How Big Music Companies Are Stealing Hundreds Of Millions In Royalties From Artists

from the follow-the-bouncing-ball dept

It's no secret that various major labels and big music organizations have a history of not paying artists what they're owed under the law. We've covered plenty of examples of fancy "accounting" to avoid having to pay, such that even big stars claim they never see royalties. However, Jeff Price, over at Tunecore has uncovered what may be an even bigger scam on the publishing/songwriting side of the business, creating a giant shell game, wherein major labels are getting hundreds of millions in royalties that are owed to songwriters, but are never paid.

The details are quite complex. Jeff's post has all the details, but let's just focus in on one key part of it. Basically, outside the US, digital music services need to pay two separate licenses to US songwriters -- one for reproduction rights and one for public performance rights (we won't get into why there are two separate rights and how they collided back together in digital music, as that's a different rant for a different day). However, almost no one actually buys both licenses. Typically they just get one (the reproduction right, as provided as a compulsory rate via ASCAP/BMI/SESAC) which they then pay through a local collection society. Technically, that means digital music services outside the US need to directly negotiate deals with US songwriters for the public performance right. But they don't do that.

Instead, they just pretend that the reproduction license they have covers it. And then, the local collection society arbitrarily split the reproduction license into components, pretending some of it is for the ASCAP/BMI/SESAC and some of it is for the public performance license... even if no such license has been secured (as it rarely is). Then, to make it even crazier, the local collection society skims its own take off the top for administration (despite having no right to the money in the first place) and then passes the money on... to the major labels. Jeff lays out an example:
You are a member of ASCAP, BMI or SESAC. These three organizations are in a relationship with other performance rights organizations around the world to collect and pass back and forth Public Performance royalties.

Your song sells via download in Japan (the same scenario plays out in just about every country).

The digital store pays the songwriter’s money to the local collection agency in Japan (called JASRAC) for the right of Public Performance. JASRAC has the right to issue licenses and collect money for the songwriter’s Public Performance as the right of Public Performance was passed to it by ASCAP/BMI/SESAC.

Now here’s where it gets really screwed up:

JASRAC arbitrarily splits the money paid by the digital store between mechanical royalties and Public Performance. For example, JASRAC decides 70% of the money it got paid by the digital music service for Public Performance goes to mechanical royalties and 30% of the money goes to Public Performance royalties.

There is no basis in copyright law for how the split is determined. The split differs from country to country and from collection agency to collection agency. It is based on who sits on the board of directors at each collection agency. If there are more publishers on the board, the split goes more toward mechanicals; if there are more songwriters, the split favors Public Performance.

Important: JASRAC does not represent the songwriter for Reproduction and has no right to split the money paid to it by the digital store. Nevertheless, the collection agencies ignore this (and apparently so do many digital music services).

For the mechanical royalties, JASRAC takes around 15% of the songwriter’s money as an “administration” fee despite not administering it (not to mention it had no right to the money in the first place).

Then, as the songwriter never joined JASRAC to get the mechanical royalties that JASRAC had no right to collect, JASRAC gives the songwriter’s money to Warner Bros., EMI, Sony, Universal and others based on each company’s market share in that country.

In other words, they give some portion of the songwriter’s money from Public Performance away to other entities. Eerily close to stealing the songwriter’s money…
He goes on to point out that it's effectively impossible for a songwriter to actually get this money that is required by law to go back to the songwriter.

Jeff has been on the warpath about this, trying to get back the royalties songwriters signed to Tunecore are owed. If you heard the story last month of Amazon suddenly taking down all Tunecore music in Europe, you might reasonably put two and two together to recognize that someone wasn't getting all the licenses required...

This is unquestionably a complex legal issue, with a variety of different separate rights under copyright law, which collide in slightly awkward ways online, combined with different laws in different jurisdictions on a global internet. The root of the problem is how copyright law itself is setup -- which is that each time a new technology comes along, regulators duct tape on a different "right" to handle things, and assume that they've fixed the issue. But that leaves us in a bit of a mess today where the internet is sorta like a sale, sorta like a license, sorta like a performance, etc... and then there's a big mess.

A true solution would be to recognize that the way copyright law is set up today is a huge Frankenstein-beast, but that seems unlikely to happen. In the meantime, however, this level of complexity appears to have opened up a way for the major labels to effectively just steal (and yes, in this case it is stealing) a ton of money from songwriters by more or less laundering the money through the complex and nearly impossible to understand international collection society system. As Jeff summarizes, the whole thing is pretty crazy:
The digital store has not gotten the right to Reproduction and has never paid the songwriter the money he/she is owed.
  • The collection agency has taken the songwriter’s Public Performance royalties, split them into two, taken a % of the royalty it does not represent and then has made it impossible for the songwriter to get what’s left over.
  • Other entities that have no right to the songwriter’s royalties knowingly take the royalties from the collection agencies.
From the portion of the money JASRAC was legally allowed to collect and arbitrarily assign to the Public Performance royalty, it takes somewhere between 15% – 25% of it as an administrative fee (it is not clear how much as they will not reveal the exact % they take from a particular source) and then about 6 – 12 months later, JASRAC passes it back to ASCAP/BMI/SESAC.

ASCAP/BMI/SESAC then takes an international administrative fee of around 3.7% of what’s given to them and then splits the Public Performance royalty in half, assigning 50% of the money to the songwriter and 50% of the money to the “publisher” (side note: there is no basis in copyright law for this, but it was done to protect songwriters in publishing deals).

ASCAP/BMI/SESAC then pays the songwriter 50% of the leftover Public Performance royalty 6 – 12 months after having gotten it (almost two years after it was generated) and the other 50% gets sent to the publisher; if the songwriter is both the songwriter and publisher, the songwriter receives both payments. If the songwriter is in a publishing deal, the publisher payment goes to the other entity that takes another 10% – 50%. This entity then sits on it for another 3 – 6 months before finally sending the remaining royalty back to the songwriter close to over three years after it was generated.

No one can follow exactly what is going on due to the complexity, lack of transparency and audit trail, and time delays. In the process songwriters’ royalties are either being taken from them or not paid to them in the first place.

It’s one hell of a global copyright shell game that funnels songwriter money into the pockets of everyone but the songwriter.
Yeah, and all the folks profiting then talk up in the press about how they're doing so much to "protect" artists and musicians?


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Anonymous Coward, Mar 9th, 2012 @ 10:11am

    It's not stealing. It's copyright infringement!

    Uh...actually, it's something else. But it's not theft anyway.

    If we are going to keep whipping trolls that equate copyright infringement to theft, then we should probably be careful with our own choice of words, no?

     

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  2.  
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    John Doe, Mar 9th, 2012 @ 10:12am

    Re:

    No, in this case it actually theft since they are taking money owed the songwriter.

     

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  3.  
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    John Doe, Mar 9th, 2012 @ 10:13am

    Re: Re:

    You could also add fraud in there as well since they are negotiating and collecting fees for a group they don't even represent.

     

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  4.  
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    Chris Rhodes (profile), Mar 9th, 2012 @ 10:13am

    Re:

    They are actually taking money that is not theirs to take, so in this case, it is precisely stealing.

     

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  5.  
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    Anonymous Coward, Mar 9th, 2012 @ 10:16am

    Re: Re:

    If someone that owes you money doesn't give you your money back, you aren't being robbed.

    There's a breach of contract. Or something like it. But it is not stealing, in my opinion.

     

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  6.  
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    Anonymous Coward, Mar 9th, 2012 @ 10:17am

    Ummm, wouldn't the money going to the labels be "other artist income" and be part of the contract?

     

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  7.  
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    Russ (profile), Mar 9th, 2012 @ 10:18am

    Business Model

    It makes you wonder if the organizations involved can actually make money performing the activities they were organized to perform.

    Like a bank that loses money on checking and credit cards but makes money on the fees, these organizations seem to make their profit from retained earnings rather than contract fees.

     

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  8.  
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    silverscarcat (profile), Mar 9th, 2012 @ 10:21am

    Just to be clear now...

    "Pirating" really costs music nothing because they're already not paying what they owe...

    Wow, just... Wow...

    And they have the gall to bitch about "lost revenues"?

     

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  9.  
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    Mike Masnick (profile), Mar 9th, 2012 @ 10:24am

    Re:

    Uh...actually, it's something else. But it's not theft anyway.

    If we are going to keep whipping trolls that equate copyright infringement to theft, then we should probably be careful with our own choice of words, no?


    This is stealing. We're talking about actual money that's been paid that belongs to artists, that is being taken by the labels. That's stealing.

     

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  10.  
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    Anonymous Coward, Mar 9th, 2012 @ 10:26am

    Re: Re: Re:

    The law doesn't care about your opinion.

    If it's your job to collect money for someone, and you pocket that money, that's stealing. You are actually depriving someone of a scare thing which is rightfully theirs.

     

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  11.  
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    Ninja (profile), Mar 9th, 2012 @ 10:31am

    I'm eagerly waiting for the usual shills to comment on that and twist up the facts.

    Other than that, no surprises here. I knew there was shit all over the place, you just gave me the dimension.

    Considering most pirates also buy stuff they like I think we (the pirates) just got the moral high ground. Brilliant ;)

     

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  12.  
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    :Lobo Santo (profile), Mar 9th, 2012 @ 10:35am

    In Conclusion

    Seeing the level of theft they're engaging in, they're obviously attempting to start their own government.

    All we need to do is point this out and then watch the military respond to this 'national treasonous threat' on CNN... everybody knows the governments of the world won't brook any competition.

     

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  13.  
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    Hephaestus (profile), Mar 9th, 2012 @ 10:40am

    Re: Re:

    It could actually be called a multiple pyramid scheme. Each pyramid passes a portion of the profits to the next after taking its own cut, in the end nothing is left for the artist. Much of this is done contractually, much more is done because there is no way to prove who owns what copyright and they can get away with it.

     

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  14.  
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    Anonymous Coward, Mar 9th, 2012 @ 10:42am

    Re:

    Probably not if it's being distributed by market share instead of, you know, the actual sales the money's coming from.

     

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  15.  
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    Anonymous Coward, Mar 9th, 2012 @ 10:55am

    Re: Re: Re: Re:

    Yeah, they should have just made a copy of the money and given the artists those copies. Everybody wins!

     

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    sevenof9fl (profile), Mar 9th, 2012 @ 10:57am

    RICO

    The perpetrators need to be pursued under RICO statutes because that's exactly what they're using to defraud the artists of their money. If the artists music is on a server or passes at any point through the USA or its territories, RICO would indeed apply.

    I'm not that smart and I thought of it; why has no one else?

     

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  17.  
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    Mike Masnick (profile), Mar 9th, 2012 @ 10:59am

    Re:

    Ummm, wouldn't the money going to the labels be "other artist income" and be part of the contract?


    Read more carefully. This is *independent artists'* revenue that is going to *major labels* who *have no contract with those artists*.

     

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  18.  
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    Anonymous Coward, Mar 9th, 2012 @ 11:12am

    Hey Mike, just to let you know, I think you flipped around the terms in your second/third paragraphs: the PROs grant the public performance right (as per their name), then pretend they also have the reproduction right. You have it written as the opposite.

     

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  19.  
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    Rikuo (profile), Mar 9th, 2012 @ 11:13am

    Re:

    I sure hope that you're being sarcastic, because in this case, IT IS theft! Here, we've got a case of money that's clearly supposed to be owed to the songwriter, but that never gets to them.
    Versus the hazy world of infringing copyright by downloading a file, where, at best, you can say there's a potential sale being lost (not an actual sale, potential).

     

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  20.  
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    Rikuo (profile), Mar 9th, 2012 @ 11:16am

    Re:

    Reading comprehension fail.
    These are independent artists who aren't with a label, or are with a label not affiliated in any way with the majors. Yet, the majors here say "Well, we've got this large market share, so we're gonna pocket a percentage of your money anyway".

     

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  21.  
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    Anonymous Coward, Mar 9th, 2012 @ 11:22am

    Re: Re:

    It sounds more like embezzlement, but Wikipedia tells me that's only for personal profit. It instead suggests peculation as the most accurate term.

     

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  22.  
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    Anonymous Coward, Mar 9th, 2012 @ 11:23am

    Re: Re: Re:

    Nevermind.

    I missed the fact that this was money these labels never should have received in the first place.

     

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  23.  
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    Anonymous Coward, Mar 9th, 2012 @ 11:30am

    Re: RICO

    You forget that the DoJ has been stacked with entertainment industry lawyers.

    Still, this alone seems sufficient for a RICO indictment on all the major labels, if anyone cared to try.

     

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  24.  
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    Anonymous Coward, Mar 9th, 2012 @ 11:46am

    Re: Re: Re: Re:

    I was thinking the same thing you were and was trying to track down exactly what it was called.

     

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  25.  
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    Samuel Abram (profile), Mar 9th, 2012 @ 11:58am

    This ^

     

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  26.  
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    Duke (profile), Mar 9th, 2012 @ 11:59am

    Under English law, it may well be stealing as they're assuming they have the right to dispose of someone else's money as they see fit. However, they'd also have to be doing it dishonestly, and proving that could be awkward, but not impossible.

    So yes, it could well be theft (under some laws), probably is some kind of fraud (almost certainly the "conspiracy to defraud" that is ever so popular in the UK with copyright enforcement groups) and may be a few other things.

     

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  27.  
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    Anonymous Coward, Mar 9th, 2012 @ 12:52pm

    Re: Re:

    and you doing your "infringement" by not buying the song to begin with isn't also stealing the money from the artist???

    yeah, that's what I thought, you don't see it that way, cause you like piracy..

     

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  28.  
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    AzureSky (profile), Mar 9th, 2012 @ 1:34pm

    Re: In Conclusion

    start their own...they already own most of the ones we have now...

     

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  29.  
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    The Groove Tiger (profile), Mar 9th, 2012 @ 3:01pm

    Re: Re: Re:

    Blah blah if someone making a copy that should have been of a copy of something that might have been paid to me if it had been good and someone actually wanted is not stealing, then pickpocketing isn't stealing either!

     

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  30.  
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    Benjo (profile), Mar 9th, 2012 @ 3:24pm

    Re: Re: Re:

    We don't see it that way because we read the article.

     

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  31.  
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    Anonymous Coward, Mar 9th, 2012 @ 3:33pm

    It figures that the ones who are screaming the loudest about piracy are in fact the real pirates.

     

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  32.  
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    Digitari, Mar 9th, 2012 @ 4:20pm

    RE

    Did anyone send this to Chris Dodd yet?

    EVERY politician that supported SOPA/PIPA should have this Story E Mailed to them.....EVERY DAMN one....


    Over and over again

     

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  33.  
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    Anonymous Coward, Mar 9th, 2012 @ 5:26pm

    Re: Re: Re:

    No, because not-buying isn't stealing, and making a copy doesn't deprive anyone of a scarcity.

     

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  34.  
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    writeem (profile), Mar 9th, 2012 @ 7:12pm

    Hmmm

    As a long time pro songwriter, I'm aware of this and any # of other ways my $ are skimmed. The game is rigged, kind of like most contract labor deals, but if you have some success, you can re-write your deal points and make up the dif. Now, how about an article about how pirates sites and their enablers make mega-millions from music and share 0% with writers, artists or anyone else who devoted their life to making it.
    Surely techdirt wouldn't scour the news looking only for evidence of major label (and major studio mis-steps), then gleefully re-print them as justification for the decade long free ride big tech has had on the backs of professional creators. Selective outrage? Surely not.

     

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  35.  
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    Samuel Abram (profile), Mar 9th, 2012 @ 7:57pm

    Let me take it, frame by frame it:

    Now, how about an article about how pirates sites and their enablers make mega-millions from music and share 0% with writers, artists or anyone else who devoted their life to making it.


    As a songwriter, I empathize. But technology giveth and technology taketh away. This isn't new. John Philip Souza railed against the "talking machines" and the player pianos that didn't pay him as a songwriter. What we got out of it was the mechanical license.

    While we're on it, name me one site that "makes mega-millions from music and share[s] 0% with writers, artists or anyone else devoted with it." The Pirate Bay? Non-profit. Megaupload? When you have dumb pipes like that, some of it is legal. Take mediafire for instance. I have legal content on there right now (for those interested, it's one of my own tracks of my own composition and two Cory Doctorow E-Books, both with a Creative Commons license). Also, I could have turned the sharing off and kept it to myself. It's entirely possible a majority or plurality of people did that on Megaupload. Hell, I'd bet good money on it. Now, there's no way to tell.

    Surely techdirt wouldn't scour the news looking only for evidence of major label (and major studio mis-steps), then gleefully re-print them as justification for the decade long free ride big tech has had on the backs of professional creators. Selective outrage? Surely not.


    Let me rephrase that for you:

    Surely [guy on the internet claiming to be a professional songwriter] wouldn't scour the news looking for evidence of [high levels of copyright infringement costing the recording and movie industry trillions of dollars], then gleefully re-print them as justification for the [legislation and trade agreements seeking to destroy the foundation of the internet] on the backs of [people who use and make use of the internet daily]. Selective Outrage? Surely not.


    I know you haven't actually scoured the news looking for those bogus reports claiming that piracy has cost the industry $750 billion, but really, do you honestly believe it?

    Also, let's see who has made it without a label: Jonathan Coulton. In 2010, he made $500,000. And he licenses almost all of his music with a BY-NC Creative Commons license.

    Also, there's Ingrid Michaelson. Granted, she could have made it on a label, but she's making a lot of money because she keeps her own master, publishing, and performance rights. So she's making millions.

    Also, you wouldn't be affected because you have representation with contract label deals. I'm not successful. And I'm not signed onto a label. And the Major Labels are STILL Stealing from me. And I believe that was Masnick's point that you conveniently ignore before throwing the red herring of those dastardly pirates.

    Next time, read more and be a dick less.

     

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  36.  
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    writeem (profile), Mar 9th, 2012 @ 9:26pm

    Re: Let me take it, frame by frame it:

    Two examples of artists who made it with Creative Commons (sounds like you've been a good little CC drone). Good for them. It's their choice, as it should be. We have a constitutional 'exclusive right' to our writings--oh yeah, except for when we don't. My songs are on illegal sites by the millions, with everyone in the chain making $ from them --except me.
    I don't have to scour the news for #'s, examples, I've seen it, lived it, watched friends and colleagues go under-- but no one here cares to actually acknowledge that I know what I'm talking about, that I really am ripped off by pirates and their pals- and fellow profiteers- in big tech. You have to demonize and diminish me. Have at it. I know what I'm getting into when I post here. I tell you what. Let's have this conversation when 95%+ of all p2p's movies and songs are no longer from the major labels and studios. Don't hold your breath.

     

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  37.  
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    Anonymous Coward, Mar 9th, 2012 @ 10:02pm

    Re: Re: Re:

    And I presume, darryl, from your moral high horse that you own a copy of every single musical file or song ever made or will be made? And paid for each of these files?

    You don't? You two-faced slimeball pirate, you.

     

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  38.  
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    Jesse Townley (profile), Mar 9th, 2012 @ 10:29pm

    Re: Re: Let me take it, frame by frame it:

    "Let's have this conversation when 95%+ of all p2p's movies and songs are no longer from the major labels and studios."

    Considering the pap that the major studios and labels churn out, I would frankly love this.

    That's just an aside- I couldn't resist!

     

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  39.  
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    Anonymous Coward, Mar 9th, 2012 @ 10:47pm

    Re: Re: Re: Re: Re:

    You got to wonder why you can't do that.

    I don't think everyone understands why money exists and the function it serves.

     

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  40.  
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    Anonymous Coward, Mar 9th, 2012 @ 10:54pm

    Re: Re: Let me take it, frame by frame it:

    Hmmm...no, what you have is a government granted monopoly which is given to you by congress that has the constitutional power to grant or not that monopoly but only if it serves to enrich the public domain.

    Read carefully the US constitution and you will not see "artists" have any constitutional rights beyond what everybody else has.

    Your songs in today "illegal"(probably legal in the future) websites may or may not make millions but they are the product of work done by others not you so why are you feeling entitled to get money from them?

    Do makers of the instruments that allow you to be a musician not get paid everytime you make a buck with their products too? Do you pay royalties to them?

    I am guessing you would feel ripped off if you did all the work and someone came along and said "I have a constitutional right to the exclusive benefits of my work and you need to pay me now".

     

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  41.  
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    Jesse Townley (profile), Mar 9th, 2012 @ 11:19pm

    Synch & masters, artistic & mechanicals, and digital income

    A couple things- like some others here, I deal with these issues all the time. I have a semi-large quibble w/ this article although the thrust of it- big companies behaving badly- is clearly accurate.

    Quibble #1:
    From reading the more in-depth blog post that this references, it's unclear how much of this affects artists who have a label working their music, whether independent or major. I have a feeling that a lot of this doesn't apply to those artists. I think this is more about the literally independent artist, not artists on independent labels not represented by the RIAA.



    For licensing games, movies, commercials, whatever, you *should* get both a synch right & a master right. I believe this is analogous to both artistic royalties & mechanical royalties. As I read those articles, the synch right and the mechanical royalty are analogous to both the public performance & reproduction rights that are discussed above, since they relate to the payment of mechanical royalties to songwriters.

    HOWEVER, a company that wants to license a song is coming from OUTSIDE the artist-label relationship. A distributor or store (whether physical or digital) is from INSIDE the artist-label relationship.

    That leads me to Quibble #1:
    A song is distributed to a digital retailer by a distributor. That distributor able to do this because it has an agreement with a record label. The record label is able to do this because it has an agreement with the artist. This label-artist agreement is where the mechanical & artistic rights are assigned to the label. The label can then push the music out along the various sales channels. All of this is INSIDE the artist-label relationship. Additionally, because of the compulsory licensing under US law, there's only one digital license needed by digital retailers (a Reproduction license), and that's included within the artist-label relationship (implied or explicitly included, btw). If the other links in the chain are lined up, an artist cannot refuse a license for the US digital retailer to sell the work.

    So digital retailers inside the US aren't involved at all in this story. Frankly, that's where the majority of income for US-based independent artists comes from, no matter who you are.

    I understand the point that legally, for some reason, there's 2 licenses needed for overseas digital sales. And since only the Reproduction one is compulsory (i.e. an artist cannot refuse to allow a retailer to sell a track under this license), the OTHER one has to be agreed to by the artist. (Is this an example of legal overreach, like the DMCA, back when the internet was going to be printing money so it was okay to demand ridiculous fees from anything digital?)

    Leaving aside that it makes no sense to have a 2nd license since this is NOT an OUTSIDE relationship (i.e. it's part of the sales chain that goes artist--> label--> distributor--> retail), I think Techdirt readers should step back and understand what this article is demanding.

    It's demanding that all non-US digital stores (as opposed to physical stores) get explicit permission from each rights-holder to sell a product that they, if they were in the US, would automatically be able to sell by being associated with the artist's distributor. While in the world of data and numbers the trading of information and permission is lightning fast, here we're talking about my people. Artists. Band members. People who aren't computer-compatible. People who are on tour. People who aren't paying attention. Dollars to donuts says that's why the right to Reproduction is a compulsory license, ha ha ha...

    That's crazy, but it's a small quibble.

    Quibble #3:
    Digital royalties famously don't come divided between mechanicals & artistic royalties. The linked article claims that standard practice is that when digital income comes in, it is all artistic royalties and the label pays the mechanicals out of its share. Maybe it's because we're not in the RIAA & we don't get their newsletters, but I've never heard of this, ha ha ha...

    As is industry standard, digital sales are treated differently than physical sales. They're treated as licenses (hence the bits about compulsory licenses above) and therefore the standard is 50% label, 50% artist. I think it was Eminem who sued his label because they were treating digital sales as "sales", in otherwords paying him 10-14% instead of 50%. (His label has brass fucking balls to do that!)

    We (& every other label I know of) split digital 50/50. The artist's 50% is split into artistic & mechanical if necessary (if a band is splitting everything equally & there are no covers, it's just extra work to split it into artistic & mechanical).

    Quibble #4:
    If we have to split the digital into mechanical & artistic, we have no real guide. As noted, there's no hard and fast % split. *** THIS ISN'T BECAUSE LABELS ARE EVIL!!! ****

    This is because mechanicals are tied to a specific amount of money ($.091 cents/song) while artistic royalties are tied to a specific % of a sales price (either list price or wholesale price), and a record may have 5 songs ($.45 of mechanicals) & sell for $9.98, or it may have 10 songs ($.91/mechanicals) & sell for $9.98.

    Here, we split each batch of digital royalties at the same ratio of the physical sales. So if the band is making 20% mechanicals & 80% artistic on their physical sales, then we apply the same ratio to their digital sales.

    QUESTION:
    Are these overseas digital royalties part of what Sound Exchange is supposed to be vaccuuming up & distributing 50/50 to the label & to the artist? If so, Sound Exchange has been very active and refuses to pay labels any of the artist's income, even when the artist is legitimately in debt to the label. Trust me, we know this through direct experience. I'm both a band member and a label owner, so it's awesome and awful at the same time, but I don't begrudge the system too much because it has been tilted against the artist almost since day one.

    For example, as an artist, I'm stoked because my old label (that's now almost bankrupt) can't come after my Sound Exchange income even though we left the label owing them $2K. As a label manager, I'm bummed because a band that owes us $4K is getting $500 that we could really use to pay down what they owe us. I have to (and am) talking w/ bands who owe us $ and trying to persuade them to pay down their debt with their Sound Exchange money. If they refuse, there's nothing we can do.


    ======= That said, I am appalled by the chicanery of the big boys, taking $ for artists that they don't represent and keeping it. They've tried to pull this kind of stuff in the late 1990s, even though they do not represent the majority of artists nor does their industry group, the RIAA, represent the majority of labels. Brass fucking balls.

     

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  42.  
    icon
    Kingharvest (profile), Mar 10th, 2012 @ 1:30am

    RIAA

    What we should do is that anyone who has ever bought an album, single, cd or mp3 should contact the RIAA and ask them to prove whether or not the royalty payment -included in the price of EACH item purchased, ever- has been passed on to the artist.

    We have already paid this money. Someone has kept most of it.


    RIAA are the people who have failed to pass on this money, all the while pretending that they are protecting the very same artists from copyright infringement.

     

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  43.  
    identicon
    Digi, Mar 10th, 2012 @ 2:15am

    collecting societies

    It is fraud, and the problem is that in most countries collecting societies are not effectively regulated. Performers have no choice, there is usually only one collecting society per country. In Spain and Belgium music collecting societies are currently being prosecuted for fraud.

    Record labels and collecting societies are ripping performers off. We need an effective system of licensing so that performers get a fair share when their music is licensed in their own country and abroad. Collecting societies need to be regulated as they can obviously not be trusted to administer money properly and act in the best interest of performers.

     

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  44.  
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    writeem (profile), Mar 10th, 2012 @ 5:14am

    Re: Re: Re: Let me take it, frame by frame it:

    Sure, there's lots of pap and crap, probably 80-90%, from the majors, same -or higher -for the indies since the bar for entry there is so low--80% of my own songs are mediocre in spite of my best efforts, but I've got to write through them to get to the good stuff that makes my, and the pirates, living. There is more money in music, movies, etc than there has ever been, but it's being siphoned off by entities who, unlike labels and studios, bear none of the cost of creating them. Keep looking for examples of label underhandedness--you'll always find them--and ignoring the same from the big tech crooks. Just don't pretend you're doing it for my benefit.
    Thanks for the scolding gentlemen, I'm off to the studio.

     

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  45.  
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    PaulT (profile), Mar 10th, 2012 @ 7:00am

    Re: Re: Re:

    "and you doing your "infringement" by not buying the song to begin with isn't also stealing the money from the artist???"

    No, it's not. Do try to read the last frigging decade of conversation to try and work out why, then you can catch up and participate in intelligent debate.

     

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  46.  
    identicon
    Anonymous Coward, Mar 10th, 2012 @ 9:18am

    Re: Re: Re: Re: Let me take it, frame by frame it:

    You, and others, keep claiming that 'the pirates' are 'making millions' off your work, yet no one can offer a single shred of positive, solid evidence of this. Just because you feel it in your gut doesn't make it true. I feel in my gut that you are a marginal, and a total washout as a writer. Doesn't make it true.

     

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  47.  
    icon
    Samuel Abram (profile), Mar 10th, 2012 @ 9:42am

    Re: Re: Let me take it, frame by frame it:

    Ingrid Michaelson does not license her music with any Creative Commons license. Way to misread my post. My point was that she has the benefits of being on a label (such as exposure and her album topping the iTunes charts) without any of the drawbacks, such as a label getting most of her earnings (her label is her own, primarily. It's one of those deals).

    Also, you keep using that word "big tech", but you never provide an example. If you're talking about google, they have a legal music service. If you're talking about their search rankings ranking pirate sites higher than legitimate sites, you act as if google does that on purpose when their algorithm is content-neutral. Also, sometimes, legitimate sites like bandcamp rank the highest. And in a lot of cases convert people from piracy into paying customers.

    and as for this:
    We have a constitutional 'exclusive right' to our writings--oh yeah, except for when we don't.


    I think this is more of a problem with technology than anything else. Also, The US constitution doesn't grant authors a right to copyright; it says that congress shall have the power to grant that. Congress can withdraw copyright and it would still be constitutional (I would hate that, but it would be allowed).

     

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  48.  
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    writeem (profile), Mar 10th, 2012 @ 11:31am

    Re: Re: Re: Let me take it, frame by frame it:

    Well, you've changed my mind. I'm totally wrong. I can now disregard the gutting of the music business by 50% in 10 yrs- which I've witnessed first hand-as a figment of my imagination. I shall hereafter bow down to the Ayatollahs of Silicon Valley.
    I will also disregard this expose of Google's biz model, 'set up ad programs for criminals of all stripes, feign innocent bystander status, go to the bank'.
    http://latimesblogs.latimes.com/technology/2011/08/google-to-pay-500-million-to-doj-for-ille gal-drug-ads-sales-in-us.html

     

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  49.  
    icon
    writeem (profile), Mar 10th, 2012 @ 11:44am

    Re: Re: Re: Re: Re: Let me take it, frame by frame it:

    How did Kim.com make his mega-millions?, Limewire, Grokster, Pirate Bay? Money was paid, either directly or thru ad revenue, to them to access content and none of that $ went to anyone in the chain who created it. The music biz is down 50% in ten years- that's a fact, and in my little corner of it, the # of songwriters is down by at least 2/3. Yeah I feel it in my gut, + my (and my friends) bank accounts, and I see/live it everyday in real time. Of course I'm a marginal, a washout. Whatever suits your ideology. Attack the messenger. Why would you want to actually have a sane conversation with someone who makes their living by the circle c, someone who might actually know how the music biz really works and how big tech has had a free ride on our backs. Don't take my word for it. Follow the money if you have the intellectual curiosity, which I doubt.

     

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  50.  
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    Zenstrive (profile), Mar 11th, 2012 @ 7:58pm

    gatekeepers of music industry most rot.

     

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  51.  
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    wvhillbilly (profile), Mar 11th, 2012 @ 9:08pm

    Re: Re:

    Aha! So now we have it! The same people who are screaming the loudest about piracy and theft are the very ones who are robbing the songwriters blind. What hypocrisy!

    Moral of this story: If you want to find out what crooks are up to just look at what they are accusing others of.

     

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  52.  
    identicon
    Anonymous Coward, Mar 12th, 2012 @ 2:08am

    Re: Re: Let me take it, frame by frame it:

    When you say "seen it, lived it" do you mean that you actually saw profits go missing because of downloaders, or because you were given all that information by labels who essentially went, "Pirates. Therefore, I don't have to pay you anything"?

     

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  53.  
    identicon
    indieThing, Mar 12th, 2012 @ 5:01am

    Re: Re: Re: Re: Re: Re: Let me take it, frame by frame it:

    Regarding your earlier link to Google paying out $500m, you should read the previous Techdirt article on it, you may get a better understanding of why they paid. And anyway, what the hell does that have to do with copyright infringement ?

    Also, I can think of many reasons musicians are earning less, here's a few:

    1. Ripped off by major record labels.
    2. People have a lot more choice on what to spend their hard earned income. e.g. Video games now earn more than the music industry in revenue - that money has to come from other spending.
    3. Global recession.
    4. People pissed off with music biz and boycotting.
    5. The record labels not embracing the digital world and refusing to sell online until recently, problem was, everybody wanted to buy digital, but it wasn't being offered.

    And before you resort to calling me a stinking pirate, I happen to be a content creator. I've been through hard times myself, and don't turn round and blame everyone else. If you're not making a good living, then buck up and do something that does.

     

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  54.  
    icon
    Karl (profile), Mar 12th, 2012 @ 9:20am

    Re: Re: Let me take it, frame by frame it:

    sounds like you've been a good little CC drone

    Sounds like you have no idea what CC actually means. For instance, you can release your music under a CC-NC license, and still be a member of a PRO, be entitled to mechanical royalties, etc.

    We have a constitutional 'exclusive right' to our writings--oh yeah, except for when we don't.

    No, we don't. We never did.

    Congress has a Constitutional right to grant copyrights to our writings. ("Congress shall have the power...") It is up to Congress to decide how much of those rights it wants to grant, if any.

    This reflects the fact that copyright is only granted through the will of the public, and its primary purpose is to benefit the public, not artists or publishers.

    As Thomas Jefferson said: "Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from anybody."

    My songs are on illegal sites by the millions, with everyone in the chain making $ from them --except me.

    Here's a suggestion. Many of those "illegal" sites have some sort of rewards program for popular content. This sort of deal was made for people like you. If your songs actually are on those sites "by the millions," then you can simply upload them yourself, and make half of whatever profits those "illegal" sites make. It's a much better deal than anything the labels will give you.

    Lots of rap artists were already doing this with Megaupload before it was shut down. (And, Megaupload was planning on unveiling Megabox, where 90% of the earnings went to artists.) Why do you think they agreed to be in that "Megasong?"

    It probably won't be that much money, though... because those "illegal" sites don't actually make much money in the grand scheme of things. The idea that the "pirate sites" are making millions in profits is disinformation from the RIAA.

    I don't have to scour the news for #'s, examples, I've seen it, lived it, watched friends and colleagues go under

    If your friends and colleagues worked for major labels, then I'm not surprised they've gone under.

    The reason is not due to "piracy." The reason is that the major labels are incompetent businessmen.

    You're behaving exactly like a UAW member who blames Japanese auto makers for the failure of the U.S. auto industry. If Chrysler isn't selling cars, and Toyota is, you blame Chrysler for making cars nobody wants to buy.

    And if you're a smart UAW member, you quit Chrysler and go work for the Toyota plant that just opened next door.

    their pals- and fellow profiteers- in big tech

    "Big tech?" The moment you start throwing terms like that around, is the moment you show you have absolutely no idea what you're talking about.

    "Big tech" treats artists much better than the RIAA clients ever did, and always has. iTunes pays far more of the retail profits directly to copyright holders than labels do. YouTube alone has created an entire middle class of artists who simply didn't exist before. Even Spotify, which pays next to nothing, still pays more than terrestrial radio.

    That's not including new entities like Kickstarter, BandCamp, CDBaby, or even TuneCore itself, all of which couldn't exist without "big tech."

    Let's have this conversation when 95%+ of all p2p's movies and songs are no longer from the major labels and studios.

    As an underground artist, I can't wait for this to happen.

     

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  55.  
    icon
    Karl (profile), Mar 12th, 2012 @ 11:17am

    Re: Synch & masters, artistic & mechanicals, and digital income

    Hey, Jesse. Thanks, once again, for stopping by.

    I think I can answer some of those quibbles, though I'm less of an expert than you are, to be sure.

    it's unclear how much of this affects artists who have a label working their music, whether independent or major.

    The article deals exclusively with songwriter royalties - that is, the copyright on the underlying composition, not the sound recording. So, it doesn't matter so much whether the artist is on a label; it depends upon whether the artist is a member of a PRO.

    Outside of the United States, songwriters get two types of royalties from digital sales: "performance" royalties (handled by a PRO in the U.S.) and "reproduction" royalties (handled by the Harry Fox Agency in the U.S.).

    Most artists on a label (even an indie label) are members of a PRO. In this case, both the performance royalties and the reproduction royalties go to the local PRO (like JASRAC). The local PRO then pays the performance royalties to the U.S. PRO (ASCAP, BMI, SESAC). That money eventually gets to (certain) songwriters, in the wholly-unfair-and-complicated way that it always has with U.S. PRO's, but that's another kettle of fish.

    But the reproduction royalties - which are legally supposed to go to the songwriter, not the label, outside the U.S. - are given to the record labels. Which record labels? Not the independents - it's given exclusively to the RIAA clients. This is done by the local PRO (e.g. JASRAC).

    In other words: All the money that, in the U.S., is handled by the Harry Fox Agency, is lining the major labels' pockets. Not a cent of it goes to songwriters.

    At least, that's how I understood the article. It's difficult to suss out, because foreign copyright law is totally different from U.S. copyright law in many ways.

    For licensing games, movies, commercials, whatever, you *should* get both a synch right & a master right. I believe this is analogous to both artistic royalties & mechanical royalties.

    As I (hopefully) explained above, the royalties the article is talking about are neither synch rights nor master rights, both of which are copyrights on the sound recording, not the underlying composition.

    You, as a label executive, don't have the legal right to negotiate the rights to the underlying composition, unless the songwriter expressly assigned it to you (which many do). This might be the source of confusion.

    So digital retailers inside the US aren't involved at all in this story. Frankly, that's where the majority of income for US-based independent artists comes from, no matter who you are.

    Correct. However, retailers in Japan certainly are involved in this story (they were the example!), and Japan is the #2 market for music in the world. It may also involve retailers in the U.K., Germany, and France, which are the #3, #4, and #5 markets respectively.

    It's demanding that all non-US digital stores (as opposed to physical stores) get explicit permission from each rights-holder to sell a product that they, if they were in the US, would automatically be able to sell by being associated with the artist's distributor.

    These royalties aren't going to the artist's distributor, either (not that they should). They are going directly to the RIAA's clients.

    Instead, they could just ink deals with the HFA. Or, hell, even give it all to the PRO's (as a last resort). At the moment, songwriters are getting none of these royalties, and they're going to the major labels instead... even royalties to artists on indie labels.

    Yes, that means songwriters on Alternative Tentacles are unwillingly supporting the major labels. Sucks, don't it?

    As is industry standard, digital sales are treated differently than physical sales. They're treated as licenses (hence the bits about compulsory licenses above) and therefore the standard is 50% label, 50% artist.

    Actually, this was not an industry standard. Among all the RIAA clients, digital downloads are considered sales, not licenses. Among RIAA artists, and most non-RIAA labels, they're considered licenses. That's what Eminem's lawsuit was all about.

    Basically, you're mistaken because you're running a label that is actually honest. It's a good mistake to make.

    In any case, the article is talking about downloads in other countries, not the U.S.

    If we have to split the digital into mechanical & artistic, we have no real guide. As noted, there's no hard and fast % split.

    Indeed, that's very true. The article does mention that, though:
    The problem is that the old school music industry was built for the world of analog TV, AM/FM radio and 12Ē pieces of vinyl or 5Ē circular pieces of plastic. It was not built for the world of digital. The old songwriter collection and administration industry is not motivated to change the system, as the existing system allows them to take/earn hundreds of millions of dollars from other peopleís royalties.

    In regards to the new emerging digital music services, they have no simple solution to get licenses from and make payments to copyright holders; itís a pain, itís complicated and, for the moment, itís cheaper to take on the potential legal liability than invest resources and time to comply with the law and pay the right people.

    The complexity of copyright law, the total lack of transparency, and the inability to audit anything, creates a perfect storm for global copyright infringement. The end result: hundreds of millions of dollars of other peoplesí money getting siphoned off and/or not paid to the millions of rightful copyright holders.

    I'd also like to add something to Jeff's statement.

    The emerging digital music services have no stake in ripping artists off in this fashion. If the system was changed, they wouldn't have to pay additional royalties. Instead, the royalties they already pay (to e.g. JASRAC) would simply be distributed in a fair manner.

    But they simply don't have the resources to change things. As Jeff mentioned, there's simply no system to handle these royalties, and putting one in place would require tremendous time, effort, and resources.

    On the other hand, the major labels have a huge stake in keeping the system the way it is. If it changed, the major labels would lose a significant portion of their income. If anyone tried, they would fight it tooth and nail.

    We all know how litigious the RIAA is. They have no qualms about throwing money at lawsuits, even if they're destined to fail. This means that anyone who attempts to change the system is up against not only the additional costs of implementation, but decades of lawsuits from the RIAA.

    From the standpoint of any digital music service, it's better to rip off artists than it is to take on the RIAA.

     

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  56.  
    icon
    BigKeithO (profile), Mar 12th, 2012 @ 1:07pm

    Re: Re: Re: Re: Let me take it, frame by frame it:

    This stance always confuses me...

    Let me make sure I've got your argument right. You are upset that "pirates" and "big tech crooks" are somehow making millions of dollars by giving away your work for free? That's the gist of it?

    Now if "pirates" and "big tech crooks" can make these millions off of file sharing what is stopping the majors (as you call them) from doing the same? If 3 kids in Sweden can rob you blind like that with a sever and a simple tracker you are doing it wrong.

     

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  57.  
    icon
    BigKeithO (profile), Mar 12th, 2012 @ 1:12pm

    Re: Re: Re: Re: Let me take it, frame by frame it:

    Gutting of the recorded music business maybe. The music business is bigger than ever.

    A story about Google paying $500 million on illegal drug ads is related to the music industry how again?

     

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  58.  
    icon
    Karl (profile), Mar 12th, 2012 @ 8:19pm

    Re: Re: Re: Re: Re: Re: Let me take it, frame by frame it:

    How did Kim.com make his mega-millions?, Limewire, Grokster, Pirate Bay?

    The Pirate Bay does not make "mega-millions." Counting server costs, they barely broke even. The rest were actively trying to ink deals with artists when they were shut down.

    In any case, whatever money they made, it wasn't remotely close to what the labels still make, and it wasn't remotely close to what the labels lost.

    It also ignores why anyone used them at all. If the labels had actually offered consumers what they wanted, they wouldn't have been profitable at all.

    Witness iTunes. Despite the fact that everything on there can be acquired through piracy, the amount of money artists and labels make through iTunes dwarfs the total amount made by all pirates put together, by several orders of magnitude. Similar observations can be made about Netflix for movies, or Steam for gaming.

    The music biz is down 50% in ten years- that's a fact

    No, the recording industry is down 50% in ten years. The music industry is growing. More people are spending more money on music than ever before, on live performances, merch, etc; and musicians are making more money than ever from things like synch deals.

    Likewise, the number of purchases of recorded music has steadily increased over the past ten years - it's just that those purchases have been digital tracks, which make less money for the labels.

    This goes to show one thing: piracy is not the problem, and people don't pirate because they only want stuff for free, or because they don't want to support artists. In fact, every independent study has shown that pirates spend more on music than non-pirates.

    The problem is that the major labels are, and always have been, terrible businessmen. This should not surprise you. Gatekeepers and monopolists do not generally have good business sense. Being the only source of a product, they don't need to actually respond to the market. Their business smarts have atrophied from misuse.

    The labels still depend on CD sales for their profits. They were only madking a profit on them because they fixed prices (and were sued by the FTC because of it). They had such bloated overhead that the only way they could make a profit on those CD sales (according to the RIAA) was if those albums went platinum. They steadfastly refused to enter the digital market in any meaningful way, and refused to deal with (and aggressively sued) anyone else who tried. When they did enter the digital market, their "products" (MusicNet and Pressplay) were horrible, anti-consumer, catastrophic failures - and the subject of another class action price-fixing lawsuit.

    When the world wanted digital tracks, the labels deliberately killed CD singles. They deliberately stopped dealing with local record stores, and instead courted chain stores like Best Buy and Wal-Mart.

    And every single anti-piracy attempt has hurt them tremendously. Whatever moral superiority they had over the pirates was lost in the public's eye when they started suing grandmothers and teenagers for hundreds of thousands of dollars. Sony/BMG's anti-piracy DRM was a "rootkit" that was characterized (correctly) as spyware - and was the subject of yet more legal sanctions by the government. They not only supported, but helped draft, SOPA and PROTECT IP - bills that resulted in one of the largest grassroots protests in recent political history.

    All the while, they have themselves pirated off of artists; not only is this article an example, but there are plenty of others. Such as the now-VP of the RIAA sneaking a phrase into a bill that would rob artists of their copyrights, or the fact that the major labels were found guilty of literally stealing $45 million of Canadian royalty money from artists. The labels' contractual exploitation of recording artists has been widely known for decades.

    Because of all this, the public's opinion of record labels is now somewhere between the tobacco industry, and Osama Bin Laden. The recording industry has done nothing but attack their customers for the past 30 years (at least). Yet piracy is the reason they're failing?

    Yeah, pull the other one.

    The label execs have been playing the piracy card for decades now. They're doing this deliberately. It's an orchestrated misinformation campaign designed to deflect the blame from their own failures.

    and in my little corner of it, the # of songwriters is down by at least 2/3.

    It is true that "songwriter for hire" is probably a dying occupation. The major growth in music now is from either a) independent artists, or b) performances, neither of which favor songwriters who are not performers.

    Of course I'm a marginal, a washout.

    You are not marginal, and I would be a complete hypocrite if I called you a washout.

    What you are is someone who is losing their income because their bosses screwed up. I know how much that sucks, believe me. You have my sympathy.

    You'd probably have more of it if you didn't just come on here and start shouting at everyone.

     

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  59.  
    identicon
    Anonymous Coward, Apr 12th, 2012 @ 11:49am

    Re:

    If it is done knowingly, it's theft.

     

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  60.  
    identicon
    David, Oct 10th, 2013 @ 2:48am

    Re: Re: Re:

    If someone who owes me money doesn't give it back, it may be a breach of contact. But that implies that he has the right to collect money for me in the first place.

    If someone just takes money intended for me without ensuring my consent, I am not in a contractual relation with him, and breach of contract does not apply.

    The original debtor still has to pay me, but he can sue the one purporting to be entitled to acting in my interest for fraud.

    Since the money was handed over voluntarily but under false pretense, there is indeed no theft involved but rather fraud. As long as the fraud as well as the original debt go undiscovered, the damaged party is the author. If he has authorized a recording association with presenting his interests, he can sue them for breach of contract if they refuse following up on fraudulently withheld money. If they receive the money but don't pass it on to him but to someone else, similarly.

     

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  61.  
    identicon
    isaac, Dec 20th, 2013 @ 1:10am

    my royalties

    I was a member, producer and songwriter in the group Klique in the 80's on M.C.A records.We had 4 albums with them. They have released our first 3 albums on C.D. in the last 4 years.I haven't been able to get a dime since our first album. It's theft and that's all. You don't know unless it has happened to you.

     

    reply to this | link to this | view in thread ]


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