Forget Infringement, Major Labels Should Be Worrying About Having To Pay Much Higher Royalties On Downloads

from the well,-look-at-that... dept

For a few years now, we've followed the lawsuit between Eminem and Universal Music concerning digital royalties. The basics are that the record labels offer incredibly low royalties on sales of music media, such as CDs. However, when it came to "licensing" music (generally for movies or commercials or whatever), it offered a much higher payout to the artist. This made some amount of sense under traditional label thinking, since selling product actually involved a fair amount of costs and work. But licensing a song for a movie was pretty simple.

So, the question that Eminem (and some other artists in other lawsuits) asked was: what is iTunes? Is it a "sale" like a CD, thus entitling the artist to low royalties? Or is it a "license," like for a commercial, entitling him to 50% royalties? Reasonable arguments can be made on both sides, and since the recording industry has a habit of a quantum-like switching where it pretends that something is a sale when it wants it to be a sale, but then insists it's just a "license" when that's beneficial, it felt pretty good about its chances in the lawsuit. And while Universal Music won at the district court, the appeals court went the other way, and said that iTunes represents a license.

And, now, the Supreme Court has refused to hear the appeal, meaning that this ruling lives on in the all important 9th Circuit. It's possible that some other similar cases may come out with a different ruling in a different circuit, greatly increasing the likelihood that the Supreme Court steps in, but for now, it seems that the courts are saying iTunes is a license not a sale. While more recent contracts have been written to avoid this problem, it does seem like there are a lot of legacy contracts out there (which are tied to a lot of ongoing revenue via the back catalogs for the major labels) where this could be an issue. In other words, the record labels may owe a ton of money to artists.

And they still think infringement is the biggest challenge they face?


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    Hephaestus (profile), Mar 23rd, 2011 @ 7:09am

    Numberz ...

    Year over year we have a drop in physical music (CDs) sales.

    This year online music sales should turn around and start dropping.

    Because of this ruling the labels are going to loose about half their profits from online sales.

    The only thing left for them is streaming and that is going to get more competative as more CC music is played and deals are renegotiated.

    I gues I am going to have to redo my numbers YET again and change the fail date on the labels. Its probably going to be a year sooner than last months numbers.

    To end this, a question, does anyone hear that bell tolling in the distance?

     

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      The eejit (profile), Mar 23rd, 2011 @ 7:28am

      Re: Numberz ...

      IT's not just a bell, but a choir of seraphim in the distance. I'll say that this is a HUGE problem for not just Universal, but for the RIAA, IFPI et al, whose business models rely on income from the Big Labels.

       

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        Hephaestus (profile), Mar 23rd, 2011 @ 8:01am

        Re: Re: Numberz ...

        ... "choir of seraphim in the distance."

        That made me smile in a big way. Thanks!!

        "I'll say that this is a HUGE problem for not just Universal, but for the RIAA, IFPI et al"

        Another couple things thing that are going to hit RIAA, IFPI, etc is Sean Parker of Napster fame. If he gets his hands on Warner Music Group I doubt they will be getting any future payments for their services. Combine that with EMI being on deaths bed and being run by bankers. Bankers who will eventually see the payments to RIAA, IFPI, etc as an unnecessary expense with no real ROI. Their inevitable failure is so close I can hear it coming, it sounds like four horses galloping in their direction...

        Isn't it great? We get front row seats!!

         

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        Richard (profile), Mar 23rd, 2011 @ 8:03am

        Re: Re: Numberz ...

        IT's not just a bell, but a choir of seraphim in the distance.

        I don't think it's seraphim. I think they come from the other place (and I don't mean the House of Lords)

         

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          Hephaestus (profile), Mar 23rd, 2011 @ 8:31am

          Re: Re: Re: Numberz ...

          Do they have choirs in hell? And which level of Dantes Hell are record label execs going to? It would be fitting if they went to the level of hell where sh!t poured out of their mouths everytime they opened them to speak. They would feel right at home, it would be exactly as it is now.

           

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            Anonymous Coward, Mar 23rd, 2011 @ 10:44am

            Re: Re: Re: Re: Numberz ...

            That is a disturbing image. A choir of record label executives spewing crap to classical music ... I don't know anyone who would want front row seats to that.

             

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      Anonymous Coward, Mar 23rd, 2011 @ 8:48am

      Re: Numberz ...

      I definitely trust a guy that can't spell 'lose' correctly to predict an event that is never going to happen...

       

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        Hephaestus (profile), Mar 23rd, 2011 @ 10:31am

        Re: Re: Numberz ...

        Way to prove anything I said wrong. This from a guy whose entire style of commenting consists of "Insert negative Comment here" followed by "Insert FUD or non provable statement here". I do appreciate the spelling correction though. However next time could you please point out all my spelling mistakes you missed 'gues'.

         

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          Anonymous Coward, Mar 23rd, 2011 @ 11:35am

          Re: Re: Re: Numberz ...

          In AC's defense "Loose" vs "Lose" is a very common mistake tha gets on a lot of peoples nerves.

          I once thought it was a British thing, you know those guys that like to add superfluous vowels to their Englandish spelling.

           

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            PaulT (profile), Mar 23rd, 2011 @ 12:11pm

            Re: Re: Re: Re: Numberz ...

            "I once thought it was a British thing, you know those guys that like to add superfluous vowels to their Englandish spelling."

            Erm, no. They're 2 different words with 2 different meanings, and using the wrong one tends to reflect on the literacy and/or intelligence of the writer if made repeatedly.

            Oh, and it's not our fault you colonial types remove letters at random when writing out your particular dialect ;)

             

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              Hephaestus (profile), Mar 23rd, 2011 @ 12:42pm

              Re: Re: Re: Re: Re: Numberz ...

              Well you brits actually had me weirded out last time I was in london. One of you telling me to go upstairs and knock up his little sister. Then I walk down the street only to wonder if "ToLet" was another british mis-spelling advertising bathrooms. ;)

               

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    Anonymous Coward, Mar 23rd, 2011 @ 7:54am

    If its a sale you can resale.

     

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    Anonymous Coward, Mar 23rd, 2011 @ 7:59am

    It is actually the artists who risk turning long term income into a short term legal win and a short windfall.

    Eminem could find himself with no online distribution (except piracy). He could find his back catalog not being sold, as a result of it not being economically viable to bother doing it.

    It could also be a horrible issue for music services online as a whole: Itunes could find itself with a depleted catalog, Amazon could find itself out of the downloadable music business, and so on.

    After all, if you think $1.49 for a song from Itunes is bad, what will you think when it goes up to $2.49 a song so that the artist can get their cut? Simple math... $1.49 only nets the labels maybe 90 cents or so. The artist would get about 17 cents of that. If the artist cut goes up to 50%, the labels would need to net at least $1.20-$1.30 to stay in the same ball park. Ballpark, that would move the price up to the range of $1.80-$2.00 - and that assumes no increase in costs with Itunes. Assuming processing is in percentage, that $2.49 song is looking very likely.

    The only bell tolling in the distance is the artists trying to gut out the industries that made them famous, taking all the money today for nothing tomorrow.

     

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      Richard (profile), Mar 23rd, 2011 @ 8:04am

      Re:

      Eminem could find himself with no online distribution (except piracy). He could find his back catalog not being sold, as a result of it not being economically viable to bother doing it.

      He could do it himself - or switch to Magnatune - who already pay 50% to the artist.

       

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      Anonymous Coward, Mar 23rd, 2011 @ 8:05am

      Re:

      Okay I can see how the record labels would make a little less money, but on sales via itunes and the like their costs are non existent.
      So if Mr Mathers gets 50% the royalties, the label is still making quite a lot of money for absolutely nothing, so I'm not sure why they should be worrying so much.

      Obviously in their heads where apparently they value no work from them as something that should bring in 70%,80% or 90% of the royalties they'll undoubtedly feel cheated but is that all record labels are now, some kind of especially generous musician supported social welfare system for useless managers.

       

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        Anonymous Coward, Mar 23rd, 2011 @ 8:24am

        Re: Re:

        the label is still making quite a lot of money for absolutely nothing, so I'm not sure why they should be worrying so much.

        Yeah, they don't do anything. They just put up the risk capital, they handle marketing, distribution, and hundreds of other jobs related to actually getting the music sold (like signing agreements with Itunes).

        Yup, they do nothing, they have taken no risk, and should never get paid for doing it.

         

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          Planespotter (profile), Mar 23rd, 2011 @ 8:33am

          Re: Re: Re:

          I believe that Eminem is quite a successful artist who has quite a following, the label that he belongs to is currently risking what exactly? That his next album won't sell over 700,000 copies in the US in it's first week?

           

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          Anonymous Coward, Mar 23rd, 2011 @ 9:15am

          Re: Re: Re:

          "Yup, they do nothing, they have taken no risk, and should never get paid for doing it"

          In normal distribution there are loads of expenses
          Digital distribution through itunes, that would get them change from 50 bucks and you think that them having to pay out 50% of the money they get to the artist is somehow a bad deal for them?

          It is actually hard to see how what they are doing would be worth more than an agents standard 10%, but your heart bleeds for them for only getting 50%, what planet are you from?

           

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          ChronoFish (profile), Mar 23rd, 2011 @ 9:38am

          Re: Re: Re:

          The capital for Mr. Mathers existing catalog has already been paid AND (I suspect) already paid back.

          The labels may not like the idea that their profit is going to go to the performer, but too bad. If their position is to receive 25% or nothing - on an investment already made - why would they take *their* music and go home?

          What marketing/distribution and hundreds of other jobs are needed to allow iTunes to handle the Marketing/distribution?

          There is no distribution cost (iTunes pays them). There is no inventory cost (it's virtual). There can be additional marketing costs - but that's not required to get the music distributed, and in some cases it is already handled by the distributor - because the distributor wants to make money too.


          That's the issue here. The major labels can't think past the CD. Distribution channels are so cheap that it really comes down to "click on file upload. check box to agree to let XYZ.com sell your Music. Done."

          Yes it's harsh that the Internet is destroying the music business. And by music business I mean the suits. The performers, mixers, song writers, editors, etc.... The place where the money SHOULD be going - they will continue to thrive. Those artist who can't do it themselves will hire it out - but the labels can no longer assume that it will be them doing that - and certainly not by "default".

          -CF

           

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          Anonymous Coward, Mar 23rd, 2011 @ 10:11am

          Re: Re: Re:

          What?!

          Only the dumb artists let the labels charge them for that.

          http://www.physorg.com/news/2010-11-music-insider-shatters-digital.html

          Quote:
          From Price's vantage point as chief executive of TuneCore Inc., business couldn't be better.

          "Unit sales are up, not down," Price said. "That means people are buying more music, not less."

           

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      Jay (profile), Mar 23rd, 2011 @ 8:08am

      Re:

      "Eminem could find himself with no online distribution (except piracy). He could find his back catalog not being sold, as a result of it not being economically viable to bother doing it."

      Somehow, I'm pretty sure that he'll do fine given the fact that most hip hop music is dispersed through non traditional channels anyway.

      "After all, if you think $1.49 for a song from Itunes is bad, what will you think when it goes up to $2.49 a song so that the artist can get their cut? Simple math... $1.49 only nets the labels maybe 90 cents or so. The artist would get about 17 cents of that. If the artist cut goes up to 50%, the labels would need to net at least $1.20-$1.30 to stay in the same ball park. Ballpark, that would move the price up to the range of $1.80-$2.00 - and that assumes no increase in costs with Itunes. Assuming processing is in percentage, that $2.49 song is looking very likely."

      All this math forgets one key concept: Steve Jobs sells hardware. The iTunes is a loss leader to promote Apple products. It would be tantamount to suicide for iTunes to suddenly increase the price of music when he's making a killing on promoting hardware.

      "The only bell tolling in the distance is the artists trying to gut out the industries that made them famous, taking all the money today for nothing tomorrow."

      Funny, how many new record labels are there? Now how many new artists have come up?

      The RIAA should look into finding a way to compete or become irrelevant.

       

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        Eponymous CowTurd, Mar 23rd, 2011 @ 9:46pm

        Poor Apple?

        My shill alert warning sirens went off as soon as you said,
        "iTunes is a LOSS LEADER for Apple & Steve Jobs."

        My goodness what a gigantic pile of Cowturd.
        I've never heard anything so preposterous in my time surfing the techdirt forums, and that takes some beating buddy.
        Sorry don't take that too personally.

        ******
        Quote:
        All this math forgets one key concept: Steve Jobs sells hardware. The iTunes is a loss leader to promote Apple products. It would be tantamount to suicide for iTunes to suddenly increase the price of music when he's making a killing on promoting hardware.

        "The only bell tolling in the distance is the artists trying to gut out the industries that made them famous, taking all the money today for nothing tomorrow."

        Funny, how many new record labels are there? Now how many new artists have come up?

        ******

        Some facts for your consumption, starting all the way back in 2003!

        2003 - iTunes is born April 28:
        Apple's iTunes Music Store is set to capture 20 per cent of the US paid-music download market.

        Apples annual revenues are projected at $600 million through its store, and this figure is set to increase year on year.

        2010 iTunes phenomenon continues:
        On February 24, 2010, the store served its 10 billionth song download; this milestone was reached in just under seven years of being online. As of April 2008, iTunes is the number-one music vendor in the United States.

        Loss leader HUH?

        Yeah Apple has lost its leader [ semi retirement ], but that has not hurt anyones pocket has it? Though the way the Record Execs talk of margins, anyone would think cutting a fair deal is tantamount to suicide. Which is absolute rubbish, given the industry is making money for nothing practically.

        What peeves me, is that its the artist that always suffers and pays on all sides no matter which way you look at it, PERIOD. Its the nature of HOST & PARASITE, but this is not the discovery channel now is it?

        You obviously don't have Apple stock or shares, nor do you read the financial reports. Because if you did, you'd realize that Apple as a company is one of the fastest growing Multimedia Companies in the World.

        When Steve Jobs invested in a small Multimedia startup on the proviso they use Apple platform and hardware, no one thought much of it. A few years later when he sold his share in Pixar Entertainment he raked in a billion. Thats Multimedia investment, NOT HARDWARE!

         

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          Jay (profile), Mar 23rd, 2011 @ 10:47pm

          Re: Poor Apple?

          So now you're an economist?

          It's not that they're looking into losing money on songs, they're using those cheaper songs to promote Apple products as I said.

          Look at any aisle of a Target, Walmart, or even a grocery store. What is it that you see? Something that helps to get your foot in the door for the more expensive goods.

          My point still stands that Apple uses the cheap music to promote their higher priced laptops, music machines, etc. that they control. Just to reiterate what I said that you seem to have glossed over:

          If they put the price up higher, it's tantamount to suicide. That's less money for the customer to invest in Apple products, which Jobs would not want. The other factors such as brand loyalty, and Apple's image would also be affected by a sudden increase. That would not be a smart business move at all.

           

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            Eponymous CowTurd, Mar 23rd, 2011 @ 11:48pm

            We own your A$$, Your not human, but a PRODUCT!

            I agree that Apple is USING the music vehicle as a means to sell Multimedia products, including hardware. Thats business in the Multimedia world, fair enough. But they incur no loss, in fact it was iTunes that opened the eyes of Steve Jobs to a new strategy and business plan.

            Digital downloads has very LOW overheads for these companies.So, the "I deserve 80-90% profit" doesn't wash friend. And for all the "oh but we supplied investment capital, we made you" blah blah bollocks. Well, tell me What business do you know of on the WHOLE EARTH that returns this kind of margin or money? And ... further to this they expect to OWN your BUSINESS and brand NAME for a little startup capital
            FOREVER?

            Tick..... tick..... tick.... NONE!
            Maybe illegal loan sharking and stand over men asking protection money and racketeering.

            Even the most EVIL of bankers and Wall street scum who trade derivatives CDS swaps and bet on governments and countries defaulting on loans and bonds pay better and they're in league with the devil. And they help them on their way to default!

            Greed has many ugly faces, the reason why the music industry is raped and pillaged compared to the remuneration paid movie actors, is simple. Look at the nature of the artist, ..... you'll realize they're fair and easy game.

            Its like the old American slaves and their masters, but the revolution hasn't awoken yet. Well, some body else decided to take the war to their door, too bad it wasn't the artists awaking from their slumber. Abe Lincoln just shrugs his head in shame, "this is America"?

             

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              Jay (profile), Mar 24th, 2011 @ 12:05am

              Seriously, Chill Pills are free...

              Dude, seriously, what the hell are you so damn angry about? We actually AGREE on this issue, but you seem to want to vent.

              It's a Loss leader strategy, that does not mean that Apple is losing money. But think about this from their perspective:

              If I want people to spur sales for my products, I have to arrest their eyeballs with something that no one else is doing.

              This doesn't mean that artists don't have their own opportunities. Ronald Jenkees sells his music through iTunes and makes a pretty decent living. TED put themselves on the map greatly with their guest speaker programs.

              But bear in mind that the music industry going down doesn't end in doom and downfall.

              The limit case, in our studies, is Bolivia, where the impasse of high prices, low incomes, and
              ubiquitous piracy shuttered all but one local label in the early 2000s and drove the majors out
              altogether. The tiny Bolivian legal market, worth only $20 million at its peak, was destroyed.
              But Bolivian music culture was not. Below the depleted high-end commercial landscape, our
              work documents the emergence of a generation of new producers, artists, and commercial
              practices—much of it rooted in indigenous communities and distributed through informal
              markets. The resulting mix of pirated goods, promotional CDs, and low-priced recordings has
              created, for the first time in that country, a popular market for recorded music. For the vast
              majority of Bolivians, recorded music has never been so prolific or affordable.


              Link - Page 44 - Bolivia market when the music industry left them alone.

               

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          Jay (profile), Mar 23rd, 2011 @ 10:50pm

          Re: Poor Apple?

          "What peeves me, is that its the artist that always suffers and pays on all sides no matter which way you look at it, PERIOD. Its the nature of HOST & PARASITE, but this is not the discovery channel now is it?"

          This... I doubt you're talking to any artists and just want an emotional response.

          Regardless, I at least know the people I follow regarding my music choices allow me to use music in nontraditional ways. Name me some artists that have lost money because of what you believe, and I'll show you they aren't trying hard enough.

           

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            Eponymous CowTurd, Mar 24th, 2011 @ 12:06am

            Would you sell your soul for FAME? Boy have I got a contract!

            Quote:
            "What peeves me, is that its the artist that always suffers and pays on all sides no matter which way you look at it, PERIOD. Its the nature of HOST & PARASITE, but this is not the discovery channel now is it?"

            This... I doubt you're talking to any artists and just want an emotional response.

            ___________________________________________________________

            Actually I know loads of artists, and I've worked for label ONCE, never again! I'm not going to enter into analsys of artists on a case by case basis, because it obscures the facts or truth. The one contract fits all doesn't work, and so to the unjust renumeration of SUCCESSFUL ARTISTS.
            If you talk of those that didn't make the grade, well sorry thats life and its a tough game with emotions on the line.

            But the small losses compared to massive gains made by them doesn't have any parallels in the NORMAL business world. And its frightening to think they get away with it. Sad world my friend, now the $hit has hit the fan and none of them will fair too well from this, but the customers .... well they'll get their way. Like it or lump it babe!

             

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              Jay (profile), Mar 24th, 2011 @ 12:25am

              Re: WTF?

              "I'm not going to enter into analsys of artists on a case by case basis, because it obscures the facts or truth. The one contract fits all doesn't work, and so to the unjust renumeration of SUCCESSFUL ARTISTS."

              What exactly is that supposedly obscuring when you're getting their story of how they achieve success?

              I'm not saying there's one contract to rule them all and the internet actually allows that diversity of thought.

              The good thing is that those that don't make the grade can get back up and try again.

              "But the small losses compared to massive gains made by them doesn't have any parallels in the NORMAL business world. And its frightening to think they get away with it. Sad world my friend, now the $hit has hit the fan and none of them will fair too well from this, but the customers .... well they'll get their way. Like it or lump it babe!"

              ?! I'm having a hard time following your train of thought here. Who is having small losses and massive gains? The RIAA/MPAA? The artist? The consumer? You're really going off topic and I don't know if you're agreeing with me, trying to argue with me, or trying to troll me.

              If you're agreeing with me that artists can have success, then great, we agree.

              If you want an argument, you really need to define that.

              And if you're trolling me because you somehow think that I'm against artists having opportunities, you're sadly mistaken.

               

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      Richard (profile), Mar 23rd, 2011 @ 8:12am

      Re:


      The only bell tolling in the distance is the artists trying to gut out the industries that made them famous, taking all the money today for nothing tomorrow.

      Your flawed assumption is that online distribution can only be done by major labels - with their cumbersome cost and management structure grown fat with years of monopoly.

      Magnatune charges less, gives the consumer a CC license, gives more to the artist and still makes money.

      Rumvi charge even less and still make money.
      Neither service uses DRM.

      The fact is that the cost structure of music distribution has changed. The copy is no-longer a luxury product and so can no longer support a bloated infrastructure. New companies are entering the market without the historical baggage and they will take over. Happens in every industry.

      How many major computer manufacturers from 1970 now survive?

      What business are they in?

       

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      Hephaestus (profile), Mar 23rd, 2011 @ 8:22am

      Re:

      "Eminem could find himself with no online distribution (except piracy). He could find his back catalog not being sold, as a result of it not being economically viable to bother doing it."

      First "not being economically viable" What a crock of sh!t! Aime Street made money selling songs at between 1 cent and 99 cents. The only reason the prices are so high is because the record labels refuse to go lower and are trying to push prices higher out of greed.

      "It could also be a horrible issue for music services online as a whole: Itunes could find itself with a depleted catalog, Amazon could find itself out of the downloadable music business, and so on."

      You are to funny! I almost pushed the "Funy" Button on your comment. Then I realized you were being serious. FIVE MILLION artists and bands on myspace say you are wrong about the catalogs being depleted. If the labels do take all their marbles (music) and go home they will make no money and fail. So your FUD is just that.


      "what will you think when it goes up to $2.49 a song so that the artist can get their cut?"

      I think that they will drive people to Creative Commons, artists like trent razor, and to infringe. Basic economics.

      "If the artist cut goes up to 50%, the labels would need to net at least $1.20-$1.30 to stay in the same ball park."

      Who said they need to stay in the same ball park? They are facing something called competition which is going to drive the price for music to the consumer to zero.

      "The only bell tolling in the distance is the artists trying to gut out the industries that made them famous, taking all the money today for nothing tomorrow."

      Thank god!! no more britney!

       

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        Anonymous Coward, Mar 23rd, 2011 @ 8:28am

        Re: Re:

        Who said they need to stay in the same ball park? They are facing something called competition which is going to drive the price for music to the consumer to zero.

        I always have to laugh when you go off like this. Where the the competition for Eminem music? They own the exclusive rights to it. It is scarce. They own all the rights.

        The only competition they face is from themselves, in the form of piracy.

        First "not being economically viable" What a crock of sh!t! Aime Street made money selling songs at between 1 cent and 99 cents. The only reason the prices are so high is because the record labels refuse to go lower and are trying to push prices higher out of greed.

        No, the only reason they don't go lower is because (a) they have an exclusive and scarce product, and (b) they invested a lot of money to get that product, and there is no reason why they should have to just give it away.

        If an individual artist chooses to forgo the record labels and sell it themselves, more power to them. They are taking the financial risks, and they get the rewards. That is how business works.

        Really, you should get out more.

         

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          Anonymous Coward, Mar 23rd, 2011 @ 8:58am

          Re: Re: Re:

          "I always have to laugh when you go off like this. Where the the competition for Eminem music? They own the exclusive rights to it. It is scarce. They own all the rights."

          Actually the competition for Eminems music is Eminem himself. He can just re-record his albums. They labels only own the masters of what he recorded for them.

           

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            Anonymous Coward, Mar 23rd, 2011 @ 9:16am

            Re: Re: Re: Re:

            He could try. But it would depend on the exact rights granted, who owns the songs, etc. It would also potentially be a reason for the record label to go after him for disloyal competition. You never know. I cannot think of an artist who has ever re-recorded an album for a different distribution deal.

             

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            •  
              identicon
              coldbrew, Mar 23rd, 2011 @ 9:32am

              Re: Re: Re: Re: Re:

              Actually, Suzanne Vega is currently re-recording her back catalog as can be seen in her bio page: http://www.suzannevega.com/suzanne/brief-bio-2007/

              Of course, you used the term 'album' very specifically (and probably intentionally) here, and that's not exactly what she is doing.

               

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                Hephaestus (profile), Mar 23rd, 2011 @ 9:46am

                Re: Re: Re: Re: Re: Re:

                I heard about that. I just didn't know if she was doing it on her own or with a label. Any idea? I need a list of artists doing this for a future trends piece I am doing.

                 

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                  coldbrew, Mar 23rd, 2011 @ 9:50am

                  Re: Re: Re: Re: Re: Re: Re:

                  The reson I even knew about that was because of a Talk of the Nation (NPR) show she did a few months back. IIRC, she started her own label.

                   

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                    Hephaestus (profile), Mar 23rd, 2011 @ 10:00am

                    Re: Re: Re: Re: Re: Re: Re: Re:

                    I just e-mail Suzanne Vega and asked her to stop by and comment.

                    This could actually break the back of the record labels if enough artists do this to their back catalogs. It would be pretty interesting to see happen. Someone should suggest this to Trent Razor. With him re-recording everything from his time at the labels it could probably catch on. Of course there would be the inevitable record label lawsuits.

                     

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              Hephaestus (profile), Mar 23rd, 2011 @ 9:33am

              Re: Re: Re: Re: Re:

              " I cannot think of an artist who has ever re-recorded an album for a different distribution deal."

              Thats just it, it hasn't been done before. But there are examples of individual songs being re-recorded and sold by different labels. I can name a bunch of "best of" albums with re-recorded songs from different labels.

               

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                Huph, Mar 23rd, 2011 @ 11:55am

                Re: Re: Re: Re: Re: Re:

                It is an intriguing idea. I don't know that it would work for all of Eminem's music, since he is not the musician nor produced the beats, so he doesn't own his *music*, just his words. As far as I know, that is. I'm just describing the typical hip hop set up, Em may have worked out his own specialized contracts with his producahs (producer in the sense of the guys who make beats, not producer in the sense of Mutt Lange or Ross Robinson).

                Sample-based music would have a lot of trouble in this arena, since I imagine all the contracts and releases would have to be renegotiated for the new recordings. That would be a pain. Very few individual artists have the capital to re-clear samples at *at least* $5,000 a pop.

                Now if only there were some way to, say, "fairly" use a bit of someone else's music in some capacity...

                 

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                  identicon
                  Actually, Mar 24th, 2011 @ 1:40am

                  Re: Re: Re: Re: Re: Re: Re:

                  Marshall has songwriting credit on most of his music. He's also a producer and has produced or co-produced a large quantity of his catalog. Not really disagreeing with what u said per se, but wanted to correct that point. On many of his biggest hits he indeed produce the music as well as write his lyrics.

                   

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          Ron Rezendes (profile), Mar 23rd, 2011 @ 9:24am

          Re: Re: Re:

          "No, the only reason they don't go lower is because (a) they have an exclusive and scarce product, and (b) they invested a lot of money to get that product, and there is no reason why they should have to just give it away."

          A. It's not as exclusive and scarce as they think it is, check your torrent sites.

          B. No one says they have to give it away, but lowering the price and allowing people to do what they want with the music they purchased would lead to more sales which seems to be the one thing they are concerned with.

          "If an individual artist chooses to forgo the record labels and sell it themselves, more power to them. They are taking the financial risks, and they get the rewards. That is how business works."

          The market will get the music they want in the format they want regardless of who sells it. The not-so-secret-to-success here is to price the music appropriately (distribution is a much smaller slice of the pie these days, quit charging more and crying because people aren't willing to pay !)and allow the purchaser to do what they want with their purchase including converting it to formats the USER can use without all the DRM crap (more useless overhead NO ONE wants to pay for)and licensing restrictions.

          I rarely ever buy a CD anymore (2-3 in the last 5+ years) and I don't even bother to download music unless it is free from Amazon or other leading name company who I trust.

          My general business suggestion to the music industry who has lost my business over the years?
          If you want to sell me an album (remember those?) then price it at about $10, keep the DRM crap to yourself - no one wants it and it certainly isn't doing you any good, give it to me in a small variety of formats for MY convenience(FLAC, MPEG-4 ALS, WAV, and perhaps AIFF) in a single zipped download, and pay the artists 50%.

           

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          identicon
          Anonymous Coward, Mar 23rd, 2011 @ 10:16am

          Re: Re: Re:

          Quote:
          The only competition they face is from themselves, in the form of piracy.


          That is assuming people don't have good alternatives to his music, which is not true just go to Jamendo and see how many people there are that have similar sounds and voila no need to listen to Eminem anymore.

          Quote:

          No, the only reason they don't go lower is because (a) they have an exclusive and scarce product, and (b) they invested a lot of money to get that product, and there is no reason why they should have to just give it away.


          I wish I could see your face when you say those things to others, just to see if you can keep a straight face saying such obviously nonsensical statements.

           

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          Anonymous Coward, Mar 23rd, 2011 @ 10:35am

          Re: Re: Re:

          "I always have to laugh when you go off like this. Where the the competition for Eminem music? They own the exclusive rights to it. It is scarce. They own all the rights.

          The only competition they face is from themselves, in the form of piracy."
          He means competition in the form of distribution. Pandora comes to mind. Free (as in beer) AND legal. It's hard to raise prices when people can just get it from another source.

           

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          Richard (profile), Mar 24th, 2011 @ 4:29am

          Re: Re: Re:

          Who said they need to stay in the same ball park? They are facing something called competition which is going to drive the price for music to the consumer to zero.

          I always have to laugh when you go off like this. Where the the competition for Eminem music? They own the exclusive rights to it. It is scarce. They own all the rights.


          Firstly the scarcity is wholly artificial - and therefore unsustainable.

          Secondly the choice they face is either sell it at a price people are prepared to pay - or not sell it at all. The price people are prepared to pay is based on the (now common) knowledge that the (electronic) copy costs almost nothing to produce (and even a CD is cheap enough to give away on a packet of cornflakes).

          If they don't sell it then they make no money and bleed to death financially.

          Emininem will be OK - thie goose that lays the golden eggs is worth far more than the eggs.

          By the way - I like the fact that you have admitted in this comment that the tactics of the recording industry are to use legal means to screw as much money as they can from both artists and consumers. Emin=em's back catalog may be locked up but new acts coming on the scene are not in that position.

           

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      PaulT (profile), Mar 23rd, 2011 @ 9:08am

      Re:

      Somehow, I knew the white knight crusader would be in here trying to defend the industry. Even when artists are trying to get their contractually agreed pay, you're still here with your ridiculous doomsday scenarios. Yet, you wonder why you're often accessed of being in the pocket of the industry?

      "Eminem could find himself with no online distribution (except piracy)."

      You mean that Eminem would have to console himself with his concerts, merchandise and other rights? Besides, the *only* reason why Eminem would not be able to sell his music online would be because he can't get out of his major label contract. Get out of that, and there's nothing stopping him from doing it himself.

      "He could find his back catalog not being sold, as a result of it not being economically viable to bother doing it."

      This makes me laugh, of course. "Pirates" are able to distribute music for free, but the labels can't do it because they "only" get 90 cents from a $1.29 download? The music already exists, what in the hell would make it unprofitable to distribute through 3rd parties?

      "It could also be a horrible issue for music services online as a whole: Itunes could find itself with a depleted catalog, Amazon could find itself out of the downloadable music business, and so on. "

      So, once forced to give their contractually agreed royalties to artists, the labels will stop selling music altogether. How does this make sense? Besides, who cares if those services disappeared? Amazon and Apple don't depend on them for their living, and they're blocked by labels from servicing large portions of the planet as it is. There's other legal ways to get music.

      "Assuming processing is in percentage, that $2.49 song is looking very likely."

      It's funny how you can never get yourself to admit that the problem is with the labels, their licensing regimes, and their overheads. There's really no reason why a $1.29 download currently exists, except that the labels are panicing about dropping sales compared to bulk CD sales. This has as much to do with increased consumer choice as it does with "piracy". A $2.49 download would kill the singles download stone dead, but would not lead to increased CD sales.

      There's a middle ground, and it involves the major labels getting their businesses streamlined and into the 21st century. For myself and those of us you regularly dismiss as "pirates", that's all we've been asking for the last 15 years anyway.

       

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        Hephaestus (profile), Mar 23rd, 2011 @ 9:27am

        Re: Re:

        "There's a middle ground, and it involves the major labels getting their businesses streamlined and into the 21st century. "

        That is never going to happen until all the execs and middle management types get the boot. The only people that can save the record labels are the execs at those labels, not legislation, not lawsuits, not HomeSec and ICE, and not ACTA or COICA.

         

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          Bruce Ediger (profile), Mar 23rd, 2011 @ 10:06am

          Re: Re: Re:

          HomeSec and ICE, ACTA and COICA probably won't save the labels, I agree with you. But they'll do a lot of damage before and after the labels go bankrupt, or effectviely quit beling major labels.

           

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      identicon
      Naw, Mar 23rd, 2011 @ 9:12am

      Re:

      Eminem doesn't need online distribution, he can distribute it himself if he wants. In fact any artist could especially the artists that this will apply to considering most are already very established with established fan bases.

      Anyway, Eminem has more money than he can spend in 4 lifetimes. Having said that he did not participate in this lawsuit at all, nor was it filed on his behalf. FBT and Eminem's manager had a falling out in 2006. Eminem's manager was on the side of Interscope during all of this attempting to get it dropped despite it being in Eminem's favor if FBT succeeded.

      Also, it would not be Apples expense to eat. It pays the rate to the labels, that is the percentage that Eminem's cut comes out of. Eminem could easily get his music on Itunes and keep the entire cut as a independent artist if he wanted to. This hurts the labels, and nobody but the labels.

       

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      The eejit (profile), Mar 23rd, 2011 @ 9:24am

      Re:

      So, because the labels lost a clarification, it's all doom and gloom?

      God, you make the conspiracy wingnuts of the USA sound like the Mr. Rogers.

       

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    •  
      identicon
      Anonymous Coward, Mar 23rd, 2011 @ 10:04am

      Re:

      ...or artists could go to people who actually make money on the net for distribution like Google, Microsoft, Yahoo, Amazon and others LoL

       

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    •  
      identicon
      tuna, Mar 23rd, 2011 @ 10:21am

      Re:

      Along with the appeals ruling came a 50 million dollar judgment in favor of Mr. Mathers.

      I don't think he's woried about future distribution right now.

       

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    •  
      identicon
      Anonymous Coward, Mar 23rd, 2011 @ 11:04am

      Re:

      Nope, we're used to $1 now. I dont think anyone is going to pay more than $1 a song unless it is in rock band.

       

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    •  
      identicon
      Len, Mar 23rd, 2011 @ 6:59pm

      Re:

      "Eminem could find himself with no online distribution (except piracy). He could find his back catalog not being sold, as a result of it not being economically viable to bother doing it."

      Unlikely. What he'll actually find is himself pulling 90% of the profits from his music after the record lables fall, instead of the miniscule 10% or whatever it is he's pulling right now. It'll all be online too, especially in the iTunes Store, and he'll sell songs for $.99, and be richer than ever. Eventually he'll start pushing an Eminem Inc. IPO, and I'll invest in Eminem myself. Hopefully I'll be able to grab a peice of that cake too, which I'll force feed myself until I puke Eminem gravy, which will hold value of it's own.

       

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    fogbugzd (profile), Mar 23rd, 2011 @ 8:06am

    Piracy has never been the main issue the labels should have worried about

    The title of the article is wrong. Infringement in terms of private copying has never been the main issue the industry should have been worried about. The should have been trying to figure out new ways to make money by capitalizing on the Internet rather than trying to keep forcing people to pay exorbitant prices for shiny plastic disks.

     

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    identicon
    Geek Hillbilly, Mar 23rd, 2011 @ 8:12am

    Royalities & Customers

    The RIAA members (The Record Labels) are already catching a backlash due to their SUE THE CUSTOMERS strategy.I for 1 will never buy a music CD from a RIAA member ever again.I'd rather buy direct from the artist and bypass DRM (Digital Restriction Management).I won't buy DRM tainted tracks,either.(Itunes,are you listening?).Forget an IPOD.IPHONE,IPAD for the same reasons. You try to restrict me,the consumer,we don't buy.
    What the general public doesn't know is that the Major Labels have been ripping off the artists for decades.That is coming to an end.About time.

     

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  •  
    identicon
    John Doe, Mar 23rd, 2011 @ 8:22am

    But think of the artists...

    Think about the artists. Wait, or is it think about the labels? I forget which the labels are always thinking about. Seems they think about the artist when it suits them an think about themselves when it suits them. Just like when they try to call IP real property or IP and when they want to call something a sale or a license. Seems the labels have painted themselves into a corner on all fronts.

     

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      Hephaestus (profile), Mar 23rd, 2011 @ 8:34am

      Re: But think of the artists...

      "Seems the labels have painted themselves into a corner on all fronts."

      Isn't it great!!

       

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    •  
      identicon
      Justin Olbrantz (Quantam), Mar 23rd, 2011 @ 12:33pm

      Re: But think of the artists...

      As mister AC above pointed out, it's "Think about the labels". The artists are a bunch of greedy money-grubbing leeches trying to rob the poor, starving record labels blind.

      On the plus side, it's nice to see the AC being completely honest and up-front about his position. Definitely not something you see every day.

       

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    identicon
    InNH, Mar 23rd, 2011 @ 8:27am

    Sounds good to me

    If it's a license for me and I can't resell it, it sounds like a license. It's about time the music artists got a fair shake from the music labels. I hope it works out that way and the music labels don't find some more accounting methods to keep all the money.

     

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    Ima Fish (profile), Mar 23rd, 2011 @ 8:43am

    The Labels are Toast!

    Mike, I'm surprised you didn't mention the upcoming copyright termination rights lawsuits the labels will undoubtedly face in 2013.

    As far as I'm concerned, the current labels are toast. They'll lose a ton of legacy music in 2013 when older artists get their copyrights back. Plus they'll have to pay a ton more money on digital "sales" for legacy artists.

    If I owned any stock in a music label I'd sell as quickly as I could. Or use it to wipe my ass, because it's probably worth less than toilet paper.

     

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    •  
      identicon
      Anonymous Coward, Mar 23rd, 2011 @ 8:54am

      Re: The Labels are Toast!

      "If I owned any stock in a music label I'd sell as quickly as I could. Or use it to wipe my ass, because it's probably worth less than toilet paper."

      Actually short the stocks that are publicly traded. You can make money off the failure of the major labels.

       

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      Killer_Tofu (profile), Mar 23rd, 2011 @ 9:03am

      Re: The Labels are Toast!

      I am tempted to buy a share or two of the stock just SO I can use it as toilet paper. Then I would mail the used stock to the execs there telling them I was done with it.

       

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      cc (profile), Mar 23rd, 2011 @ 10:24am

      Re: The Labels are Toast!

      You know, I'm a bit worried about that.

      I'm worried that 'inactive' copyrights that the labels think are unprofitable to enforce will be given to artist estates. Artist estates are some of the biggest copyright trolls around, and they may start squeezing their monopolies for everything they're worth, basically by suing everyone the labels weren't bothering to sue.

       

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    Chris-Mouse (profile), Mar 23rd, 2011 @ 8:45am

    Eminem could find himself with no online distribution (except piracy). He could find his back catalog not being sold, as a result of it not being economically viable to bother doing it.

    Funny how the record label math works out. Out of every 99 cent song downloaded from iTunes, Apple pays royalties of somewhere around 60-70 cents to the record labels. Apple also pays all the digital distribution costs out of it's share of the money. The record label pays out nothing, and collects in money. Since the royalty rates are based on the wholesale price, not retail, the total royalties payable to artists and producers would have to rise above 100% before the record label would lose anything. They may not get to keep as much money as they'd like, but who does? If they expect to find sympathy, they'd better start looking in the dictionary, because they won't find it anywhere else.

     

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    Hiiragi Kagami (profile), Mar 23rd, 2011 @ 9:06am

    Forget the artist, what about the consumer?

    The title is a bit misleading, but my thinking comes down to this:
    If artists view each sale as a license, and not a product, then this means consumers are buying licenses, and not songs.

    Correct me if I'm wrong, but I'm pretty sure copyright doesn't cover license infringement.

    Therefore, sharing a license is perfectly legal, regardless if it comes in the form of an MP3.

    I'm betting a damn good lawyer could represent those being sued for infringement with this knowledge to the courts.

    If you'll excuse me, I've a few thousand licenses to share, now that I can.
    >:)

     

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      identicon
      Anonymous Coward, Mar 23rd, 2011 @ 9:43am

      Re: Forget the artist, what about the consumer?

      Really? The license grants you rights that you would not otherwise have. You are not granted the right to share. Breaking that license by sharing means exercising a right not granted to you, and that is copyright infringement. You won't find a lawyer willing to make that argument because that argument makes no sense.

       

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        Hiiragi Kagami (profile), Mar 23rd, 2011 @ 9:49am

        Re: Re: Forget the artist, what about the consumer?

        Young man, you're missing the point of my post.

        When we buy a CD, DVD, book, etc., we're not paying for a license. We're paying for a physical product which has its content covered by copyright.

        That's the entire point of copyright (today): to protect from copying.

        However, in lieu of this case, if what Apple's iTunes is selling are licenses, and not songs, this changes the ballgame completely.

        You see, those record label contracts stipulate a royalty on every *PRODUCT* sold, not every song. That's a huge change in wording.

        Therefore, if artists get their claim of a license with online distribution, then this means they've, in effect, removed the *PRODUCT* from the equation, making every mp3 out there a license, not a song or a *PRODUCT*.

         

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        The eejit (profile), Mar 23rd, 2011 @ 10:06am

        Re: Re: Forget the artist, what about the consumer?

        No copyright infringement is clearly copying an infringing work to which you have no right to do so. a-DOY! [/sarc]

         

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    identicon
    Brad, Mar 24th, 2011 @ 3:43am

    Theres no way Universal/Interscope record would want eminem to go, he was the highest selling artist for last decade selling over 90 million records worldwide. the revinue he has given then is crazy. plus his worst selling album in the us is like 4 million. most rappers have the softmore curse and have on big album he has had 11 platinum albums in a row, if you count 8 mile soundtrack, the re-up, greatest hits and the 2 d-twizzy lps name another artist who could guarantee platinum status like that, basically he could record his farts and sell a million, universal know that. and he is loyal, he has been out of contract for a couple of cds now its just out of respect for universal, interscope, jimmy iovine, dr dre and aftermath that he keeps using them. marshall is just trying to get his fair share.

     

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    Hephaestus (profile), Mar 24th, 2011 @ 12:07pm

    It just occured to me ....

    This could bankrupt the record labels if every artist or their estates goes after the record labels. How long have the labels been selling music online for?

     

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  •  
    identicon
    Paul Keating, Mar 25th, 2011 @ 8:50am

    is breaching a license itself infringement?

    If the contracts between the artists and the labels in these old contracts are licenses in which the artist is licensing the music to the label, then the license is granted only on the condition of payment of the license fee. If this is the case then I would think the label's failure to pay the license fee is in reality infringement no?

    So, it is ok for them to infringe but not others?

     

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


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