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
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.