... When her next album is due, the $200,000 unrecouped balance gets pooled with the advance for the new album. Now she has to still recoup both... but there's more. Until she has paid off all her debts, she cannot get out of her contract... she still owes the record company material.
But there's still more...
The record company may incur additional expenses related to the promotion of the album... whenever an A&R agent wines & dines a program director at a radio station, whenever someone uses a jet to fly from LA to New York and meet with program directors there, whenever transportation costs and other overhead expenditures are incurred in relation to the promotion of her album, etc.... all these expenses are deducted from her advance and/or royalty checks first.
Britney doesn't get to keep the advance... it's a loan. See my response to the other guy for a more detailed explanation.
This is like that Motorola iTunes-capable phone that none of the cellphone carriers want to support; these are the same carriers that charge $3 for a _ringtone_ and a $1 iTunes song just messes up their business model. Same here for Sony. Apple gets a lot more pennies with their smaller margin than the gougers who think their monopoly justifies the price.. slashdotters may be aware of this already, but your common consumer doesn't.. Out of mind, out of money, as it were. Glad to see Apple subverting the infrastructure. being in the 10% or less market share and surviving the computing world has taught them a few tricks.. now if they only had iFuel for 99c a gallon..