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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."
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.
Such it Blue!... errr Suck it Sony!
Granted we shouldn't be taking pleasure in the legal issues of such a large company... it is nice to see their business model faltering even more.
First the rootkit now this, the question in my mind is now: "What will be next?"
Help Brendan pay off his student loans
"One wonders how Sony will defend against these charges"
With a well placed root-kit!
They're trying to cover for the cost of DRM packaging, and the possible breakage of the product when a listener tries to play it, forcing them to ship a fixed version? ;-)
...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?
Blame it on piracy?
one wonders how Sony will defend against these charges.
The Chewbacca(tm) defense?
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.
~~~~~~~
"You are not remembered for doing what is expected of you." - Atul Chitnis
Shocked, Shocked I tell you Shocked, a large corporation not knowing how to properly do it's accounting.
Fantasy remains a human right; we make in our measure and in our derivative mode... -- JRR Tolkien
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.
"I don't know that atheists should be considered citizens, nor should they be considered patriots." George HW Bush
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.
My guess: they'll use lawyers.
My second guess is clowns, but we'll see which way it goes.
"Who is the Journal of Quantum Physics going to believe?" --Stephen Hawking
Seeing as how there is no physical packaging, nor physical inventory that might suffer breakage, one wonders how Sony will defend against these charges.
It's pretty simple. Sony will simply claim that there are marketing costs, server costs, bandwidth costs, and so on that amount to the same thing. To say otherwise would be to admit that they could be selling the downloads at lower cost to the consumer than the equivalent CD.
Sony may even capitulate so far as to actually update the contracts, so that it spells out, for online sales, how much money goes to marketing, bandwidth, etc. At the end of the day, however, I highly doubt that the artist will see a larger percentage of the sales than they did before. Nor will the consumer see any kind of savings.
It's unfortunate, too, because a reasonable pricing model for online downloads of music could have been arranged where:
1. The consumer pays less per track than for the equivalent physical media (which is fair, considering compression losses and lack of a physical object).
2. The artist gets slightly more per sale than before.
3. The label gets slightly more per sale (because of savings due to lack of packaging, etc.).
However (and not too surprisingly), the labels have decided that any savings that arise should all be kept by themselves. As we are starting to see, this strategy will lead to losses instead, as both artists and consumers seek out better strategies... maybe even business models without so many middle-men.
...one wonders how Sony will defend against these charges. The same way crew managers on the Alaska pipeline defended getting paid for 25-hour days: it's in the contract! Sony should know, they wrote the contract. Until artists wise up and stop signing contracts that allow the record companies to screw them any time they please, artists are going to keep getting screwed. Granted, in this case the contract was written before any such thing as internet downloads existed, but since Sony owns the copyrights and not the bands, they are in a very poor position to renegotiate.
I've abandoned my search for truth; now I'm just looking for some useful delusions.
For record companies, every imaginable expense is billed to the artist. If you go on tour, ALL the expenses are billed to you including expenses like this one that are just ridiculous. The bottom line is that the record company tries to take zero risk. All the risk is moved over to the artists. You can have a hit record and end up owing the record company money.
It is sort of the same for movies where actors are paid a percentage of the profits. The idea here is to make sure there are no profits so that the actors don't have to be paid.
The fat cats make darn sure they get their share though. It's an expense after all.
The silver lining is that, unless you are one of the really big name artists, you're much better off promoting your own career on-line. Once the majority of artists realize that, the record companies are toast.
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.
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.
"As God is my witness, I thought turkeys could fly." A. Carlson
You beat me to pointing that out. :(
The other thing I'd nention is this:
Because the contract covers defined methods of distribution, and online distribution is not allowed by the license from the copyright holders, this means that the labels themselves are guilty of copyright infringement, and are doing so willfully, for profit, and by levying fees against the artists and mailing checks which are baased on the fraudulent fees, they are adding mail fraud on top of the simple copyright infringement (of which there would be 1.000,000,000 individual counts if files). This is a felony actiity, and obviously piracy (if we accept the new term piracy).
This is obviously not within fair use (simple trading of mix tapes for free, which is essentially what is done on P2P networks) but criminal activity, and as we all know, piracy funds terr'rists. Therefore, homeland security and the NSA should be closely scrutinizing the big labels (and their subsidiary "Indie (but not so Independent" labels) for terr'rist funding.
The Christian Right is Neither (Christian nor right). See: Matthew 23, Matthew 25, Ezekiel 16:48-50
What costs does Sony have at that point?
Lawyers to sue copyright infringing teenagers! Duh.
Breakfast served all day!