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Who’s Stealing Now?

As you know, the major label music industry has been aggressively suing people for using peer-to-peer services to download free music. Something like 20,000 individuals, including 12-year-old kids and grandmothers, have been nailed with threats of lawsuits for copyright infringement. The people that are caught are forced to pay settlements of around $4,000 or face a lawsuit with all the cards stacked against them.

Of course, the music industry claims to be doing all of this in the name of “creative artists,” the musicians whose music has been downloaded. This bold claim has been met with considerable skepticism all around, even from a great many “creative artists,” based on the reality that most recording contracts are horrifically one-sided, and that the vast majority of major-label recording artists never make back enough money to pay off whatever advances the labels have provided to them. A skeptic would say that the labels are doing little more than desperately trying to bail out a sinking ship, that their business model no longer makes any sense in light of new technologies, and that the wholesale suing of their own customers is perhaps the most boneheaded marketing move in the history of modern commerce.

A couple of things came up last week that graphically show that the labels are not remotely on the side of musicians. First off comes news that the RIAA (the well-funded label trade association) is lobbying Washington heavily for significant reductions in the levels of royalties that labels pay to songwriters. You see, copyright law says that anyone that makes and distributes a recording of a song must pay the songwriter a set royalty for each distributed copy. This royalty, called a “mechanical royalty”, has slowly increased over the years, and is currently set at 9.1 cents per copy. Mechanical royalties are typically paid by record companies directly to the songwriters, and often these royalties are the songwriter’s primary source of income. Mechanical royalties are paid “off the top” and without regard to any advances paid to artists. For a recording artist who also writes his or her own material, mechanical royalties are often just about the only money coming in from a recording during the often infinite wait for the label to recoup its advances pursuant to the industry’s draconian recording contracts and crooked accounting practices.

And the RIAA wants this royalty reduced. Does that sound consistent with championing the cause of the “creative artist”? What’s particularly disturbing about this is that the labels already coerce reduced mechanical royalty payments to songwriters in their hideous recording contracts. All major-label contracts that I’ve seen have what’s called a “controlled composition clause” in which the artist agrees to accept somewhere in the neighborhood of 50-75 percent of the statutorily set royalty rate. And this clause is typically non-negotiable.

What appears to be the motivation here is songwriter royalties for sales of digital files, and especially ringtones. Earlier this year, the RIAA asked the Copyright Office to designate ringtones (which are now a billion dollar business) as somehow not qualifying for mechanical royalties, and the Copyright Office ruled, rightly, that mechanical royalties should be paid to songwriters for ringtone sales, just like they are for other digital downloads or CD sales. Having lost that battle, the RIAA is now pressing for reduced payments to songwriters across the board. It is so blatantly hypocritical that it’s obscene.

The other thing that happened is that CBS Inc. announced that it is reviving the old CBS Records label. (The old CBS Records assets, but not the name, were sold to Sony in the 1980s.) The stated reason for the new label is to create a reservoir of “low-cost” music for CBS’s television shows. It’s painted as having this wonderful, integrated, cross-platform synergy, where CBS Records artists benefit from the powerful medium of television to promote digital download and CD sales. What’s not to like?

Plenty. The artist gets screwed again. CBS will have its artists agreeing to reduced or eliminated licensing payments for the use of their songs on CBS television programs (and if the deal involves CBS’ corporate cousin Viacom, maybe movies as well). CBS Records artists will be giving up one of their major sources of real money: licensing songs to TV and film. And what do they get in return? Exposure! (If you don’t understand why that’s funny, ask any musician.) CBS gets music for its programming on the cheap and artists, instead of getting paid market rates for the use of their songs, get “free promotion” for the sale of downloads and CDs. And sales of downloads and CDs are governed by those hideous, onerous, unfair recording contracts, that are designed to impoverish musicians and make who rich? Uh, let’s see . . . hmmm . . . oh, yeah . . . CBS!!! And if the RIAA gets its way with the Copyright Office, the songwriting mechanical royalties are gonna shrink, too, so artists’ income from recording contracts will be even less.

The CBS deal is not even close to a quid pro quo. It’s more like highway robbery. Or stealing. Which is, of course, what the RIAA is accusing the 12-year-olds and grandmas of.

—Paul C. Rapp


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