record companies are mad at Apple. Apple’s freakin’ because
there’s a new hack-around for iTunes. Microsoft is mad at
the record companies. Musicians are mad at Apple. Apple says
Don’t blame us, it’s the record companies that are too greedy.
The RIAA is suing 14,000 people. Nobody knows what to do about
podcasts, which suddenly are everywhere. And there’s a new
program that Tivos satellite radio! Governments all over the
world are scratching their little governmental heads. And
people are downloading music, either for free or for 99 cents
a song, like there’s no tomorrow.
Is this a great world or what?
The record companies apparently don’t think they’re making
enough money on music downloads, so they’re threatening to
pull the plug on Apple’s iTunes, which has something like
80 percent of the download market. The companies want iTunes
to dump its blanket 99 cents per song pricing. Edgar Bronfman,
the booze peddler turned music mogul, says “some songs should
be 99 cents and some songs should be more.” Duh, Edgar? Maybe
some songs should be less? How ’bout that? Chivas over here,
Four Feathers over there?
Actually, Edgar’s got part of a good point. There is no valid
reason why, say, the new Mariah Carey single should cost the
same as an old Bubble Puppy B-side. But who figures out the
pricing? Edgar? Steve Jobs? Can you say “antitrust”? Sure
Oh, and Edgar also thinks record companies should get a piece
of iPod sales! How’s that for balls?
Meantime, Microsoft has stomped away from the bargaining table
where it had been chatting with the record companies. Microsoft’s
been trying to launch a music subscription service, but claims
that the record companies want too much money for the service
to be economical and competitive. So Microsoft has ditched
the subscription idea.
The record companies had better be careful. All their shiny
lawyers aren’t ever going to kill the “illegal” free services,
and if they decide to jack the prices on the “legitimate”
download sites, the free services are going to start growing
exponentially—again. The only way the labels are going to
compete with free is by staying convenient, dependable, and—most
importantly—cheap. And if they push the price for a song over
a dollar, I think they’ll be creating their own nightmare,
Over the pond, musicians in the U.K. are complaining that
they get only something like five cents per song out of the
download pie, and they blame Apple. They’re barking up the
wrong virtual tree. The artists need to look at their record
contracts. Most contracts more than five years old provide
that all sales of music other than CDs carry a royalty of
one-half the usual rate. These contracts didn’t envision digital
downloads taking over the marketplace, and the clauses were
meant to cover marginal, exotic sales on unknown media. (Until
a few years ago, the major record companies were in a contrived
state of denial that digital downloads were the future. That’s
why the old Napster became so popular so fast—there was no
legal alternative.) So, figuring that the usual lousy artist
royalty rate for CDs is somewhere around 10 percent of the
list price, applying the archaic contract clause to downloads
gives the musician around five cents per song. D’oh!
Most newer record contracts provide that the artist and the
label split the digital revenue 50-50, which makes sense.
There’s no physical product, no packaging, no warehouses,
no distribution. The label is now just a middleman—a financier,
promoter, and briber of radio DJs. That’s it. So there’s no
reason on earth that the labels should get a bigger chunk
of the dough than the artist.
Although I didn’t think so in 1982, right now I’m glad that
my band, Blotto, never got a record deal. We’ve got a couple
of old songs that I sense some people still would like to
own, but maybe not enough to go by our CDs (even though the
CDs are sublime, revolutionary, postmodern masterpieces).
A couple of months ago we put our stuff up on the major download
services through CDBaby, a cool indie music distribution service
that has agreements with the download companies, including
iTunes. While we’re certainly not getting rich, we’re now
making a lot more money from selling downloads than from selling
CDs. After CDBaby takes its 9-percent cut, we get around 60
cents per download. All of a sudden our music is moving again,
we’re getting paid well for it, and we couldn’t be happier.
If we were with a label and getting five cents per download,
we’d be bitching like crazy. And hey, if they want to charge
a little less for some of our non-hits, we’d be cool with
Rapp is an intellectual-property lawyer with offices in Albany
and Housatonic, Mass. He teaches art-and-entertainment and
copyright law at Albany Law School. Contact info can be found