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. 

Celebrating Johnny Cash

It's all Johnny Cash week.

He would have been 78 today. There's a Wear Black For Johnny Campaign in honor of his birthday.

His latest record American VI: Ain't No Grave was released earlier this week. It was produced by Rick Rubin.

Retired real estate agent Louie Sulcer 71, of Woodstock, Ga., won Apple's iTunes Countdown to 10 Billion Songs contest. He purchased Johnny Cash's 1957 single "Guess Things Happen That Way", which is the 10 billionth song downloaded from iTunes. He was rewarded with a a $10,000 iTunes gift card. The L Magazine reported he also received phone calls from Apple CEO Steve Jobs and Johnny's daughter, singer/songwriter Rosanne Cash, who had her guitarist husband, John Leventhal play the song for Sulcer over the phone.

DRM Contributing Factor to Illegal Downloadin

According to a posting in TechDirt a Cambridge law professor found that restrictions put on audio files by record labels, promotes illegal downloading. ... the study found that users get frustrated by the restrictions put on legally purchased content by DRM and copy-protection technologies. Instead of rolling over and accepting this, they often change their behavior -- choosing to download unrestricted, illegal content in the future.

It states that users become frustrated with the limitations and illegally download the file, which has no restrictions. I would agree. Most purchased audio files are now DRM free. I curtailed my iTunes purchases because of the restrictions. If I upgraded my OS, or changes an external hard drive or made any changes to the iTunes library, there was problems with the tracks I did download. Once again, it seems like the artist suffers for the mistakes of their label. Audio cassettes did not kill recorded music, as it was thought. Illegally downloading has not killed recorded music. I've mentioned ad nauseum the reasons the major labels are bleeding money, so I'll spare you the list here. The album is now the promotional tool for the tour. Bands, sink your money into touring and getting yourself on the road. Make fans one by one, which will then grow to two by two and before you know it, you're playing in front of 100+ people. Record your live shows, release singles, enjoy playing.

iTunes New Pricing

The ho hum announcement at Macworld Expo was that iTunes will now be DRM free and songs will be variably priced. This is what Apple negotiated with the major record labels. DRM free comes way too late and who is going to want to pay MORE for a track when it can be downloaded for free. The labels will now charge $1.29 for a new song, .99 for those selling well and .69 for older tracks. In a time where everything is being sold at a discount, the labels decide to jack up the price. I'm shaking my head.

Discovering New Music While Getting Your Haircut

Radio isn't quite what it used to be for discovering new music. I keep reading that listenership is up, but advertising is down. I'm guessing that Talk Radio is leading the way. I don't know many people who turn on the radio to hear music. People are becoming their own radio stations. iMixes on iTunes are a great example of that. I've known Gabrielle Trujillo and Jeffrey Fernandez, the owners of Sparkle Beauty Studio for over 10 years. Not only will you get an amazing haircut from them, but you will be treated like a king/queen and will be turned on to some great new music. Music is Gabriel's passion and he's an informed and intuitive "DJ". Each month he posts an iMix which is a seamless bounty of new music. He removes it when the month is up and posts a new one. This month I was introduced to Ohm-G & Bruno, McFly and Augustana. Gabriel's iMixes are a great way to catch up on new music if you don't have the time to jump from Internet radio to terrestrial to satellite.

Pet Sounds for $5

In the great music under $5 bin this week is the classic, perhaps greatest album of all time, Pet Sounds by the Beach Boys at iTunes. The other beauty besides the price is that it is iTunes plus, which means it's DRM free. You own it free and clear without restrictions. If you don't have this record, skip a latte at Starbucks and purchase it. It's timeless, it's beautiful, it's a masterpiece.

EMI Starting An Online Music Service

It seems like it's 8 years too late, but EMI is launching an online music service, which according to the WSJ is to gather customer behavior patterns rather than actually make money. There are so many ways to gauge what fans are thinking. Online message boards and postings are filled with kudos and complaints about what works and what does not. Throwing what I'm guessing is large sums of money into an already overcrowded field seems fruitless. There are so many places to buy music, the easiest being iTunes, Consumers will be confused with another entry like EMI's. It used to be the only place to buy music was either a record store or for the big artists a place like Target, now each label has it's own site. Tthe consumer doesn’t look for these sites. The labels have already lost trust with the consumer. Why would they go to the labels website to find out about an artist or buy music? They can go directly to the source meaning the artist or go to iTunes which is a trusted entity. There is also the option of pulling it from someone else for free. It's not trusted, but it is free.

Rights Restricted Music Is Back

Have the labels and studios learned anything over the past few years? An article in today's Hypebot says there is a consortium of the labels and studios who want to, once again, control how you can use what you buy.

It's been said, wants gone is gone. But apparently some in the entertainment industry failed to get the memo. A group of major film studios and record labels have joined together once again in an initiative called the Digital Entertainment Content Ecosystem to find a way to control what happens after you purchase a digital album or movie.
"The goal is to create for downloads the same kind of interoperability that's been true for physical products, such as CDs and DVDs...Once you've acquired a file, you could play it on any of your devices -- if it couldn't be passed directly from one DECE-ready device to another, you'd be allowed to download additional copies. And when you're away from home, you could stream the file to any device with a DECE-compatible Web browser." - LA Times
Its called domain based digital rights management. Apple already uses a version of it. Total freedom until you want to share what you bought with a friend...or use it on a non-compatible device.This DRM has a new name and may even be a bit less intrusive. But it's still DRM, and as such faces certain consumer rejection. When will we learn?

This is the reason I don't buy from iTunes-I don't want to be told what to do with the music I buy. Once again, those who are willing to pay for content, will be the ones to get screwed. History repeats itself, yet no one seems to learn from the lessons of the past and they continue to make those mistakes again and again. Dante's Inferno comes to mind.