US Court Brings Back Price Fixing Lawsuit Against Major Record Labels

from the all-priced-the-same? dept

For many years, we've wondered why the major labels haven't gotten in trouble for what appears to be clear price fixing -- having all of the major labels band together to both demand identical wholesale pricing and attempt to dictate retail pricing by partners as well. There have been various investigations by both local and federal officials, along with a few lawsuits -- but nothing has really gone very far. One lawsuit was tossed out by the district court back in 2008, but in a surprising move, the 2nd circuit appeals court has revived the lawsuit, claiming that the evidence is "sufficient to plausibly suggest" price fixing by the major labels with regards to digital music. So now it goes back to the lower court. I still doubt this will really have much of an impact, but it's nice to see some recognition of what's seemed pretty obvious for quite some time.

Filed Under: antitrust, price fixing, record labels
Companies: emi, sony music, time warner, universal music, vivendi, warner music group

As Warner Music Collapses, Its Two Top Execs Got Paid $14 Million

from the how-about-those-artists? dept

It's beginning to appear that some of the major labels' strategy for dealing with the changing structure of the music business -- in which overall money is up, but has shifted away from the record labels' bank accounts -- is to simply bleed the old market dry. How else to explain that as Warner Music continued to shrink and fail to respond to market changes in any reasonable manner, its two top executives took home $14 million last year. I guess you could argue that WMG's stock was up slightly (from deathly ill to just really really sickly -- but way, way down from just a couple years ago) over the year, but the company lost a tremendous amount of money each quarter this year (last quarter still hasn't been reported), and Warner Music has shown little outward effort to suggest it's adapted or has any idea how to adapt to the changing market.

Filed Under: record labels, salaries
Companies: warner music group

Major Labels Accused Of $6 Billion Worth Of Copyright Infringement In Canada

from the oops dept

The major labels and their friends like to throw around huge numbers of "damages" when it comes to copyright infringement. But how about when they're on the receiving end of a copyright infringement lawsuit. Up in Canada, there's a class action lawsuit against the Canadian divisions of all of the major record labels, suggesting that the labels have infringed on the copyrights of artists to the tune of $6 billion (Updated: the original math was off, it's actually $6 billion, not $60). As Michael Geist explains:

The claims arise from a longstanding practice of the recording industry in Canada, described in the lawsuit as "exploit now, pay later if at all." It involves the use of works that are often included in compilation CDs (ie. the top dance tracks of 2009) or live recordings. The record labels create, press, distribute, and sell the CDs, but do not obtain the necessary copyright licences.

Instead, the names of the songs on the CDs are placed on a "pending list", which signifies that approval and payment is pending. The pending list dates back to the late 1980s, when Canada changed its copyright law by replacing a compulsory licence with the need for specific authorization for each use. It is perhaps better characterized as a copyright infringement admission list, however, since for each use of the work, the record label openly admits that it has not obtained copyright permission and not paid any royalty or fee.

Over the years, the size of the pending list has grown dramatically, now containing over 300,000 songs. From Beyonce to Bruce Springsteen, the artists waiting for payment are far from obscure, as thousands of Canadian and foreign artists have seen their copyrights used without permission and payment.

And yet, amazingly, the record labels -- these "strong defenders" of the importance of copyright and paying for every use -- somehow have decided that it makes no sense to pay this bill. The list itself details about $50 million in unpaid royalties that are owed, often to well known musicians who it would be quite easy for the industry to find and pay up. As for the $6 billion number? Well, the class action lawsuit that's been filed seeks statutory damages starting at $20,000 per infringement and going up from there. Given that these same record labels have been defending those same (or, similar, in the US, at least) statutory rates for infringement, you have to wonder how they can realistically claim that those statutory rates shouldn't apply to themselves as well.

Once again, though, we're seeing what's really happening. The record labels are copyright defenders only when they profit unfairly from it. When they can screw over others via ignoring copyright, they have no problem doing so.

Filed Under: canada, copyright, music, record labels
Companies: emi, sony music, universal music, warner music group

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.

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!

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.

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?

Filed Under: accounting, david bach, royalties, tim quirk
Companies: warner music group

Warner Music's Royalty Statements: Works Of Fiction

from the too-much-joy dept

For years we've all heard the stories about how bad the major labels are at accounting for royalties they owe bands. There have certainly been a large number of lawsuits from artists claiming that this rather opaque accounting system is used to hide money from musicians, with various multi-platinum selling musicians claiming they never saw a dime of royalties from their albums, thanks to major label accounting. This is, of course, rather amazing in this day and age where technology allows for amazingly accurate accounting practices -- even for massively complex operations. But, then again, these are the major labels we're talking about, and they're often proud of their technical cluelessness.

Still, it's quite interesting to see a blog post, sent in by Quentin Hartman and written by the singer for the band Too Much Joy, Tim Quirk. Quirk is in an interesting position. Having been a moderately successful major label artist who is now an executive at digital music company Rhapsody, he's seen different sides of the business -- and in his must-read blog post, he details the absolute fiction that is a royalty statement from Warner Music Group -- leading to the flat-out false claim that Too Much Joy earned a grand total of $62.47 in digital royalties over five years across their three Warner albums. You really should read the whole thing, as it's quite detailed about how the major labels view most bands on their roster.

Back to my ridiculous Warner Bros. statement. As I flipped through its ten pages (seriously, it took ten pages to detail the $62.47 of income), I realized that Warner wasn't being evil, just careless and unconcerned -- an impression I confirmed a few days later when I spoke to a guy in their Royalties and Licensing department I am going to call Danny.

I asked Danny why there were no royalties at all listed from iTunes, and he said, "Huh. There are no domestic downloads on here at all. Only streams. And it has international downloads, but no international streams. I have no idea why." I asked Danny why the statement only seemed to list tracks from two of the three albums Warner had released -- an entire album was missing. He said they could only report back what the digital services had provided to them, and the services must not have reported any activity for those other songs. When I suggested that seemed unlikely -- that having every track from two albums listed by over a dozen different services, but zero tracks from a third album listed by any seemed more like an error on Warner's side, he said he'd look into it. As I asked more questions (Why do we get paid 50% of the income from all the tracks on one album, but only 35.7143% of the income from all the tracks on another? Why did 29 plays of a track on the late, lamented MusicMatch earn a total of 63 cents when 1,016 plays of the exact same track on MySpace earned only 23 cents?) he eventually got to the heart of the matter: :"We don't normally do this for unrecouped bands," he said. "But, I was told you'd asked."

As you hopefully know, with a major record label, the band gets an advance to record the album. From then on, the label no longer pays the band anything. Even though the band accrues royalties on albums sold, those royalties simply go towards repaying the advance. Most label bands never fully repay the advance, and are thus considered "unrecouped." This does not mean (as record label defenders will claim) that such bands were money losers for the label. The labels still take their own hefty cut from any album sales. They just also hang onto the tiny fraction of album sales that are officially designated for the actual musicians.

Basically, what Quirk notes, is that whether through malice or indifference (or a combination of both), the general major label attitude towards "unrecouped" bands is that the accounting is meaningless, so they don't even bother. That means they make massive mistakes -- such as the time Warner just happened to make a $10,000 mistake in Warner's favor, and then mocked Quirk for even caring about such a measly sum.

Now, when it came to digital revenue, for most artists, Warner apparently doesn't even bother to tell artists what their digital royalties are. They're unrecouped, so it doesn't matter in the minds of Warner execs. Quirk, by nature of also being an industry exec was able to (thanks to a chance meeting at a conference and 13 months of waiting) get Warner to agree to detail his digital earnings. But, because the band is unlikely to pay off the nearly $400,000 in "unrecouped" advance money, basically Warner did a slipshod job of it all. What this tells you is that Warner either has no serious accounting system to track this sort of thing or has mastered the art of obfuscating everything and purposely acting like their accounting department is run by six-year-olds. I'm not sure which is scarier.

Now, Quirk is reasonably clear that he's just as likely to attribute all of this to a combination of indifference and incompetence than to malice -- and there's nothing to indicate otherwise. But, you do have to ask how seriously anyone can take any of the ridiculous numbers that Warner Music Group or the RIAA toss around concerning the music industry and "losses" due to "piracy" and such, when it can't even put together an accounting system that can track (let alone accurately count) the most basic information that it is contractually obligated to both track and report. It also should highlight, for any bands who still actually think signing a major record label contract makes sense, how little regard major labels like Warner Music Group actually have for most of the artists on their label. As Quirk notes in discussing the $10,000 error:

When I caught this mistake, and brought it to the attention of someone with the power to correct it, he wasn't just befuddled by my anger -- he laughed at it. "$10,000 is nothing!" he chuckled.

If you're like most people -- especially people in unrecouped bands -- "nothing" is not a word you ever use in conjunction with a figure like "$10,000," but he seemed oblivious to that. "It's a rounding error. It happens all the time. Why are you so worked up?"

So, perhaps, the next time that Warner Music claims that it deserves $22,500 for a "pirated" song, someone will point out that according to Warner Music's own accountants, such numbers are really just a "rounding error" and there's no need to pay them. Somehow, I get the feeling that Warner Music will take a different view on such numbers about then.

Filed Under: business models, music, royalties, tim quirk, too much joy
Companies: warner music group

Entertainment Industry: Yes, Please Keep Negotiating Secret Copyright Treaty To Save Our Asses

from the yeah,-that's-convincing dept

Sherwin Siy (one of the few people who actually was allowed to glance briefly at parts of the proposed ACTA treaty, though under strict NDA) has written about yet another letter sent by the entertainment industry to the government in support of ACTA. This letter includes pretty much everyone who benefits from abusing copyright laws and is afraid of the internet:

Advertising Photographers of America
American Association of Independent Music (A2IM)
American Federation of Television and Radio Artists (AFTRA)
American Society of Composers, Authors and Publishers (ASCAP)
American Society of Media Photographers, Inc. (ASMP)
Association of American Publishers (AAP)
Broadcast Music, Inc (BMI)
Commercial Photographers International
Directors Guild of America (DGA)
Evidence Photographers International Council
Independent Film and Television Alliance (IFTA)
International Alliance of Theatrical Stage Employees (IATSE)
Motion Picture Association of America, Inc. (MPAA)
National Music Publishers Association (NMPA)
NBC Universal
News Corporation
Picture Archive Council of America (PACA)
Professional Photographers of America (PPA)
Recording Industry Association of America (RIAA)
Reed Elsevier Inc.
Society of Sport & Event Photographers
Software & Information Industry Association (SIIA)
Stock Artists Alliance
Student Photographic Society
The Advertising Photographers of America
The Walt Disney Company
Time Warner, Inc.
Universal Music Group
Viacom Inc.
Warner Music Group

Funny... isn't it, that all these companies and industry groups are supporting a deal that no one's seen yet? Oh wait... that's because many of them have seen it and actually have had a hand in creating it. But what's really damning is that no where in the letter do they explain why this is actually needed or how it will do anything valuable. Instead, it's a pure faith-based letter saying "if you pass this secret treaty, good things will happen." I don't know about you, but generally, I prefer there to be actual proof and evidence that restricting consumer rights around the world actually leads to some sort of real benefit.

Tellingly, they don't respond to any of the points we raised earlier. This is not a treaty to help people or the economy. It's a deal to try to sneak through a system for propping up an obsolete business model by companies who don't want to adapt.

Filed Under: acta, copyright, counterfeiting, evidence, lobbyists, secrecy
Companies: a2im, aap, aftra, ascap, asmp, bmi, disney, gda, iatse, ifta, mpaa, nbc universal, news corp., nmpa, paca, ppa, reed elsevier, riaa, siia, time warner, viacom, warner music group

Update On Choruss: Universities Not Talking, Mysterious 10,000 Students Still Nowhere To Be Found

from the still-waiting... dept

We've been pretty big critics of the music tax concept, that was being pushed by Jim Griffin's Choruss along with Warner Music (who had hired Griffin to create this program). Of course, we've only been able to criticize what bits and pieces have leaked out from those who have seen Griffin's presentations. That's because, despite a busy conference schedule, Griffin never seems to publicly describe what Choruss really is. So, every time we hear some new info about Choruss, and explain why it's bad, we get angry emails from Griffin calling me all sorts of insulting names, and insisting that I've mischaracterized Choruss. So, we ask for more details, and we don't get them. Instead, we're given amorphous descriptions about how it's "an experiment." But what is the experiment? Well, it will be lots of things. As soon as we narrow in on an example, however, and explain why it's bad, we're attacked because the plan might not include that particular example. But we haven't yet heard an example that makes sense.

Griffin had agreed (as part of an angry email) to answer questions from the Techdirt community, and we obliged by sending him a long list of questions. Griffin had some personal issues to deal with over the summer, which was totally understandable, but we still haven't heard any answers. I'm beginning to wonder if we ever will.

But the biggest question I had was if he could explain who the "tens of thousands" of students were who Griffin told a conference in June would be using Choruss this fall semester. It seemed odd to find out that so many students had signed up for something when we still weren't being told what it was. As the fall semester started, we asked to hear from students who were using Choruss, and got silence -- which seemed odd. Apparently, it's because those tens of thousands of students hadn't signed up for the fall.

However, as a bunch of you have sent in, now the claim is that six college campuses will be testing Choruss this spring semester, but Griffin won't say who they are and the campuses won't admit to participating. They claim that they're afraid of backlash from folks like us -- but that makes me wonder. If the concept is so good, why not stand up and defend yourself for being a part of the program? If you can't defend the reasons for testing the program, it makes me wonder why you're doing it in the first place.

The article at the Chronicle of Higher Education provides a few new details that don't sound particularly appealing. Rather than (as some had suggested earlier, but since Griffin never made it clear, we just don't know if this was ever true) a system that would let students share files freely under some sort of blanket license, it sounds like "yet another limited music service." It will allow unlimited downloads, but you have to use the Choruss service (again, perhaps the article is wrong, but that's what it says). Similar services have been tried on various campuses and failed, so we're curious to hear what's so special about Choruss that will be different.

It still seems like Choruss is trying to solve a problem that doesn't exist. We're seeing more and more smart musicians put in place business models that work. They work in a way that lets fans choose to send money to the artists they want to support directly, without a big middleman. Choruss appears (from all we've heard) to be an attempt to set up a big middleman that will take big chunks of money and then use some magical process to figure out how to dole it out. But why do we need that overhead? The market is figuring stuff out. It doesn't need another middleman.

Filed Under: jim griffin, music, music tax, universities
Companies: choruss, warner music group

Post Script On Edwyn Collins: Power Of The Press Gets His Music On MySpace For Free

from the no-thanks-to-warner-music dept

A few weeks back, we were one of the first publications to highlight how singer Edwyn Collins was unable to put his own hit song on MySpace for free download (as he wanted to do) because Warner Music claimed copyright over it -- even though it had no such copyright. Despite quite an effort by Collins' manager/wife, Grace Maxwell, nothing was changing. However, the story started to spread, including making it into some major media properties, such as the BBC and The Guardian... and whaddaya know, suddenly everything gets fixed. Mesanna writes in to let us know of an update post from Maxwell, where she points out that the power of the press seemed to finally accomplish what simple reasoning with both MySpace and Warner Music could not:

However, whaddaya know? After 30 odd fruitless emails, A Girl Like You is now available in full on the myspace player! So, todays lesson is simple:

THE MOST POWERFUL DEPARTMENT IN ANY ORGANISATION IS THE PRESS OFFICE.
The whole sad world runs scared of bad publicity, especially from a righteous source like Edwyn Collins.

While Maxwell says it's not worth the ridiculous effort it would take to sue Warner Music or any other major label claiming copyright over Collins' songs, she's more than willing to help out in other cases against them:

Warner Music Group has no connection with Edwyn whatsoever and yet they are still corporately arrogant enough to steal Edwyn's copyright and God knows what else from others. A guy from myspace advised me to treat their copyright department with kid gloves if I wanted a result. It didn't work. If the shoe was on the other foot they'd have been down on us like a ton of bricks. The next time a major tries to take ANYONE to court for copyright infringment, I'm volunteering my services as a witness for the defense.

Filed Under: edwyn collins, music
Companies: myspace, warner music group

Edwyn Collins Can't Give Away His Music Thanks To MySpace, Warner Music

from the thanks-guys dept

Mesanna alerts us to a blog post from the wife/manager of pop singer Edwyn Collins discussing the hellish experience she's gone through trying to offer up Collins' most famous song, A Girl Like You, on MySpace. Collins owns the copyright and wants the music to be freely downloadable by anyone, but Warner Music claimed that it owns the copyright, even though it does not:

At the beginning of this year I noticed that Edwyn's myspace had gone bit wonky and I tried to upload the tracks back on to the music player. His most famous track, which he owns the copyright in, as he does for most of the music he's recorded in his life (preferring to go it alone than have his music trapped "in perpetuity" to use the contract language of the major record company) is called A Girl Like You. It's quite famous. Lo and behold, it would not upload, I was told Edwyn was attempting to breach a copyright and he was sent to the Orwellian myspace copyright re-education page. Quite chilling, actually. I naturally blew my stack and wrote to myspace on his behalf demanding to know who the hell was claiming copyright of Edwyn's track? Which, incidentally, he always made freely available for download on myspace, something which amazed his followers. Eventually, after HUGE difficulty, I was told Warner Music Group were claiming it. I found a nice lawyer guy at Warners, very apologetic, promised to get it sorted, but all these months later it isn't. That is because Myspace are not equipped to deal with the notion that anyone other than a major can claim a copyright. Warner's were one of the lead petitioners in the attempt to put those three stoner lads in Sweden in prison recently, remember.

Meanwhile, the song which Collins wants to give away, but cannot, is being sold all over the internet... but not by Collins. Instead, it's by major labels who have no right to do so, according to Collins' manager:

A Girl Like You is available FOR SALE all over the internet. Not by Edwyn, by all sorts of respectable major labels whose licence to sell it ran out years ago and who do not account to him. Attempting to make them cease and desist would use up the rest of my life. Because this is what they do and what they've always done.

Wait... major labels... selling a song they don't have the right to, and not giving any of the money back to the artist? That seems a hell of a lot worse than just sharing a song for non-commercial reasons, doesn't it?

Meanwhile, Collins has no problem with the sharing of bootlegs:

Andrew Loog Oldham said that getting ripped off (by the industry) was your entrance fee to the music business of the sixties, so get over it. He's right and things have not changed. We are very over it, but nonetheless aware of who the biggest bootleggers around are. It's not the filesharers. Personally, we've always loved bootlegs. Even when Edwyn was really skint at the fag end of the eighties, I remember being in Camden market and seeing some tapes of a couple of his shows on sale. I tried to buy them but the stallholder somehow knew who I was and said "free to the management." I failed to see how that guy selling tapes of Edwyn or even U2 or anybody on the list of signatories above could harm their career.

And... then at the end, she's got a nice little message for the Featured Artist Coalition and its silly petition to try to stop file sharing:

The gig's up. You might as well take a position about when you want the sun to come up in the morning. It's over. Now let's get on with working out a wonderful new way for music lovers to enjoy music for free or for a small subscription that makes it legal and easy to hear ANYTHING and allows the artist to reap the rewards of such freedom of access. Viva la revolucion!

Filed Under: bootleg, copyright, edwyn collins, free, music
Companies: myspace, warner music group

Only Took 9 Months, But Warner Music Videos Finally Back On YouTube

from the how-big-were-the-losses? dept

You may recall last December that a spat over how much Google would pay Warner Music for hosting its videos (for free, mind you) created a situation whereby Warner Music videos were taken off the site (there are conflicting stories over who actually made the call to take the videos down). The end result of this was basically bad for everyone -- and even Warner's own musicians got pretty pissed off at Warner -- especially as they saw other musicians use YouTube to grow their audience. It only took nine months, but it looks like Warner Music and YouTube have finally worked out a deal to allow the videos back online. You have to wonder how much harm this did to Warner artists, and to the label itself. I'd argue that the failure to leverage a rather useful promotional platform to connect with audiences was likely to have been much greater than any "harm" done from file sharing.

Filed Under: copyright, music, videos
Companies: google, warner music group, youtube