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Rockers Sue Sony Over Download Royalties
Ohreally_factor writes "According to an AP article, groups Cheap Trick and The Allman Brothers allege that Sony is paying them less than what they deserve for music downloaded from popular download sites such as iTunes. Because Sony counts such sales as the equivalent of a physical phonorecording sale, they deduct costs for packaging (20%) and breakage (15%) from the artists' royalties, just as they would if they were selling CDs through more traditional means. Seeing as how there is no physical packaging, nor physical inventory that might suffer breakage, one wonders how Sony will defend against these charges."
Read the article (I did - just when I submitted the story someone else's submission of it hit the front page)....
The suit seeks class-action status for all artists who signed between 1962 and 2002. That's not chump-change.
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"You are not remembered for doing what is expected of you." - Atul Chitnis
Seeing as how there is no physical packaging, nor physical inventory that might suffer breakage, one wonders how Sony will defend against these charges.
How? The same way they do it with CDs. You don't really think 15% of CDs break in shipment, do you?
The history of the breakage clause that exists in pretty much every modern royalties contract is a sad one. See, it originated back when music was distributed on records made of shellac, before the advent of vinyl. Shellac records were very brittle and very fragile, and when you packed a bunch of them in a box and shipped them to a store, it was pretty much guaranteed that some of them would arrive broken. At first the store owners and distributors tried to actually count how many were broken and adjust the invoices appropriately, but that was just too hard, and allowed merchants to take advantage by claiming a higher level of breakage than actually occurred. So they compromised and set an arbitrary percentage reduction of every invoice to cover broken records. The number chosen was about right, and it worked for everyone.
Obviously, since the record company wasn't being paid by the stores for that percentage of theoretically-broken records, the same amount was likewise deducted from the net proceeds before calculating artist royalties.
When vinyl came onto the scene, broken records became a rarity, rather than the norm, but the royalty deduction stayed.
When eight track tapes and cassettes came into being, and then CDs packed in protective jewel boxes, actual breakage became nonexistent except in cases of egregious abuse by the shippers, which the shippers were actually to cover. So the net effect of breakage on distributors is and has been zero for a long time. But the royalty deduction stayed.
So how is it any different that the copies are bits now? It's not like the CD breakage was any more real. Sony's response to that part of the complaint, at least, will be "It's a standard contract term, and they agreed to it."
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
You're partly right, but partly wrong.
The reason a recording artist can't just re-record an album with a different record company is because the recording company has secured the mechanical rights, i.e., the recording rights.
Let's back up here. When someone creates a song, they own the copyright to that song. The copyright can be divided into component rights, i.e., publishing rights and mechanical rights. Recording companies do not generally try to buy the publishing rights from the artists, although there are certain exceptions to this*.) Generally, a songwriter will keep the publishing rights, and make a royalty every time the song is purchased or publicly performed.
*The most famous exception is the Beatles' catalog, which is not owned by their record company Apple Corp., but jointly by Michael Jackson and Sony. Apple Corp still holds the mechanical rights, however.
It's not offtopic, dumbass. It's orthogonal.
The argument is not, "There is no breakage on the internet therefore you can't have that 15%." The argument is, music downloads fall under the 'licensed music' portion of the contract and not 'record sales', which have different royalty structures. I don't know the terms of their contract and either do you, but they could have a case. Their label is not distributing the downloads, and certainly not on a physical medium, they're licensed to someone else, such as Apple. Its all about what a music download qualifies as under the terms of a contract written before there were such things.
Whoa whoa whoa... The Allman Brothers, Cheap Trick... You think MP3 *existed* when they signed their contracts? Depending on the wording of the contracts, there's an argument to be made that Sony doesn't have a right to ANY cut of/control of the music as published on ITMS. Even if online distribution is somehow considered to be covered, the contracts are probably pretty explicit that the fees collected from the artist are for packaging, etc, and if there IS no packaging, then the validity of the contract, in this specific area is certainly debatable. (IANAL) If you collect 35% from me for packaging and breakage, then by god, you better show me some receipts for packaging and breakage, or else I want my 35% back.
Just don't dismiss this as whining about shitty contracts. ESPECIALLY don't dismiss it out of hand when the #1 argument put forth by the xxAA's lately has been 'protecting the interests of the artists'. This is PERFECT proof that they don't give a flying fsck about the artists.
These people looked deep into my soul and assigned me a number based on the order in which I joined.
Breakfast served all day!
I'm going to disagree with you. For compositions in the US there is a statutory mechanical reproduction (pressing the disk in old school terms) fee. Any one who pays this can record the song and sell the disk. The songwriter holds a "first-performance" right which may be granted to someone else on a negotiated basis, but once the song is recorded, any one can record that song without asking permission -- they just have to pay at pressing time. The recording company holds a copyright on the publishing of the performance, i.e., the disk.
Now, bands that were kinda successful (or not succesful at all) may still owe advances to the recording company. And the contract may require that any new labels reimburse the old label for the advances and that would put a damper on a re-do.
Songwriters of the Beatles era keeping their publishing was not as common as you make it out to be. And the money the songwriters get from the disk occurs not at sale but at pressing. Glossing over some of the ways people screw artists, for every $1.00 received as publishing revenues (commercial radio and live performances [collected by performance rights societies, such as ASCAP], inclusion on film soundtracks, advertising placements, sheet music sales) $.50 goes to the songwriter and $.50 goes to the publisher. The specific publishing deal may mean the songwriter also gets a bit of the publisher's $.50. The more successful the songwriter, the greater a piece of the publisher's $.50 the songwriter may get.
As far as copyrights go, there's nothing to prevent a band from rerecording its repetoire on a new label. The old record company only holds rights to the original masters, via the recording contract, the right to sell the disks in the warehouse, and the right to press more disks from the masters. Seems to me, five years ago or so, Prince was on the verge of re-recording his songs until he and Warners came to an understanding and Prince bought back his masters. I know I own some disks where 50s and 60s era artists re-recorded their hits years later for a different label.
Now the original packaging is the property of the old record company. So if we're being old school and talking about product in stores, this band would have to pay for original packaging and find a distributor who is willing to distribute what is duplicative product which will be placed side by side next to the originals (assuming the old company hasn't put the catalog out of print). So good luck with that. Of course, the packaging and distribution problems dissipate if we're thinking about mp3s via internet download only.
So, copyright doesn't interfere with the redo the repetoire plan in the mp3 age. Are there any other impediments? Well, recordings can be difficult to duplicate. The studio may be gone. The room may have lost its acoustic signature. The budget, in relative terms, may have been higher when the record company was cutting the checks (even though the costs were recouped from royalties). Digital sounds different than analog tape. Engineers are exercising different skill sets. Plus, who wants to listen back to the playback and say "25 years later and we play it just the same." Regarding those re-did disks I mentioned above: the originals were better, despite the new ones featuring real stereo recordings on better requipment with better musicians. I'll conclude with this note: with the arguable exception of the 1969 Memphis recordings, Elvis sounded best when he was young and hungry and in Sam Phillip's house at Sun. Some moments are quintessential; they don't last and they don't come back.