More Creative Fiction In Warner Music Royalty Statements
from the going-backwards? dept
With Tim Quirk's story about his fictional royalty statements from Warner Music, more people are beginning to talk about these kinds of things. Bob Lefsetz points to another report of a royalty statement of an unrecouped artist (and former major label exec), David Bach, who notes with some surprise that on his last royalty statement from Warner Music, the amount the band owed had gone up. In other words, the royalties that the band had accrued had somehow decreased:In May of 2007, I wrote a post about the wacky world of record company royalty recoupment.Now, to be fair, Bach still says that he was happy with his major record deal, in noting that it was effectively an "unsecured loan" in that he doesn't lose his house if it never gets recouped. He conveniently leaves out the clear explanation that the label is still making money based on the wholesale price of the album, which is many times over what royalties are due to recoup the advance. He also leaves out the fact that while it was an "unsecured loan," it also involved him giving up basically all rights to the music created under that deal forever (or, as the industry prefers, forever minus a day). Not sure that's really that great a deal. With a real loan, you don't also give up the lender something to keep forever. That's not a loan, it's a transaction.This week (Nov.-2009) - I received another royalty statement.
Wow!...we've gone backwards!
In May 2007, we were unrecouped to Warner Brothers to the tune of $174,073.84
Now...our balance is up to $174,717.56!
Talk about "pushing forward back!".
How is this possible?
Good question!
Still, the bigger issue is this idea that the amount that still needs to be recouped has gone backwards over time. It again raises serious questions about how Warner Music accounts for what it owes bands, whether they're recouped or unrecouped. I recognize that accounting may be a boring topic, but it's an important one that Warner has contractual obligations to keep accurate. And... plenty of other businesses with similar challenges seem to be able to keep track of what royalties are owed to whom. Why can't Warner Music keep it straight?
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: accounting, david bach, royalties, tim quirk
Companies: warner music group
Reader Comments
Subscribe: RSS
View by: Time | Thread
You suck .... but you do have potential ...
"Some Enigma employees told me years later that they heard that Wes signed us with the intent to “shelf” us as to limit Stryper’s competition
“Shelving” is an old-school record industry tactic of tying up a band legally through a record contract to take them off the market."
... so we are going to offer you a record deal and be nice to you until it no longer suits us to do so.
[ link to this | view in chronology ]
It's also worth noting that under this system, it is technically not the labels investing in the artists...rather than artists investing in themselves. I mean, none of the the labels profit goes into repaying the investment, right?
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
Sec. 801. The tile of this section.
Sec. 802. Criminal penalties for altering documents.
Sec. 803. Debts nondischargeable if incurred in violation of securities fraud laws. criminal fraud.
Sec. 806. Protection for employees of publicly traded companies who provide evidence of fraud.
Sec. 807. Criminal penalties for defrauding shareholders of publicly traded companies.
SOX is about defrauding investors and misrepresenting your publicly traded company to investors. Scamming the poor artists doesnt enter into it.
The business model of the record industry is, to make money off musicians while paying them as little as possible, and to contractually lock up as many artists as possible so there is no industry external competition. Everyone knows this and so there is no deceit.
[ link to this | view in chronology ]
Re: Re:
but, regardless... im not talking about them ripping off artists and i agree that SOX would have nothing to do with that specific aspect of it.
what im wondering is how exactly the fact that they are knowingly using false reporting information not a sox violation.
huge difference as one is pertinent to what im saying and one is not.
[ link to this | view in chronology ]
Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re:
[ link to this | view in chronology ]
Interest
But isn't the obvious answer "interest", if it's an unsecured loan?
[ link to this | view in chronology ]
Re: Interest
[ link to this | view in chronology ]
Re: Re: Interest
[ link to this | view in chronology ]
Re: Re: Re: Interest
[ link to this | view in chronology ]
I would suspect that at a certain point, the record company had to process returns (unsold merchandise) that the stores no longer wanted to stock. Now, when they sold it off to the stores, they may have debited the band account with the sales, and now with returns, they have to credit back some of those sales.
With a difference of about $640, that isn't at all outside the realm of possiblity.
It's another great moral outrage story, but there isn't much to it. Mr Bach sure isn't complaining about the rock star lifestyle he got to lead on the company dime for a certain period of time.
[ link to this | view in chronology ]
Re:
Sure, $640 sounds like a small enough number until you consider that EACH album returned should only ding the unrecouped amount by a few pennies (since that's all the royalties seem to be for these unrecouped bands).
So, your "only" $640 turns into (let's say) 6,400 albums returned (WITH ZERO ADDITIONAL SALES OVER THAT TWO YEAR PERIOD) at $.10 per album.
I eagerly await your response.
[ link to this | view in chronology ]
Re: Re:
Consider a chain store returning stuff. 1000 units isn't much.
[ link to this | view in chronology ]
Re: Re: Re:
The royalties are calculated based on sell-through, not deliveries. That way any returns have zero effect on the amount of royalties.
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
'Warner Bros. still makes money off our back catalog...but yet finds ways to implement "creative accounting" to send us backwards.'
[ link to this | view in chronology ]
Nah, he's a paid shill wannabe at best.
I've met lots of people like him over the years: people who have embraced the most wretched practices of this wretched industry because they think it makes them 'hard nosed realists' who have an edge on all of the naive artistic idealists who don't have what it takes to 'play ball' with 'the big boys'.
Now his hard nosed reality is going up in smoke and the resulting cognitive dissonance is making him go a bit loopy.
He deserves pity more than anything.
[ link to this | view in chronology ]
IRS
Its a lot of lost revenue for them.
They should investigate.
[ link to this | view in chronology ]
Re: IRS
[ link to this | view in chronology ]