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."

Comments

Re:Cheap Trick & The Allman Bros?

[linuxwrangler]

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.

Breakage

[swillden]

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."