EMI/Virgin Records Sues Platinum Selling Band For $30 Million… Despite Not Paying Them A Dime In Royalties

from the the-music-business-at-work dept

It’s always fun to remember stories like the following one the next time you hear some RIAA exec claim that it represents musicians. The RIAA represents the record labels and record labels are continually at odds with musicians — sometimes to extreme levels. Wired reported that EMI/Virgin Records had sued the band 30 Seconds To Mars for $30 million recently. The band is apparently fronted by movie star Jared Leto, and is considered something of a success. Its last album went platinum and won some awards. So why the lawsuit? Well, EMI implied that the band failed to deliver its latest record on time, but members of the band have now responded with a very different story. Wired now points us to the response from 30 Seconds To Mars, where the band notes that the lawsuit appears to have a lot more to do with the band opting out of its contract. The band points out that, under California law, a contract of more than seven years is not valid — and the contract EMI held with the band was for nine years.

So why opt out? Perhaps this has something to do with it:

If you think the fact that we have sold in excess of 2 million records and have never been paid a penny is pretty unbelievable, well, so do we. And the fact that EMI informed us that not only aren’t they going to pay us AT ALL but that we are still 1.4 million dollars in debt to them is even crazier. That the next record we make will be used to pay off that old supposed debt just makes you start wondering what is going on. Shouldn’t a record company be able to turn a profit from selling that many records? Or, at the very least, break even? We think so.

This is, of course, rather par for the course in the recording industry. As Courtney Love explained years ago, it’s quite rare for a recording artist to ever see a dime of royalties from selling music. The label gives the band an “advance” which really isn’t that much, and then uses some funky accounting tricks to claim all of the band’s royalties as paying off that advance as well as covering other fees involved in the marketing and distribution of the album. In this case, apparently, despite selling 2 million records, EMI is still claiming that the band has $1.4 million to pay back. Not so long ago, we noted that Lyle Lovett was in the same boat: 4.6 million albums sold, no royalties paid.

So, at what point will the press and politicians stop buying the RIAA’s claims that it’s looking out for the musicians and trying to get them paid? The RIAA has always been in the business of not paying musicians.

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Companies: emi, virgin records

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Comments on “EMI/Virgin Records Sues Platinum Selling Band For $30 Million… Despite Not Paying Them A Dime In Royalties”

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Ima Fish (profile) says:

Roger McGuinn once said, “I never received a dime from the Byrds, I don’t see how Napster changes anything.”

And of course despite selling 11 gold records in a row, the band Grand Funk never saw a dime. They were actually never signed to a label. Their manager was. And he considered them his employees. Despite the fact that they wrote and played all the music, it was all owned by the manager and he recouped all the money he could get out of the label.

The only way a musical artist can get money is by having enough success to set up his or her own sub-label. Like the Stones or Zeppelin.

Tony says:

It's a racket...

Basically… the RIAA and it’s cousins are organized crime. They do the normal mob stuff…

Launder money – instead of money going to the musicians, it gets laundered and sent back into their own coffers in the name of expenses, fees, etc.

Protection racket – this is basically their “protection” for artists. But in the end, they own you.

Extortion – they extort unrealistic, unconstitutional fees from people they decide are sharing music – regardless of proof, etc. And… they use illegal, underhanded methods to obtain proof.

Murder – while they may not have taken lives, they’ve certainly destroyed enough

Dosquatch says:

Re: Virgin . . . isnt that?

Yup, Richard “the brand” Branson owns everything stamped with the Vrigin logo. Including, incidentally, the airline, one of the planes of which he named for Stephen Colbert.

I just nominated Branson for Colbert’s “on notice” list over on ColbertNation. Not that it’ll change anything, really, except a LOT of bad will from Colbert Report viewers.

robc says:

Re: Virgin . . . isnt that?

Branson sold Virgin records to emi around 1990.

In the case of xtc It was Branson who they had to go to when royalties where not paid and from all accounts the issue was resolved pretty darned quickly on that occasion.

However in the music business its the record company staff that end up with the high end cars rather than the artists.

I say parasites

Pjerky says:

Someone needs to step in...

and replace the RIAA. The new, legit Napster has already stopped selling DRMed music. I would like to see them come up with their own record label that is non-RIAA and that splits the profits of each song sold directly with the artists. No managers (if that is what the artists want), no need for heavy overhead for marketing (their whole site and community is a marketing machine in and of itself), and tons of easy, cheap exposure that artists need.

Think about it, all they have to do is throw up a few promotional links for a new artist and promote popular artists a bit on their system and all of that costs next to nothing. They sell each song for $1, so they charge $0.20 to $0.30 for marketing and hosting and in general all of their services per song and then each artist gets $0.70 to $0.80 per song sold. It is win-win for the artists and Napster, the artists actually get paid, Napster still makes an amazing amount of money, artists can get more precise feedback about what their fans like and they will actually get paid. Best of all the RIAA is completely cut out of the loop and we won’t have to deal with them ever again. Hooray!

All that will be needed is for the artists and Napster to refuse to give money to the RIAA for non-RIAA music that is sold. I am willing to bet that they can uphold that in courts when you get down to brass tacks.

John Russo says:

a foundation is under way to protect musicians

Back in the 70’s a group called the Jackson sisters recorded some music and did the tour for about a year. The record companies are presently marketing their music but not paying royalties. Many performers had similar problems and were poorly paid, forcing some into bankruptcy. Much of this was the result of the language of contracts written to keep profits in the music company.
Janine Jackson is still performing and will do a benefit at the McCallum theatre to raise money for a foundation giving legal aid to upcoming musicians. The funds will allow them to get outside legal help with record company contracts ensuring they will get proper compensation. The benefit has attracted some large financial backers and more are welcome. The original Jackson sisters will perform along with other entertainers. The event is scheduled for October 2008 at the McCallum theatre in Palm Desert, Ca.

Liquid says:

Just imagine if this goes to courts, and they ask “Why aren’t you making money? When you have a group that sells 2 million records at 10-20$ a pop how does the cost break down that they are not even making any money, but doing all the work?”

Once that quest gets asked in court, and the RIAA, etc. along with record execs can’t show a liable excuse as to why a band goes into dept for 1.4 million after bringing in all that kind of revenue then we might actually see things change for the better.

Amateur Video Editing (user link) says:

Re: Liquids Remarks

When they do get asked that question as to why they are 1.4 mil in debt, the answer for them will be quite simple:

Executive Salaries: 100 Billion, plus raises of 500 million/year
Assistants: 200 million/year
Advertising: They completely overpay up front, then get a refund at the end of the year for hitting a target. This goes on the books as extra income not tied to a particular band.

If you don’t think this doesn’t happen, it does. The more channels money passes through, the harder it is to track. A good accountant can hide money. And all I am talking about here is the advertising dollars.

Lets not forget video’s which again they will claim cost millions.

The worst are the salaries. Grossly over paid con-artists who do nothing.

Its sad that the musicians go through this. They should all start banding (no pun intended) together and work deals out with Napster as suggested by another poster. I like that one a lot. Better yet, why not just buy direct?

Joseph Weisenthal (user link) says:

As you say, the band shouldn’t be surprised how their deal turned out. At this point, it’s kind of ridiculous when bands are shocked that they’re not making any money in royalties, given how common this story is.

One thing that will change as the industry evolves is how much of an “advance” is needed to create and promote a record.

Also worth noting is that the bandmembers don’t really owe that much money — it’s just a debt against future royalties. So they’re not going to have any bill collectors calling them up ’til old age.

Keith Jolie (user link) says:

just buy indie

Hey there…just another reason to buy indie. There are Thousands of us out here making decent music and working with some great companies (I personally distribute through CDbaby.com, and they pay me around $.75 for every song sold on itunes or any other online store – and no contract)

want to hear great indie tunes? check out http://www.stumbleaudio.com or try http://www.thesixtyone.com


Keith of Endsville

Lea Hernandez (user link) says:

And At What Point...

…will artists stop signing these ass-reaming contracts? It’s no secret the music business is run by thieving weasels.

“I imagine a trench, about four feet wide and five feet deep, maybe sixty yards long, filled with runny, decaying shit…Two people arrive simultaneously and begin wrestling furiously…eventually, one of them capitulates, and there’s only one contestant left. He reaches for the pen, but the Lackey says ‘Actually, I think you need a little more development. Swim again, please. Backstroke.'”


Anonymous Coward says:

Throwing out some hypothetical numbers, some wild estimates:

pressed CDs in bulk cost less than $0.05 per copy. Packing will run more, but I’m sure physical costs of a CD are not more than $1.00. If they are sold at $15, the marginal wholesale cost is probably between $8 and $10 dollars. Let’s say the net to the studio is $7 per disk.

Two million CDs would then be $14 million in income. I don’t know how much cost went into producing the album, but I’m sure it was less than a million dollars. I suspect that the production cost is lumped into the 1.4 million the artists still owe, so it doesn’t really matter. Same with advertising.

My off the cuff conclusion is that of the $14 million profit, the studio is pocketing at least 12-13 million (about 90%), only feeding enough money to the artist to partially pay off some of the studio costs and advance. That’s pretty crazy, when the studio should only be keeping production/marketing costs and maybe an additional 10 percent cut.

I guess I don’t understand why a bunch of successful artists don’t come together and start some co-op studio.

Namklak says:

There are good labels.

Steve Vai has
to represent the artist. I don’t know if he owns a plane yet, but I’m guessing from what FN artists have said, probably not.
It’s too bad some artists are blinded by the false promise of big $$$ from the likes of EMI when other options are out there.
Let’s not forget that a majority of the listeners in America seem to like to be programed by ClearChannel, etc. If we could raise the musical IQ of Americans, maybe real artists could make real $.

RockDJ says:

RIAA Are Obsolete

For years and years the music companies have had a monopoly over the production and distribution of music. As a result they were able to charge what they liked.

Now it’s a whole new ballgame and they don’t like it one bit. Well tough titties. You had your chances and preferred to bury your heads in the sand instead of innovating and finding new ways of keeping your customers happy.

Suing a few people is not going to deter the millions that say we are mad as hell and we are not going to take it anymore.

MJT says:

Question about radio play

Real question here. I d-loaded the new free NIN album and the free Radiohead disc and think that both are awesome. But I’m not hearing any of it on the radio. Are mainstream terrestrial radio stations restricted to only playing **AA music? Why do we hear a lot about great free or independant music, but not hear it on the radio?

H says:

Re: Re: Question about radio play

Actually, the same companies that own radio stations own record companies, concert venues, tv, etc. Imagine you own a record company. You sign an artist, then promote them on your radio stations, give them a tour to your venues, and advertise that tour on your TV stations, maybe have them guest start on a tv show on one of your stations. Doesn’t work so well for the bands not signed by the mega-company….

len bullard (user link) says:

Come And Get It: Free Lunch and The Begging Bowl

1. We do have our own studios. That part is easy.

2. Touring isn’t the big bucks they say. Courtney spelled it out. It’s a job with a top, a bottom and no middle, sort of like blogging. No, exactly like blogging.

3. Sheet music can still make money. I use Sibelius.com. This is a neat symbiosis. They sell me top quality scoring software and provide a commission based sales site that I can set the price and they provide the infrastructure. Fair dinkum that. I can easily see the same companies that sell us recording software becoming labels. It’s a mutually good deal. Apple is sort of that but Jobs can’t let anyone be taller than he is, so that deal is f*cked.

Ripping off sheet music isn’t all that useful. Composers can still make some money. The trouble is most of these bands aren’t that good as legit composers. Also, they don’t sell into the honest markets such as worship markets where church choir directors have a budget to purchase sheet music.

4. One alternative is the buddhist begging bowl, aka, a PayPal Contribute button. Put a text box above that say, “Save Your Soul. Feed a Band.” or whatever.

The web ripped the guts out of the system and while it feels good to stick it to the RIAA, you’re sticking it to the musicians too. How about a little collective awareness and collective action in the direction of the musicians.

I can’t write FOR you. I can give you what I have and if you like it, send a few cents my way. Because I was tired of finding the bad versions of my songs, I put the better versions up at IMEEM. For my tastes, an mp3 is a suck fidelity version, but it’s free. Pick up your prize.


Enjoy. Or not. It’s free.


Melted Metal Web Radio (user link) says:

This Has Happened To Dozens Of Major Acts

The old CBS Records label (sold to Sony) did the same thing to rock band ‘Boston’. Tom Scholz was denied millions of dollars in royalties from the label during the suit, and Scholz had little money to fight back.

Scholz had to use the revenues from the Rockman guitar pre-amp sales to fund his legal bills. That ended any reinvestment into building the Rockman brand, forcing Scholz to sell the company. If it were not for the Rockman cash flow, he would have lost the suit.

Oh, and why did they sue Scholz? He took too long to deliver the next album. This type of thing has happened many, many, times to major acts, especially throughout the 80s. Think about that for a moment ..

Bill Wilkins, CEO
Melted Metal Web Radio

Ed Burgueno (user link) says:

Artist and the NEW model...

Record companies know the end is near… and bands need to figure out the new model.

You should check out BetaRecords (http://www.betarecords.com)

Artist remain in control. Great community site, easy to download songs: “Artists make 85% of the sale of songs. The 15% that we retain helps to cover our storage, streaming, and transaction processing costs.”

Good By EMI/Virgin/Hand in my damn pocket…

DaveM says:

Signed to Virgin

Way back in the 60s I was in a band that was signed to Virgin when they were a much smaller company. We actually met Richard Branson, who told us we would all be stars! (Yay!)
Well, we weren’t. And, after reading this thread, I think it’s a good thing. If we had sold millions of records we’d probably still be oweing him money.
That was a close one!

Fletch W says:

The real facts

I do not like record labels either, from studying music industry business management, it makes sense. top artists like metallica and U2 get almost a 30% cut, that is unheard of becuase they carry so much power nowadays. That equates to around $2.50-$3.00 ped disc. There is distribution costs (walmart, best buy etc) CD printing and packaging. Mastering of a disc could run anywhere from $10,000 to $50,000 depending on who is doing it. Huge promotions and maketing ensue etc etc. So, if a top draw, world class, 100,000,000 selling artist gets $2.50 or close to for a CD 3 seconds to mars will be lucky to get .50-$1.00 a disc. It is very typical that a label offers advances to a CD, Try Guns N’ Roses Chines democracy $3,000,000) The advance covers artist expenses to record, live, and fund the project. If 30 seconds to mars were ill informed on basic money management, the recoprd label will absolutely take advantge of that. I have zero doubt that the label have knowingly covered their backsides, but allowed the band to spend and spend and spend some more. the labels are greedy and shrewd, but not ‘techinically’ criminal……. Stupid artsist vs smart label=screwed artist.

Pierce says:

30 Second to Mars Video

Okay, of course this is a prime example of how the recording industry manages to screw artists by giving them large advances but it is also bad business on the bands behalf. Groups take advances as if it is free money. If this is the model we have come to know…then don’t sign! Jack White has managed to retain his masters and get more royalties than most dream of while being signed to a major label, it is possible.

Oh yah and included in that two million is probably the cost of one of the most expensive music videos ever made…and did I mention it was terrible! Music videos are dead anyways…another prime example of bad business on a bands behalf

Lorrenn says:

Record Company Crookedness

Ya…ya…record companies are crooked. Old news, friend. And I’m sure that 30 Seconds to Mars and Lyle Lovett really appreciate your support in their respective fights to get paid fairly for their considerable creative efforts.

The thing I don’t want to see is the use of these cases as some sort of justification for file-sharing. Somehow the phrase “See, the RIAA is screwing our favorite musicians” has actually come to mean “See, the musicians aren’t being paid anyway, so who are we hurting by downloading their stuff?”

Everyone within 30 miles of music label accounting practices knows how convoluted and corrupt these guys are. But when folks who go out and steal these artists’ hard work turn around and take a position of perverted solidarity, it stinks just as bad as what the labels do to them.

Bottom line, folks go out into the world and work damned hard to hone their crafts, skills and talents, whether it’s writing and performing a song or becoming a plumber.

How arrogant it is to decide that you have the right to say how much a person should charge for his services

I don’t have the right to steal the services that you use to try and feed your family and better your life, regardless of how much of a crooked jerk your regional supervisor might be.

And just so you know, I was in the “biz” for ten years and it isn’t “quite rare” for an artist to receive royalty payments. Many gold and platinum-selling artists, who weren’t talked (by managers) into taking six-figure advances or (by label) into seven-figure promotional videos, actually see some revenue, in spite of the crooked accounting.

And, really, anyone who quotes friggin’ Courtney Love on anything is really reaching, don’t ya think?

Mike (profile) says:

Re: Record Company Crookedness

The thing I don’t want to see is the use of these cases as some sort of justification for file-sharing. Somehow the phrase “See, the RIAA is screwing our favorite musicians” has actually come to mean “See, the musicians aren’t being paid anyway, so who are we hurting by downloading their stuff?”

Um, the reason you don’t see that is because we don’t support it. We’re not defending unauthorized file sharing.

Go erect your strawmen elsewhere. We’ve got more important things to do.

J says:

Cost of Piracy

So, if I do the math right, for every CD sold they lose 70 cents per CD. That means that if I just bypass the whole process and download the CD illegally (no marketing required), then I’m actually saving the company 70 cents. By legal definition, I wouldn’t be stealing because I would be preventing harm…not causing it. By their own admission, RIAA’s lawsuits against illegal downloaders have to be thrown out of court since they actually helped out the company.

Kc40k says:

Now That's Interesting

Why is this interesting? Well, because I own a youtube account and used “This is War”, by 30 Seconds to Mars, in one of my videos. As soon as it was published, the EMI prohibited the videos viewing in several different countries. But according to this article, the band broke out of EMI’s contract. So why are they blocking my video?

09d70 says:

Cause they think they still own it and that defines everything about everything. They are king of the mountain. King nothings who create nothing, do nothing,are nothing and expect EVERYTHING…king none the less right?

Artists don’t need labels anymore period. Its up to them now to wisen up and be merchants as well. CDS are basically dead. Easier than ever to reach the world now. Everything from advertising, payment processing, the store, shipping,merchandising…all covered for you by technology.

If you have the talent to create its a very small step now to show what you’ve made, pen your customers and shear them.

A few no nonsense freebies/samplers on youtube,torrents,locker sharing sites, etc linking to your .com where people can buy your works for a low fair price,with no nonsense (volume). Throw in a bunch of tshirts,mugs,whatever with autographed cd’s or whatever in a giftshop and your good to go. There are a million and one places that print/make that crap to your needs and I assure you the jewery on that is less than any fluffy middle man like the riaa which YOU DO NOT NEED and your customers/fans DO NOT WANT (drm…old world pricing/distro…they hate granny…sopa.pipa. neuta (dicks!)…king everything mindset they have)

Go solo. x1000 if your already established as you get to skip all the waiting and collect in full. If you ever get to the point where you can throw a concert well polish your little cloven balls you filthy rich leprechaun.

Jeroen Hellingman (profile) says:

Bonded labor

Sounds very much like bonded labor (debt bondage) practices in some developing countries (such as India).

Debt bondage has been defined by the United Nations as a form of “modern day slavery” and is prohibited by international law. It is specifically dealt with by article 1(a) of the United Nations 1956 Supplementary Convention on the Abolition of Slavery.

Maybe time to countersue…

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