Chuck D and How Record Labels Pay Royalties

Universal Music lost its digital royalties case to Eminem.  Universal had been claiming in all ways, except with regard to playing royalties to musicians, that iTunes (also includes other digital sales and ringtones) purchases were licenses as opposed to sales.  A sale, according to Universal, was a physical unit such as a CD.  A license is typically the use of a song in a movie or TV show and as such, labels typically give higher royalties to musicians for licenses as they do not require any extra spending from the label (for packaging, marketing, etc). 

All of this brings me to the Techdirt post from a few days ago, which very clearly lays out the case Chuck D is making against Universal.  He wants to be paid for his iTunes sales as a license, not a sale.  According to the article, Chuck D is receiving  $80.33 for every 1000 units sold.  As his lawsuit claims, his rightful royalty payment should be  $315.85 for every 1,000 units sold.

This could have huge ramifications for major labels.  Their accounting to the artists has always been sketchy at best.  I've heard of big name artists who would audit the labels every 4 years and walk away with a couple of million dollars.  I don't believe there were any artists or managers who were deluded about this accounting practice. We were all aware of it.  Since the bands I managed never relied on royalty payments and didn't sell in the millions of units, it was a moot point.  It would probably cost more to hire a lawyer, then finding what might be a long lost royalty payment.   

It's great to see Chuck D pursuing this.  If these bigger artists can pave the way, it might mean a bit more transparency from the labels. 

Adele's Jerk Ex-Boyfriend Feels Entitled To Royalties

As Techdirt points out, this is a few weeks old, but still worth mentioning. In this litigious society we live in, it seems that exes are taking it a little too far.  As if a breakup isn't bad enough, the person who caused the heartache tries to sue you for ownership of the songs you wrote because of the breakup.

Adele's ex is claiming he "inspired" the songs and therefore should get partial ownership. Isn't he embarrassed to make such a claim?  Isn't he embarrassed that he caused such pain?  Guess not.  He wants a cut of the royalties.

Adele's response to him: Well, you made my life hell, so I lived it and now I deserve it.

An Argument For Happy Birthday

Should the song Happy Birthday To You be in the public domain?  Ben Sisto at freeculture.org thinks so. He meticulously documents the copyright history of the song.  Ben points out that the song is a derivative work  using folk song lyrics and combining them with the melody to the song Good Morning To All written by and copyrighted to Mildred Hill in 1893.  The original lyrics to GMTA were written by her sister Patty Smith Hill.  Warner Music currently owns the copyright on Happy Birthday which expires in 2030.  As techdirt mentions, the song generates about $2 million per year.  I thought that Paul McCartney had the song in his publishing arsenal, but it turns out it is in the hands of the Patty and Mildred Hill estate.  McCartney's MPL does own the rights to the Christmas Song (Chestnuts Roasting On An Open Fire).  Would love to know what that generates in royalties each year.

Royalty Statement Fiction

Tim Quirk, a member of Too Much Joy is also a music industry executive with Rhapsody. He had been trying for years to get an accurate royalty statement from Warner Brothers Records for the records the band released on that label. Although he knew the band was not recouped (paid back all the advances given by the label), he did not see one digital royalty listed. Being that he worked at Rhapsody, he had access to the Too Much Joy account there and was able to see what they were making and what was paid to the label.

In his blog, Tim details his experience dealing with Warner Bros accounting. This is a pretty common scenario and I've spoken many time about artists I've worked with who have sold over 1 million units a title and never saw a dime in royalties from the label. Tim points out that the label makes money on many bands that never recoup. Bands usually receive between 10-18% of the retail selling price. That money goes to recouping the advance. The bulk of the money goes to the labels. What Tim doesn't mention is that the labels often bill unapproved expenses to the artist. In most cases the musician's contract does not specify that they need to get approval for spending. Labels can spend tens of thousands of dollars on radio promotion (yes that includes gifts for programmers, giveaways and promotional items), crazy marketing ideas (let's put the band's name on a hot air balloon for $6,000) and dinners with the band. It's not limited to these things, but the spending builds. I've yet to see a truly transparent royalty statement. Tim astutely notes that if they accurately report to the bands that don't recoup, they have to do the same to those that do recoup and that means shelling out more money than they want to. If they can afford it (it's very costly), an artist can audit the label. From what I've heard from managers, there is always money to be found.

What Do Royalties From YouTube Amount To?

Peter Waterman, songwriter of Rick Astley's hit "Never Gonna Give You Up," is not happy with Google's royalty payments and compared his royalties from YouTube to the "exploitation" suffered by foreign workers in Dubai according to a piece in the Telegraph. The Astley video has been viewed 154 million times on YouTube, according to the article, and Waterman says he has received £11 ($16.30) from Google. There are several posting of the video on YouTube, including Pop Up Video versions. The views ranged from 1.5 million to 16.3 million views. I'm assuming these are global views and not just US. If so, the 154 million claim seems rather high.

The PRS For Music organization based in the UK, wants Google/YouTube to pay higher royalties to songwriters for use of their work online and Waterman's comments were part of a press conference for the PRS for Music group, which is demanding higher payments to content creators.