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

such sweet irony

[yagu]

I want you to want me. I need you to need me.

What a tasty irony one of the first incidents of the artists awakening to the double-edged sword that is the music industry's abuse is from a band named Cheap Trick!

From the article, assuming it's accurate and correct, what a staggering number each 99 cent sale of a Cheap Trick song nets Cheap Trick a paltry $.045. That's internet highway robbery.

I never thought about it this way before, but maybe a to date unreckoned force that could be brought to bear is the ire of scorned artists. Maybe, just maybe, in its seemingly infinite greed the record industry finally goes a bit (or bits) too far and the slumbering artists wake up and smell the corruption. Probably a bit of a pipe dream, but I'm pulling for Cheap Trick.

Re:such sweet irony

[TWX]

Established artists that actually have some money should get smart and start re-recording their classic songs themselves without corporate money, so then they have completely independent music to sell.

Granted, they'd have to make the remake sound a lot like the original, and they'd also have to find a way to market their version through the Internet where it's higher-profile than the industry-owned tracks, but if they could find a way to get the Internet retailers to start classifying the existing industry stuff with names like "Sony/BMG/Cheap Trick" for the artist field and just "Cheap Trick" for the new recording it just might work...

Re:such sweet irony

[hackstraw]

From the article, assuming it's accurate and correct, what a staggering number each 99 cent sale of a Cheap Trick song nets Cheap Trick a paltry $.045. That's internet highway robbery.

The FA also says: "Tracks sold over the Internet usually go for about 99 cents. About 70 cents of the sale price goes to Sony. The bands are getting about 4 1/2 cents per song, according to the suit, rather than the approximately 30 cents they claim is rightfully theirs."

I'm not sure if the band's cut is out of the Sony cut or what, but Sony getting 70% of the money seems excessive. Remind me why artists need companies like Sony? Especially known bands.

Re:such sweet irony

[Rei]

They get royalties. Of course, ripping content creators off on royalties is a classic business.

For the publishing industry, there's an entire accounting firm in New York City that makes its money simply by auditing the books of publishers at no charge. If an agent thinks that their author is getting ripped off on royalties, they have the company audit the publisher for free. The company gets paid a percentage of the unpaid royalties that they find for the agent/author, and nothing if there weren't any unpaid royalties.

Re:such sweet irony

[cpt kangarooski]

Well, the main service that publishers of any sort provide is money.

If you want to go from having a band all the way to having a CD in stores, you'll need money to live on, to rent any instruments you need, to rent a recording studio for the time it takes to make the recording, to hire engineers to run the studio equipment for the recording, to create the master, to press a run of CDs, to design the cover art, to package the CD, to ship it to stores, and to advertise it. If you want to promote it by going on tour, you'll need money to do that too.

You'll also probably want contacts in the industry. Sure, members of a band could take the time to learn what the best studio in their price range is, who to get as an engineer (and who to settle for if they can't have their first choice), where to get the best deal for making the CDs, who to convince to get chain stores to stock albums, how to get reviewers to actually listen to the CD, etc. But if there already is someone available who can do this, it may be more efficient to take them on as a hired gun.

Of course, publishers could spend these resources on a band, or they could just invest their time and money in stocks. They're going to treat the band as just another investment, ultimately, which means that they want to make the greatest profit, and have that profit be more than they'd get from their best alternative investment.

As it happens, most bands end up not selling enough to recoup costs, or don't sell enough to make a bigger profit than the best alternative. They are bad investments, and the labels lose money on them. The same is true elsewhere too; books, movies, whatever. The idea is that a rare handful of the works being created will be such spectacular success that it will not only yield a great profit, but that the profit will cover the money lost on all those other, failed bands. And just to make sure, the publisher might want a contract for several works, so that if there is a success, it can not only exploit it for all it's worth, but if the band has staying power and isn't a one-hit wonder, it can keep pulling in the money. While this isn't perhaps the most efficient way of doing things, the unpredictability of the market rather necessitates it, and it seems to work okay, if you're careful about watching your expenses.

Anyway, now we get to the main reason why some of your friends are, as the man said, already this fucked.

If you are a musician and you are offered a fairly ordinary record contract, you have the options of rejecting it, making a counter-offer, or accepting it.

If you reject it, then you just keep on doing what you're doing. The label will not give you the money you need to finance your career, and you probably either have to get a regular job, relegating music to a hobby, or live a rather poor life.

If you make a counter-offer, the label probably rejects it. After all, there are tons of musicians that would love to get a record label, and won't make waves. If you will not take the deal offered -- the deal that overwhelmingly favors the label -- then you'll get no deal at all.

In both cases, maybe you can scrape up some cash, or find a more amicable label to finance you, but it's not common.

Or you can accept, in which case, you get a lousy deal but a lot of money to make a go for the brass ring. Probably you flop, and your career is shot, at least for a spell. The label lost money on you, and while you don't have to repay it, you have the stigma of a bad investment. Or, maybe you become a hit -- a lasting hit -- and can quickly pop out a few albums to fulfill your lousy contract, and negotiate a new contract from an infinitely stronger bargaining position. For while there are plenty of untried musicians, there are not many proven successes. But the odds of this are actually quite low. Basically, the chances of becoming enough of a star to get rich are like winning enough in the lottery to get rich. Most people might fantasize about it, but in the end it's probably better

Re:such sweet irony

[Original Replica]

as self publishing and self publicizing becomes more doable, that there is no way that the old model of the recording megacorps can continue to hold up.

Could it be that this current bill in Congress to restrict streaming is the tip of the wedge used to make self publishing and promotion less doable. First streaming MP3s are illegal,then all Music files without DRM, then prohibitive licensing of DRM encoders. If Sony can make their products less functional to protect their $$$ why wouldn't they try to do the same with internet distribution?

Re:such sweet irony

[asckar]

"The CD market is on the way out, that's just inevitable. It's a dead-end format and they restrict it more all the time."

You know, a lot of people say this, except for one small problem: 128kbps AAC audio (iTunes Music Store) is of much lower quality than CD audio. Granted, a significant portion of people are incapable of recognizing this difference, but most people who have any sort of musical training at all (which I find to be a large number of intelligent people, and most of the /. population are of such a type) can hear the difference if a comparison is made very directly (i.e. play the lossy music file, then play the CD audio).

This is not to say that I thing the iTMS to be a bad thing, I'm all for it (although I feel they should offer 160-192kbps files instead, or perhaps a lossless version as well for a higher price like many artists do for live albums [DMB, Galactic, etc]), but CD audio will not disappear, just like vinyl hasn't disappeared. It's a sonically superior format to lossy digital music, just like the original pressing of an album on vinyl is sonically superior (if prone to the occasional analog "pop") to its reissue on CD (and if anyone wants to argue this point, I invite you to come over and listen to my copy of John Coltrane's Giant Steps and compare it to the CD reissue, which supposedly has been remastered).

As for the whole bit about artists being ripped off, I am a musician. I am not signed to a major label, but, being someone who attends the Berklee College of Music, and has had a variety of discussions with both my peers and my professors, I can honestly tell you that the pop music side of the business is quite rotted. And a staggering example of this is Sony taking 70% of an online sale, and paying the artist 4.5 cents. Yes, I'm aware that Sony fronted the $250-500k studio costs, and the physical media distribution costs, and the promotion (radio play, MTV, etc), but dammit, they make a digital copy of the album, tag it appropriately, point to a favorable review of the album somewhere, and upload it to Apple ONCE. I agree with the poster on here who mentioned 50%. 50% would be damn fine for digital stuff, since it's ALL CONTENT, and requires nothing beyond the initial digitizing. Hell, how about 25%?! I mean, seriously, it's a sad thing when I can go out with a wedding band and make more in a few months playing "The Chicken Dance" than a relatively popular group can make with a major label contract.

I think it's safe to say that...

[fighthairloss]

...neither Sony nor any other major music label is going to get much sympathy from anyone on this.

Regardless of the merits of the case, I think Sony is not going to get much more than a shrug from the well-informed of the world.

Is this an example of karma? A cosmic balance? Maybe it's too early to say that until more lawsuits are initiated against the other side. Yes, that's right... more lawsuits against RIAA-affiliated companies, regardless of their merits. Sound familiar?

Huh

[Mad Quacker]

The "breakage" charge has been bogus for quite some time. It really applied in the days of actual records, a lot of which wouldn't survive shipment. How many CD's (or tapes for that matter) end up broken per shipment? Definitely not 15%. So far they have been able to make this stick regardless. Now it's just completely ridiculous, versus just mostly.

Easy

[Xichekolas]

"one wonders how Sony will defend against these charges"

Easy... Sony will do what all major labels and the RIAA do... They will allot some people-crushing money to their lawyers, file countersuits, and keep the legal battle going on long enough that the artists run out of money and are forced to accept a settlement out-of-court for a paltry amount that probably doesn't even cover their legal fees.

Meanwhile, Sony keeps collecting 94.5 cents of every 99 cent Cheap Trick song and puts it into a special account labeled 'Cheap Trick Settlement Fund'...

That, my friends, is the glory of controlling the distribution channel!

Isn't this also evidence of tax fraud?

[constantnormal]

It would seem to me that inflating such "expenses" would reduce the reported profits considerably.

I would expect the IRS to be going all medieval on them, but for the satanic protection of lobbyists.

I would also hazard a guess that such exaggerated "expenses" are a standard practive in the music distribution business, not just a practice at Sony.

Re:Not so fast

[bill_kress]

Some people just want to get their work out there. :-)

And to tell you the truth, these are the only people who's art I'm interested in. That's been my real problem with this crap all along.

If you actually can say "I refuse to create art unless I am paid X dollars", I don't want your "Art"

If you say "I want to create the art regardless of pay rate, or being paid at all", then chances are your art is going to end up being amazingly valuable. More often than not I don't mind paying for this at all.

Free Market isn't all that it's made out to be, there are other factors at play. Seriously--and Free Market logic is totally useless when it comes to something that can be replicated for free.

Seriously, what is the justification for keeping huge sections of humanity away from a certian type of art just because that artist hasn't been paid. Art is something to desciminate, to put in lives. It's a privilage to be able to create art for others--getting paid for it's a nice bonus, but it really shouldn't be considered a right.

Actually France has a pretty good plan here. The state pays artists to create. This has been done in one way or another since, well, since the beginning of art.

Might not be bad to have a similar system for Open Source programmers--Just enough money to keep them off the streets and happily coding away. (I know it's not quite THAT easy, but it's not THAT difficult either)

Re:Breakage

[geobeck]

So how is it any different that the copies are bits now?

My guess is that they will remove the 15% breakage deduction and replace it with a 25% piracy reduction. Or a 30% "Indy artists are stealing our profits" deduction.

Not bullshit.

[babbling]

It's not necessarily bullshit.

One could consider the DRM as a form of packaging. It is not the song itself, but something placed around the song. The DRM costs Apple money (CPU usage, initial and ongoing development), and Apple surely pass that cost onto Sony.

Similarly, when Apple changes the number of CDs a user can burn from 10 to 7, AFTER that user has already purchased the song, that could be considered a breakage from the point of view of a user, despite the fact that it was intentional. Surely Apple are forced to hand out some refunds to users because of a change like this, and so the "breakage" might also cost Sony money.

I want the artists to go for the whole enchilada..

[R2.0]

specifically, assert that the major labels have NO right to distribute songs electronically. Prior to 2002, electronic distribution wasn't a blip on the radar screen. If the artists can argue that it is impossible to sign over distribution rights for a method that didn't exist when the contract is signed, then the rights devolve to the original copyright holder. that means the artists could cut deals with Apple directly and cut the RIAA members out completely.

If they can get a legal team with big enough balls, and the right judge, it could happen.

Courtney Love was... and still is correct

[merc]

For those who never read the speech Courtney Love gave at the Digital Hollywood Online Entertainment Conference a few years ago it's worth a read. Most noteworthy was the position she held that the record labels are the real pirates.

Sony, (once again) continues to make her position tenable.

Courtney Love does the math:
http://archive.salon.com/tech/feature/2000/06/14/l ove/

OT: Philip Glass

[PCM2]

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.

Amusingly enough, the modern classical composer Philip Glass's first job was working at a relative's record store, where among his duties he had to take poor-selling records down to the basement and smash them, so the store wouldn't have to pay. (Heard that on NPR once.)