Sony To Court: Of Course We're Allowed To Contractually Screw Over Our Artists
from the that's-how-this-works dept
For quite some time now, we've been pointing out that the hatred directed at Spotify and other music streaming services in some circles is misplaced. Spotify is paying out a ton of money to the copyright holders (approximately 70% of its revenue). The problem is that much of that money is staying with the labels rather than being passed on to the artists. Earlier this year, in fact, we wrote about a detailed report by Ernst & Young, in cooperation with a European music label trade group, that revealed just how lopsided some of these deals end up being:
And that brings us to an interesting lawsuit that was actually first filed last year from a bunch of artists associated with American Idol, filed by "19," a management company connected to the show. Originally, the lawsuit had been a typical one concerning the question of whether online streaming counts as a license or a sale for the purposes of the contracts (music contracts pay much higher rates to artists for licensing rather than "sales" and there have been a bunch of lawsuits around that). However, once the Sony-Spotify 2010 contract was leaked a couple of months back, the lawsuit was amended to specifically argue that Sony chose to structure its deal with Spotify in a way that purposely kept revenue from artists.
Sony has filed its response, which pretty much directly admits that it has every right to negotiate contracts with third parties that screw over artists:
The implied covenant does not require SME to structure its affairs in whatever way yields the greatest royalties for 19It further cites an earlier ruling in this very case, in which the judge said that Sony Music is under no obligation to maximize revenue for artists if it benefits Sony:
...as Judge Abrams already has held, SME can “act on its own interests in a way that may incidentally lessen the other party’s anticipated fruits from the contract.”Furthermore, Sony points to the details in the contract that it signed with 19, which flat out says that Sony is free to receive revenue in other forms that don't lead to royalties.
19 cannot claim that the parties intended that SME would not receive consideration on a general or label basis (such as in the form of an advertising credit), rather than on a basis tied to the use of a particular sound recording, because 19 expressly agreed that it “shall not be entitled to a share of income received by or credited to [SME] on a general or label basis."The filing from Sony also (rightly) mocks the claim that Sony did some "self-dealing" because it has "control" over Spotify and wanted to benefit Spotify. Noting that it holds approximately 6% of the equity in Spotify, it points out how that is a rather small equity position, and not one that gives it any real control.
Sony Music is absolutely right here. 19 signed a contract that handed over control to Sony Music, and Sony Music appears to be living up to that contract exactly. That the contract itself has a bunch of ways in which Sony can screw over the artists isn't Sony breaking the contract. It's the artists and 19 agreeing to a bad contract that they no longer like -- something that all too frequently happens in the recording industry. Sony's actions in its dealings with the artists and with Spotify may be morally questionable on the issue of whether it's really helping artists, but from a legal and contractual standpoint, it's difficult to see how 19's argument has much of a chance in court. It seems likely to get tossed out pretty quickly.
But, the big point remains: in the end it's not the music services that are to blame for small royalty checks to artists. It's the bad deals that artists themselves continue to sign with labels.
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Filed Under: american idol, artists, contracts, labels, royalties
Companies: 19, sony, sony music, spotify
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Seriously? That's the takeaway here? You had me right up until the last couple paragraphs, and then everything went off the rails.
Someone really needs to look up the concept of a "leonine contract" and why they're unacceptable in civilized society.
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I have no clue why artists continue to sign these kinds of deals. 20 years ago you needed a label for distribution. Now (and for the last 15 years) you have not.
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However artists lose the right to complain when they voluntarily sign a contract that screws them.
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I'm not sure artists actually realize what they're signing when they put pen to paper.
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It is completely unacceptable for labels to be able to negotiate others conditions without sufficient counterpush, just like it is unacceptable for governments and companies to do so in trade negotiations!
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Contracts
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Re: Contracts
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So when artists are complaining about streaming services....
According to the graphic the service is already handing over 62.4% of all revenue to compensate creators for the music they stream.
52.4% of which is going to the artists/labels.
Since the ratio of artist to label is about 14.9%, even if the streaming service gave the artists/labels another 20% [leaving the platform with only 0.8%] the artists share would only increase to about 9.78%. Of course the labels portion would balloon to an amazing about 55.82%.
So there you go, in the simple unbiased universal language of math. As most anyone who was paying attention has already been saying, it's not the streaming service that's harming artists, it's their contracts with the labels.
On the other hand, streaming platforms get the artists music in front of many more people than would otherwise get to hear it. This creates new opportunities for an enterprising artist to actually make money than they have previously enjoyed.
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Re: So when artists are complaining about streaming services....
The big green elephant can stop distributing their music if they annoy it, so of course they pretend its not the elephants fault.
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Re: Re: So when artists are complaining about streaming services....
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Spotify pays 70% only to the major labels
Say I'm a musician either on a small indie label or self releasing my own records, there is none of that green triangle for me or indie label, that went only to the majors. All the indies get is the red and the orange.
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sign your contracts in a jurisdiction that protects you?
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Fuck Taylor Swift
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Just that parts where you listen to Taylor Swift.
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Fuck Taylor Swift"
I believe Calvin Harris is already doing this.
Perhaps artists should become shareholders when they sign their contracts. At least in this way the companies are obliged to make some money for them
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That fact should terrify artists and should be the center of their complaint. Not the rates paid by the streaming services.
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(but I don't understand my own industry well enough to blame the right group for my dissatisfaction)
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Re:
Those pirates who spend more on "content" than the average consumer in study after study after study after study? Those pirates?
Boy, I wish I could get "screwed" like that.
Yet you won't read about that on Techdirt.
As a matter of fact, I have. But not in the way you mean.
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Re: Re:
Boy, I wish I could get "screwed" like that.
Do artists make any money on the content those pirates illicitly download? No. Your answer makes no sense. Of course it was voted insightful. It's Techdirt.
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They don't make money from music sales. They don't lose money from music sales.
They don't make money from suing pirates. They pay lawyers a shit-ton to sue pirates.
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Would they have made any money if the pirates had not illicitly downloaded the content?
No.
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Out of the frying pan, into the fire(but now with self-righteous satisfaction as you roast)
Congrats, you waved your magic wand and forced all the pirates to 'go without', guess how much you're making now? Nothing, just like what you were getting from file-sharing before!
(Oh, and your sales just plummeted, something about the pirates who were buying more than non-pirates now not buying as much, but who cares, you stopped piracy!)
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Re: Out of the frying pan, into the fire(but now with self-righteous satisfaction as you roast)
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Re: Re: Out of the frying pan, into the fire(but now with self-righteous satisfaction as you roast)
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Re: Re: Out of the frying pan, into the fire(but now with self-righteous satisfaction as you roast)
Would it kill you guys not to make idiotic arguments that depend on the redefinition of words and basic concepts? It's possible to argue against piracy without constructing a parallel reality from which to do it. The words and definitions in the real world work just fine.
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Re: Re: Out of the frying pan, into the fire(but now with self-righteous satisfaction as you roast)
Really, stop trying to redefine words in your arguments. It's old, and it doesn't work. It's 'file-sharing', or 'piracy' if you want, not stealing. Believe me, despite using the word in an attempt to make an emotional plea, the last thing the studios and labels would want is for file-sharing to actually be legally treated as stealing.
"Oh, you downloaded a movie or CD's worth of songs? Pay a fine well under $100 and you're free to go", rather than "Oh, you downloaded a movie or CD's worth of songs? Either settle for 'only' a couple thousand, or fight it out and potentially face a fine in the hundreds of thousands range."
As for the 'Everything falls apart after that'? No, it really doesn't. Whether piracy is treated as copyright infringement or stealing, the base facts remain the same. Neither the person who 'does without', or the person who pirates, are spending any money on the content at the time, so from a sales perspective both are pretty much indistinguishable from each other, making the 'if you can't pay, then do without, don't pirate' argument a ridiculous one, as neither group is paying.
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Re: Re: Out of the frying pan, into the fire(but now with self-righteous satisfaction as you roast)
Because actual economic theories would disagree, as would the law itself. And even if piracy were somehow considered stealing in economics, terminology alone would not miraculously change reality.
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Re: Re: Out of the frying pan, into the fire(but now with self-righteous satisfaction as you roast)
Absolutely false. In the framework of economics, piracy is the same thing as perfect competition.
And the rule of perfect competition is that the product's price naturally gravitates towards its marginal cost - the cost to make one more copy. In the case of a digital file, the marginal cost is zero.
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Re: Re: Out of the frying pan, into the fire(but now with self-r
AS a song writer, they Shouldn't be allowed to sell so called Music recording software EVER, Music Studio is designed for ONE thing, and ONE thing ONLY, that is to WRECK your work, They should be FORCED to SELL the source code and rights to produce it to someone who will do right thing with it, and NEVER again be Licensed to produce another.
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What a bizarre false dilemma you just threw out there.
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If someone doesn't download something it's called "doing without". It's not going to have an effect on a non-existent purchase for which the label is going to keep in the first place.
Unless you're suggesting that magically, not downloading something results in the artist getting paid...
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That's missing the point (that whether the labels like it or not, simply not consuming their content is a valid option for which they still get nothing). But, it's easier for the ACs to argue semantics in other peoples' comments than address the nuance of reality.
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It's not a false dilemma at all. The original AC was saying that piracy is wrong precisely because rights holders do not make money on the copies that the pirates made.
I'm simply pointing out the fact that they also won't make money on the copies that were never made - the works that were never pirated.
You may certainly believe that piracy is wrong, but it can't be wrong only because rights holders don't get paid. They won't get paid either way.
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It's not like this is that difficult to grasp, but as I'm feeling generous, I'll try and explain.
Say you've got two people, Person A, and Person B.
Person A doesn't download anything, and the only music they have in their collection is stuff that they paid for. They buy perhaps 1 or 2 albums every few months.
Person B downloads fairly often, and they have an extensive collection of music, some paid for, most not. However, they also buy much more music, and tend to pick up 3-4 albums every few months, if not more.
Whether you're looking to maximize sales(current or potential), or increase the number of people listening to your music, people like Person B are much more helpful, even taking their downloading habits into the equation.
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No, it makes perfect sense *(especially if you're honest enough to read the linked studies. Alas...).
Despite your whining, this is not a zero sum game. Your entire industry was predicated for decades on giving away free access in return for higher revenue sales. "Lost" sales on low margin song sales can also translate into higher margin merchandise, concert or other revenue. People also buy music after listening to pirated copies, meaning that although they make no revenue on the free copy, they get revenue on the sale that would never have existed beforehand. And so on...
You should know this by now, yet you play the ignorant fool. I say "play" because nobody's actually this stupid.
"Of course it was voted insightful. It's Techdirt."
Of course. This is a site generally populated by people who have reading comprehension, nuanced thought processes and the ability to consider more than one factor of a situation at once. I apologise if you lack any of these qualities.
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Stop people listening to music for free, in some convenient fashion, and they either find an alternative method of listening to the music before making buying decision, or they simply do not buy music. So while nobody who pirates music buys every track that they pirate, the do find a lot more music that they like, and so they end up buying more music.
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Well, you know, apart from all the articles that do talk about it. Especially those that point out how much piracy tends to go down when services like Spotify are allowed to service the demand, and the multitude of ways of doing business that either make such losses irrelevant or actively leverage them for higher profits than simply selling/streaming a copy of the music can provide.
But, you know what you won't get from an AC around here? Honesty for one, but a simple admission that the major labels they tirelessly defend are part of the problem. Somehow, accepting that both pirates and the labels are causing problems is beyond their simple capacity for thought, so they have to take sides and attack those discussing reality and solutions that don't attack paying customers.
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** that was sarcasm/irony (difficult to properly define in comments **
Actually has there been a case of the source of inspiration suing for royalties ?
How long before someone gets somewhere is now the question ?
Which leaves the last thing - if you can't talk about things, people or events where will the creativity come from ? abstract concepts negative numbers ? hah they can't sue!!!
*copyright the songs i=sqrt(-1);
Lyrics :
NaN
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when the question is "has there been a case of the [someone] suing for royalties?" the answer is yes.
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When a pirate illicitly downloads something, $0 goes to the artist. It's a fact. And it's an uncomfortable fact for the Techdirt Nation. That's why they have to hide any post mentioning it. Pathetic.
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When a pirate doesn't pay the artist though, that's a terrible thing, because they didn't sign a contract that allows them to do so!
Remember, screw someone over with a contract, and it's perfectly fine, and the fault of the fools who didn't expect the person offering the contract to do anything and everything in their power to rob blind the ones signing.
The fault is always, always, to be placed on the one signing the contract, never the one who wrote it, much like you're supposed to blame the one who played the rigged game, rather than the one who rigged it in the first place.
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If you want pathetic, look at someone who feels he has to white knight a bunch of cartel criminals because he thinks he's spotted someone worse. Yet, when faced with a site that discusses how to get rid of pirates and corporate scam artists alike, all he can do is lie about them in order to defend his preferred set of con artists. Now, that's pathetic.
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Because the uncomfortable fact is that money is only lost if the person would otherwise have purchased the product. Since actual evidence implies that those who pirate the most also purchase the most, the most logical conclusion is that, if anything, not pirating is stealing, not the other way around, because those who don't pirate spend less on content!
It's not an uncomfortable fact for anyone who understands basic economics. Ever heard of "advertising?" People generally don't pay for ads, they're given out for free, and companies spend billions producing them specifically to give them out for free. If $0 is going to the person creating the ad, why are they spending so much money creating them?
Oh, right, because ads make money by promoting a scarce good while utilizing a non-scarce good. This is literally Marketing 101. Yet copyright has managed to break this economic fact by trying to convert infinite goods into scarce goods, and then everyone seems to be shocked when people don't follow the rules.
People have been trying to regulate the economy forever, and the most common result is that the people that can influence the regulations get rich at the expense of everyone who can't. That's because economic principles simply don't care about laws other than how those laws try and bend them out of shape.
The sad part is that regulation is necessary for a thriving economy. Once the regulation becomes "beneficial" rather than punitive, however, it tends to shift money to those who are on the benefit side rather than punish those abusing the natural imbalances of the economic system.
And, surprise surprise, that's exactly what we're seeing.
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Majority
45.6% is not a majority, vast or otherwise.
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Depends on what you are talking about.... [Re: Majority]
62.4% of revenue is handed over to compensate creators.
Of that amount 45.6% goes to the labels.
45.6% is more than 50% of 62.4%.
Therefore the vast majority is going to the labels.
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Re: Majority
we are not starting with 100% but 70% which 45% goes to the record labels. 16.8% goes to artists/songwriters
lets make it simple for you.
You have 70$
I take 45$
who has more?
compare 45$ to 16.8$
nearly 3 times more, a "vast" majority
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Re: Majority
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Re: Re: Majority
The article states that a majority of the subscription fees goes to the labels. A majority is more than 50%. Thus, the article is incorrect. The point remains, however, that much more goes to the labels than anywhere else.
The article's point is correct. The wording used to express that point is incorrect.
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So, we go from 100% to 83.3%. 45% is MORE than half of 83.3%. Thus, the labels do get a majority of the money going to the relevant parties.
In fact, artists & song writers, combined, barely get more than the taxes paid. A tenth of a percent more than the taxes. How is that right?
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What about taxes?
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Re: What about taxes?
Yeah, but only a little. And as hard as it is to get major music labels to change, getting Congress to change the tax code in a particular way is probably even harder.
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Re: What about taxes?
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Re: What about taxes?
Oh wait.... I think someone did.
-------------------------------------------------------
Once upon a time there was a river that was flooding the village. A brave pilot brought his single barge to the shore to rescue the people.
A wealthy man brought 100 pieces of luggage with him, trunks and suitcases, and baskets of knickknacks.
The pilot had 5 drums of fuel.
The towns people, some with only a single bag of all their worldly belongings, most with nothing tried to escape the rising water.
All but two towns people manage to get on board the barge.
As the water rises, the remaining people wail and gnash their teeth screaming at the pilot for wasting too much room with all that fuel If only the pilot wasn't so greedy, they too could be saved.
Other people, take up the call and start berating the greedy selfish pilot.
Meanwhile the wealthy man raises his voice to add;
And the people say amongst themselves;
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Re: What about taxes?
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Getting out of a contract
lining up to break those contracts ?
I am sure some here will be unsympathetic to artists gullible enough to think that THEIR experience
would be different but contracts being one sided are usually labeled "scams" or "confidence schemes"
which we mostly agree should be treated as crimes.
So, where are the lawyers ?
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Re: Getting out of a contract
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Re: Getting out of a contract
As for why do they sign? Because most of them don't know how bad the contracts they're signing are, until it's far too late. Even then, some of them are too stupid to realize just who it is screwing them over, and rather than blaming their labels, they'll lash out at everything else, like streaming services for 'not paying enough'.
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Re: Getting out of a contract
Working for the people who can afford to pay them a huge sum rather than those who don't yet have anything.
Who do you think writes those one-sided contracts?
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Re: Getting out of a contract
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Re: Getting out of a contract
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Well...
Well, take a look at the typical size of the legal department of a record label, and at the typical size of the legal department of a musician.
Then take a look at the number of recording associations offering contracts, and the number of musicians taking them, and the options for either to just go elsewhere.
Now guess who gets to say "ok, the deal is either this or none" more often.
In short, that is one setup where leaving the free market to sort things out is not likely to result in balanced results.
Letting things run free without outside oversight or regulation is not going to end up in fair dealings, period.
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Re: Well...
That's the point, artists actually have those options now.
Of course, there are compromises. If I sell widgets, maybe I can sell them online, one at a time, for $10 each. Or I can sign a contract with Walmart, who can sell a million of 'em, as long as I can supply them at 89 cents each. Business is full of hard choices.
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Music Labels
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This is exactly why
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Is that a 3D pie chart?
There is nothing wrong with a flat, 2D pie chart. Unless you're one of those people who thinks people can't accurately judge angles.
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Re: Is that a 3D pie chart?
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Re: Is that a 3D pie chart?
I'd be fairly shocked if someone thought: "Man, I was convinced that the 45.6% going to labels was bad, but then I realized it was a 3D pie chart and that the 45.6% actually looked closer to 46.7% compared to the rest, so my conclusion is now totally different!"
Yeah, right.
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no
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hi
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