Eminem Wins Appeal Over Universal Music: iTunes Downloads Should Be Accounted Differently Than CD Sales
from the uh-oh-universal dept
Well, well, well. A few years back, we noted that Eminem's publisher was upset about the royalty cut they were getting from sales on iTunes, and they eventually sued both Apple and Universal Music over this (though, I'm still confused why Apple is involved). The issue is a contractual one: as is standard in lots of recording industry deals, musicians make very little money from each album sold. However, when their music is "licensed" for other things -- such as a commercial, movie or video game, they make a much larger percentage. The reasoning, of course, is that there are a lot more "costs" that go into making and selling a CD, which the label is taking on.But here's where it gets tricky: what is a sale via iTunes? Is that a "sale" like a CD (meaning a small percentage royalty)? Or is it a "license" like for a movie (meaning a much bigger royalty)? Conceptually, you can make a reasonable argument for either side. After all, from the consumers' perspective, it's very much like buying a CD. But... from a technological perspective, it's really a lot more like licensing, since you don't have the same production, physical goods, shipping and distribution costs. A jury originally sided with Universal Music, saying that it's really just like a CD sale, and thus, the lower royalties should apply.
However, the 9th circuit appeals court has just ruled the opposite way, saying that the contract is "unambiguous" that iTunes sales count as a license, for which the higher royalties apply:
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Filed Under: eminem, licenses, royalties, sales
Companies: universal music
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Some sanity
Just goes to show further how crooked the industry is. They whine to the governments, using "the poor artists" as an excuse to get bad legislation passed, which they then turn around and use to shit on everyone with, artists included. It's never been about the artists, only what's in their own damn wallets. No one has ever stolen more from the artists than the labels themselves through their deceitful contracts and crooked accounting.
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hrmm
add a label to front and back and thedsesign for 5 cents mass produced and the case another 5 cents form china
vs
.0002 cents of bandwidth
ya we know the truth again....
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Why this is a big win for artists as well as songwriters and publishers
It not only may impact artist earnings (royalties vs. 50% of net receipts, not to mention approval rights) but also publishing royalties: If the download is not deemed to be a sale by the label, then the publisher has the right to receive a full mechanical royalty rate directly from iTunes, not a reduced rate through the label. (Record companies apply so-called "controlled composition" provisions contained in artist contracts in order to reduce the mechanical royalties payable to publishers, but the labels do not have the right to assign such controlled composition provisions to their licensees such as iTunes.)
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Re:
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Smells like spam to me
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Re: Why this is a big win for artists as well as songwriters and publishers
then what is it deemed to be?
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Wow
www.Ultimae-Privacy.net
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Re: Re:
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Re: Some sanity
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Re: Re: Why this is a big win for artists as well as songwriters and publishers
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Re: Smells like spam to me
If I were trying to advertise my services, I would seek a more receptive audience, lol!
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Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
Since they are in the business of selling licenses, it must be classified as a sale. It is not "other" income(revenue).
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Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
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Re: Why this is a big win for artists as well as songwriters and publishers
How will this affect the license fees that Apple has to pay? Do a portion of the fees get "shifted" from the labels to the songwriters, or will they have to pay additional license fees?
Will songwriters now be able to re-negotiate deals with Apple directly? Will they be able to veto already-existing deals?
Does this mean that performers (vs. songwriters) will now earn less (or no) money from digital downloads?
I'm all in favor of money going to artists rather than labels, but this ruling has the potential for disaster if not handled delicately. Hopefully I'm just being paranoid.
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Re: Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
SalesCD)Revenue---xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
License Revenue---xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
_________________________________________________ ________
Total Revenue---xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Less COGS--------xxx
_________________________________________________________
Income----------xxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
The CD just contains what was licensed. Or is it mine and I can copy and share it all I like?
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Re: Re: Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
Same for Apples' download.
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Re: Re: Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
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Re: Re: Re: Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
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Re: Re: Why this is a big win for artists as well as songwriters and publishers
Songwriters are paid mechanical royalties by publishers. Publishers seek to collect mechanical royalties from the companies that distribute copies of their works (e.g., record companies distributing CDs and iTunes distributing downloads). Publishers license and collect mechanical royalties either directly of through an agent on their behalf (e.g., the Harry Fox Agency in the USA).
However, in the USA, but not in most other countries, iTunes and the record companies agreed that the record companies would cover iTunes mechanical royalty liabilities to publishers for downloads. The problem with this is, publishers didn't agree to waive their right to get paid direct from iTunes. And why would you, if you were a publisher or songwriter? Why would you want to have to wait for a record company to receive reports from iTunes and take months or years to turn around and pay you at reduced rates in many cases? That isn't fair. But whether you think it is fair or not to let the record companies get their fingers into this income stream, record companies do not normally have the right to grant mechanical licenses to any third party - iTunes or otherwise - on behalf of third party publishers.
One appeals win doesn't mean everything will change. UMG is trying to say that Eminem's case is unique, although it isn't. The legal battles will continue.
Nevertheless, what is changing is that iTunes is moving to streaming, and it is obliged to license and pay streaming royalties to the publishers directly (or through the publisher's agents such as HFA) - not through the record companies. This will mean more money for publishers and songwriters, who typically split mechanical royalties, and this cost will come out of the pockets of Apple and/or the record companies, ultimately.
These changes will also mean more money for artists, as record companies report streaming income as licensing income, unlike downloads, which they report as sales. Said another way, most artists currently get 50% of streaming income, but only a small fraction of download income, so a shift to streaming will benefit artists, in terms of the their percent splits with the record companies.
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Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
Wrong costumers will foot the bill as always.
Songwriting should be work for hire not protected by copyright, what is a songwriter that doesn't perform anything and don't bother to build a fan base and expand his market?
I don't get what those people deserve anything beyond being paid to produce something.
Same for musicians, they should be paid for playing not for rights that are so complex that turn the market place into a desert.
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Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
Write songs and sell that to the public once, what is this absurd notion that he owns anything and should get paid for every use of it?
This is the insanity of the 21th century.
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I don't understand why they care about something that will not empower them(the majority) anymore and only benefits a small percentage of people, that can't be good planning.
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Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
Isn't this usually the case? That's how it works with physical CD's - the labels pay the mechanical royalties to the publishers/songwriters. It's a bit like saying the publishers didn't agree to waive their right to get paid direct from Tower Records.
Why would you want to have to wait for a record company to receive reports from iTunes and take months or years to turn around and pay you at reduced rates in many cases? That isn't fair.
"Fair" has never been a word in the major labels' vocabulary. Why do publishers agree to that in the case of physical albums?
Don't get me wrong: I'm not complaining. I'm just trying to understand the details.
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Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
After some thought, I think I can answer my own question. They agreed to this because otherwise they couldn't sign a label deal at all. And if (like most) they already signed a "deal memo," they had to sign a deal with that label.
Which means that this probably won't effect anyone who signed a label deal in the past five years or so, since label contracts will have already included clauses for digital download royalties. That's a pity.
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Re: Smells like spam to me
Considering her posts "spam" is unfair, IMHO.
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Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
Probably not, actually. iTunes (and other online retailers like Amazon) have wanted to drop their prices several times. It's always been the labels that have been against it.
This ruling will take some of the bargaining power out of their hands. It's likely that this will positively effect consumers. If they're effected at all, that is.
Songwriting should be work for hire not protected by copyright, what is a songwriter that doesn't perform anything and don't bother to build a fan base and expand his market?
A composer like Beethoven? A musical team like Gilbert and Sullivan?
Some people are excellent songwriters but terrible performers - and vice versa. Both sides of the equation need to be compensated. Could this work under a "work for hire" situation? Maybe, and there are some times when it does (studio artists or backup singers for performers, jingle writing for composers, etc).
But the music industry is mainly set up as a "spec" system, where nobody gets paid until the music is sold. Blaming songwriters for this is a lot like blaming salesmen because they work on commission.
But think of it this way. iTunes is selling music downloads. They have every right to do so. Who, exactly, do you think should get the money? The labels, iTunes, or the artists?
Currently, only the labels and iTunes get the money - because they're treated like CD's, and we all know most artists don't make a dime from selling CD's. This just gives the artists a stake in the game, and I'm not opposed to that.
The only thing that concerns me is that if the money is shifted to songwriters, it will be shifted away from the recording artists. But because of "label accounting," recording artists usually don't make money from physical sales anyway.
In Eminem's case, he is both the songwriter and the performer, so it's a false dichotomy. Indeed, anyone who writes their own material can only benefit from this ruling.
Write songs and sell that to the public once
You can't sell anything to "the public" once. You can sell to individual members of the public, but that's the business model we have now. Unless you mean accepting one lump sum to put songs in the public domain - but in that case, who would pay? The government?
In practice, "work for hire" songwriters sell their music to their clients. But the clients then own all the rights to the work, regardless of the songwriter's intent. Being businesses, they are generally even less inclined to let others use that work than the songwriter.
So, "work for hire" doesn't end up being any better for the public. It works out very, very well for publishers and labels, however.
That's why, in 1999, Mitch Glazier - then a Republican Congressional staff attorney - inserted language into an unrelated bill that made all musical recordings "works for hire." Artists got up in arms, and the law was repealed. Glazier is now Senior Vice President of the RIAA.
This is why I don't put much stock in the "you should only get paid once" argument against royalty payments. This argument doesn't help put works in the public domain, it only puts label interests above the interest of artists. It is one of the (few) times where copyright is justified.
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Re: Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
"This" = "This court ruling"
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Re: Re: Re: Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
The labels can deem it to be whatever they want.
It is their choice whether or not to give me the product, as well as the license, on workable medium or just the license written on paper.
If your audit reports are written on gold leaf sheets, just plain paper, or e-mailed to client, it is your choice(and maybe clients). I don't need to hear about how much more it costs to print them on gold leaf.
You sold client your services. You made a sale. There is no difference. A contract may require you to break them down into the different types of sales, but they are still sales.
Funny thing that. You sell your IP once to others who can do whatever they want with it, while telling them they have a right to every copy produced of their own IP.
If I was working for the musician, rather than the label, I would be asking which portion of physical sales are for the physical product and which portion is the license. Then I would be having the artist paid accordingly.
If an album retails for $19.99 and the artist gets 1% of physical sales and 50% of license sales...
Since a license is @ $0.99 and an album generally has @ 10 songs on it...
$19.99 = $10.09 for medium and $9.90 for licenses
Artist should be getting $5.05/physical album sold.
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Re: Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
You mean they got the rights for free? Didn't buy/front money to musician? All songs are guaranteed a profit, regardless of the cost of the copyright?
Why does a musician need the label again? Aren't they allowed to call/e-mail Apple i-Tunes?
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Re: Re: Smells like spam to me
Ditto
But stating that a business which sells licenses, can call a sale "license revenue," and not be included as sales, I can see where "Audit trix" comes from.
"I ain't nothing but a simple man
Call me a redneck, I reckon that I am
But there's things goin' on that make me mad down to the core
I have to work like a dog to make ends meet
There's crooked politicians and crime in the street
And I'm madder than hell and I ain't gonna take it no more"
Simple Man
Charlie Daniels
http://vodpod.com/watch/2192681-charlie-daniels-simple-man
Did I copy too much? Is that theft or promotion?
I'm going to need a lobotomy if that is theft.
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Re: Re: Re: Re: Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
If an album retails for $19.99 and the artist gets 1% of physical sales and 50% of license sales...
Since a license is @ $0.99 and an album generally has @ 10 songs on it...
$19.99 = $10.09 for medium and $9.90 for licenses
Artist should be getting $5.05/physical album sold."
Don't forget! You heard that here first.
Since I am increasing the artists earnings by 2 525% (actual may be less, this is for my scenario above), I am willing to accept 10%, for my IP, of all retro-active pay owing, to all, by all labels. They may freely use it for future.
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Re: Re: Some sanity
My reasons for disliking Eminem have nothing to do with his lyrics or vulgar language. Some music I like can be considered equally vulgar and has been under attack from parents, politicians, & religious groups long before rap even existed. I just hate rap, plain and simple (I guess you missed the part where I said "and his style of "music" in general", which began with the 7th word). Music, by my definition, is a combination of instrumental notes and a melody, not talking to a beat. Anybody can do that and to my ears it's just annoying noise.
"as he is one of if not the most talented artist that has ever rocked the music world"
- This is laughable. Want to witness some REAL modern musical talent watch Within Temptation - Black Symphony, or pop in any Epica CD.
"He is truely a lyrical genious"
- How so? Because he's good at rhyming words? He's a far cry from Neil Peart or Roger Waters who both had vast imaginations and could tell a story better than anyone, all while rhyming their words as well.
Well, that's all the time I have for you unless you want to get back on topic and talk about the article and the court ruling. If you want to further argue musical tastes I suggest you find someone else on a music blog or forum somewhere.
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Re: Re: Re: Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
They sell limited licenses for recordings of songs. Just because that license is on a CD, it does not make them a seller of CDs.
Does Microsoft sell CDs, or limited software licenses?
How can both be sellers of CDs, but aren't competitors? Why the price discrepancy? How come the labels haven't put MS out of business? Labels sell CDs for $20 as opposed to MSs' $700.
Are the labels CD sales declining because MS is selling more CDs? Will i-Tunes sales decrease if MS starts selling 7/Office as downloads(they will both be selling downloads)?
If I sell photo albums on CD, am I also in the business of selling CDs? How will this affect the labels CD sales?
$Million question.
If, in addition to the CDs, I print the photo albums on photo paper, what business am I in?
A) CD sales
B) Photo paper sales
C) Photo ink sales
D) Photo album sales
E) All of the above
If MS starts shipping their software on flash sticks, have they changed their main operations? DVDs? Are they now flash stick/DVD sellers, or do they still sell software? Should they change their name so people don't get confused? People will be looking to buy a CD from them and yet they will get a DVD, not the product they were looking for at all.
Are they still competitors of the labels for CD sales?
The business admin class I took did not cover/explain these questions. Did yours? If you have a link from a reliable source...
Trix are for kids.
The labels, in my lifetime, have sold the same product over and over again. A limited license, recorded on different mediums.
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Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
"...unlike downloads, which they report as sales."
%(
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boy am I confused
In as much as royalties are calculated, in any case.
Sorry, but I can't even imagine how the sale of a downloaded album is conceptually any different - at least from a financial perspective - from buying a physical CD.
I mean in the simplest termns, the sole REASON I no longer have to go to a record store and buy a CD for $15 is because I can log into iTunes and download it for $10.
Even if they were the same price (and, sadly for iTunes, this is becoming more and more the case), the end result is still the same - I choose to buy a new album either by downloading it or buying a physical CD.
They are BOTH ALBUM SALES, plain and simple, and it seems that any royalties paid should be paid under the guidlines of an album sale.
But this new ruling says the purchase of an album on iTunes is now an act of licensing?
Please explain this to me.
So from now on it's incorrect for me to say "hey, I just bought the new U2 album on iTunes," but rather "hey, I just paid a fee to indefinitely license the new U2 album for personal use only on iTunes?"
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Re: Re: Re: Some sanity
Judas Priest were the best blankity blank rockers
Even my 65 year old grade twelve engrish teacher
Said that blankity blank blank blank could be a preacher
Yet if he wrote a poem for her along the lines of the ripper
She would gladly become a blankity blank blank stripper.
To help you get by all the cursing, and truly understand what I am versing
Although my teacher didn't know 'em, she said "The Ripper" was a fantastic poem
Too bad, so sad, that youngsters such as the one atop
will never understand that, and become another flop
If you need to curse and swear to articulate, how can you become anything more than an ejaculate?
Pardon the pun, from the line just above
It's all in fun, and fair for war and love
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Re: boy am I confused
Conceptually speaking... have you ever tried to get your download autographed after a show?
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Re: Re: Re: Re: Some sanity
Wanna be a star? Just contact me at:
blankityblankinblank at interscope.com
with an answer and we'll have the limos waiting outside your door. We'll give you $1mil up front and all you have to do is give us complete control of your works and 99% of sales until we recoup that $1mil. If no one buys, you get nothing and we'll haunt you for the rest of your life...
Deal?
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Re: boy am I confused
They are both very limited license sales, plain and simple, else you could do as you wish with your purchase. One comes on a piece of physical material, the other does not.
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Re: Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
There is compensated and then there is compensated.
Compensated for work done and paid for it, it is all good and well, work compensated for eternity for every use under the sun is not.
"But the music industry is mainly set up as a "spec" system, where nobody gets paid until the music is sold. Blaming songwriters for this is a lot like blaming salesmen because they work on commission."
Every one has a choice, they could make different choices but they don't and they finance groups like ASCAP, RIAA and the MPAA, so no I do believe they are guilty and weather it is by incompetence, apathy or greed it really doesn't matter the end result is the same, trying to take their ass out of the line and blame some imaginary set of rules is not convincing.
"But think of it this way. iTunes is selling music downloads. They have every right to do so. Who, exactly, do you think should get the money? The labels, iTunes, or the artists?"
iTunes. they are the ones creating the market, they are the ones doing the promoting, they are the ones who found a market others should try to emulate them or die trying but not have part of it and that is because I don't like Apple, but I do like less the people who can't make a business work for themselves and need to keep creating rules of what is moral or imoral, what it is just and not and don't want to work for it.
If it was up to me music would have no licenses and everybody could sell it or distribute it or play it in public, artists specially musicians still have other means to make a buck and songwriters would just be paid like reporters, that don't hold copyrights on their writings, maybe reporters should start claiming copyright and ownership on the news would that make sense?
"Currently, only the labels and iTunes get the money - because they're treated like CD's, and we all know most artists don't make a dime from selling CD's. This just gives the artists a stake in the game, and I'm not opposed to that."
Neither the labels nor the artists deserve any money from the work done by others just like artists shouldn't have to pay others when they create something from sources they found in the public space. People try for years to create markets and vultures come in and try to take it away, that is how it works today, and it is a shame.
"You can't sell anything to "the public" once. You can sell to individual members of the public, but that's the business model we have now. Unless you mean accepting one lump sum to put songs in the public domain - but in that case, who would pay? The government?"
Really, people pay once for the song and can do with it what they like?
No that is not what happens people have to keep paying forever and that is not only unsustainable is just ludicrous a bubble of entitlement that some trully believe in, unfortunately they can't defend it, it just doesn't work that way in reality.
"In practice, "work for hire" songwriters sell their music to their clients. But the clients then own all the rights to the work, regardless of the songwriter's intent. Being businesses, they are generally even less inclined to let others use that work than the songwriter."
That it is true about business that is why this was a social failing, we fail to compete with business, but programs like kickstarter, slicethepie and others are remedies to that, is not "work for hire" is the license scheme called copyright that give vasts rights to people who really don't deserve any the so called "copyright holder". I'm ignoring the attempted bill referenced because it would make work for hire a reality but it wouldn't reduce the copyright rights that enable it to be so bad, so I don't see the relevance, work for hire is not a problem. expansive copyright is.
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Re: Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
This is why I don't put much stock in the "you should only get paid once" argument against royalty payments. This argument doesn't help put works in the public domain, it only puts label interests above the interest of artists. It is one of the (few) times where copyright is justified."
I believe that is not correct, the concept of work for hire is good and could help clear up the mess copyright is, the implementation on the other hand is what kills things.
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Re: boy am I confused
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Re: boy am I confused
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Re: Eminem & Ms
- that the major labels use Hollywood accounting (http://en.wikipedia.org/wiki/Hollywood_accounting) to the disadvantage of their artists
or
- Eminem is a top-selling artist
C.A.
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Re: Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
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hi
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iTunes - sale or license?
The fact is that the case, as with all Court cases, is decided on its facts, and the applicable law.
The law (in the US) states that giving someone permission to do something with your master recording, whilst retaining the rights within it, for periodic payments - based on use - is a "licence".
That is precisely what Aftermath did (Eminem's label), when it LICENSED use of its master recordings (yes, it owns them, not Eminem) to iTunes. It did not, in any way "sell" the master recordings to iTunes.
In Eminem's case, "license" royalties were paid by Aftermath at 50% (whereas sales were paid at 12%). Thus the iTunes royalty should have been paid at 50%. That is what this case was about.
The fact is that iTunes then went on to SELL permanent downloads to consumers. That agreement is between iTunes and the consumer. Neither Eminem nor Aftermath is a party to that sale. Thus they have no involvement with it, nor was it examined in the case.
In any event, there was no "periodic" payment made to iTunes (by the consumer) based on use (which the Court used as evidence of what differentiates a "license" from a "sale") - rather, each download was permanent, for a one time payment, constituting a sale. No matter, because the transaction was between iTunes and the consumer, as stated above - so it was not examined in the Court case. Sure, iTunes used its LICENSE from Aftermath to create a copy of the master recording for onward SALE to the consumer each time, and paid a royalty to Aftermath based on each download (or sale), but that is all.
I am afraid that this is not the radical rethink of the entire music business cash flow for digital products that some people have thought it to be, but rather a specific decision based on the specific language of one contract (between F.B.T and Aftermath).
Of course, some artists (notably those who signed contracts prior to 2003, when iTunes launched) will have similar language in their contracts, and can push their record lable into paying a higher digital royalty as a result, but many (probably most?) will not be so lucky.....
Hope that helps.
Ian Penman
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