Kenny Rogers' Lawsuit Shows The Many Ways That A Major Label Screws Artists (Even The Big Ones)

from the here-we-go-again dept

We've seen this many times before, where famous musicians are totally screwed over by the major labels. A bunch of folks have sent over a summary of Kenny Rogers' lawsuit against Capitol Records (EMI), which highlights the levels to which Capitol Records went to not pay Rogers. The central facet of the lawsuit is similar to that of lawsuits that a number of artists have been filing, concerning whether or not iTunes transactions are sales or licenses -- for which massively different royalty rates apply.

However, there's plenty of other crazy things in the lawsuit, most of which involve an "audit" that Rogers requested from Capitol in April 2007... and which took until March 2009 to complete. Yes, it took two years. For a basic audit just to make sure he was getting the money he was owed. Oh, and the audit showed that he was not getting the money owed. From there, things got worse... with all sorts of stalling and foot dragging, finally resulting in the lawsuit. That stalling included repeated promises to resolve the problems and pay up. Rogers was told at times that the company was "still ironing out a few things," and then later found out that the people he'd been negotiating with were no longer at the company -- replaced by a lawyer who just told Rogers that he would be happy to work with Rogers to "promptly try to resolve the Rogers audit" -- nearly two years after the audit was completed and four years after it was requested.

Among the problems in the audit are a bunch of unprocessed royalties that were put into a "suspense" file for no reason. These kept $76,956 from Rogers. There were also actions in foreign territories where Capitol appears to have ignored the royalties it's supposed to pay Rogers. There were also things as simple as just not reporting royalties on money from record club sales. The company is also accused of playing some tax games to double count taxes to avoid paying royalties. There's also the fact that Capitol charged Rogers the full amount for a video production to his own expenses (i.e., money they'd "recoup" out of his portion of royalties), but they ignored their own contractual agreement that only 50% could be expensed that way.

Then there's the fact that Rogers wants his cut from the money Capitol has received in various lawsuits -- those against Napster, Kazaa, AudioGalaxy, Grokster, BearShare and others. As we've noted in the past, the labels have bent over backwards to avoid paying out such money to the actual artists -- but Rogers wants his piece:

Such lawsuits have resulted in Capitol Records receiving monies from entities such as Napster, Kazaa, Audiogalaxy, Grokster, BearShare, and others. Capitol Records has refused to provide Kenny Rogers with an accounting regarding the amounts actually received. A portion of the monies received by Capitol Records is attributable to the Masters and Kenny Rogers is entitled to that portion of Capitol Records‟ receipts. Capitol Records‟ refusal to account to and pay that money to Kenny Rogers has resulted in Kenny Rogers suffering direct financial harm in an amount that cannot be determined until Capitol Records provides a full, fair, and accurate accounting.

There are a few other charges as well, but those are the big ones. None of this, of course, is to say that it's "ok" to infringe because the major labels are somehow "bad." But it does show just how ridiculous it is if anyone assumes the majors represent the best interests of artists in any way.

Filed Under: copyright, kenny rogers, lawsuits, record labels
Companies: capitol records, emi

Katy Perry Shows How The Problem With The Major Labels Is Economics, Not Piracy

from the there's-a-lot-of-inefficiency dept

A few weeks back, the folks at Planet Money tried to break down the economics of Katy Perry's massively successful album with its five hit singles. Specifically, they wanted to figure out how much money her label made from such a big success. What comes out is a step-by-step description of the massive inefficiencies of the major label recording system. There are things like paying producers $100,000 per song they produce on the album. Then there's all the payola... er "special promotions" to get the songs played on radio so much. In the end, Planet Money calculates that Perry's label, EMI, probably made somewhere around $8 million in profit from Perry's music sales in the US. That's not topline revenue, but bottomline profit. That's not bad per se, but for an album with five hit singles and which was clearly one of the most successful albums in 2011, you begin to see why the labels are struggling.

But, of course, Perry, herself isn't struggling. As the full podcast by Planet Money notes, Perry has been able to avoid getting sucked into a "360" deal where the label gets to take some of all the revenue she earns. They just get the record sales. Perry, in the meantime, is estimated to have made $44 million in 2011 -- a large chunk of that coming from her tour, which alone grossed over $50 million.

What you begin to realize as you see more and more stories like this is, once again, the "problem" has nothing to do with the "music industry" failing... or even that musicians aren't able to make money any more. It's all about the bad economics of the record labels. They set themselves up to fail this way, focusing solely on that one slice of the pie, and not moving very quickly to adapt when the market shifts. Instead, they seem to have kept up the inefficiencies associated with making such a "hit" album, without figuring out a way to profit from the results. Of course, for artists like Perry, things are great. She's able to make a ton of money, most of which doesn't first have to filter through the label...

Filed Under: deals, katy perry, record labels, revenue, touring
Companies: emi

Insane Entitlement: EMI Sues Irish Gov't For Not Passing SOPA-Like Censorship Law

from the wowzers dept

The sense of entitlement exhibited by the legacy players in the entertainment industry is now reaching positively insane levels -- highlighted by the news that major record label EMI (in the process of being acquired by Universal Music to make it the largest record label by far) is suing the Irish government because it feels the Irish government is taking too long to pass a SOPA-like law that would require ISPs to censor the internet and block access to sites it doesn't like. I'm not kidding. Apparently, because the legislative process is too slow, it feels the need to sue.

In another article on the lawsuit, EMI Ireland's CEO complains that the length of time it's taking the government to craft such a censorship bill is "leading me to believe it’s unlikely to satisfy the music industry’s requirement for injunctive relief."

Think about that for a second. The major record labels have such an insane sense of entitlement, they think that any bill they declare that they "require" must become law, or they can sue the government. More specifically, EMI is effectively confessing here that it's upset that the government isn't sharing the bill ahead of time with EMI or others in the industry. Again, the massive sense of entitlement of these guys is such that they expect that they get to write the laws, and when they're left out of the process, they get to sue over it. And yet, on every one of these laws, the people actually impacted by them -- the public -- get no real say or can't see them. Remember ACTA? The public was left totally in the dark, while RIAA/MPAA officials and others had pretty detailed access and the ability to help craft the bills. And yet, when EMI doesn't get to see a draft of a bill, and it makes them think that it won't go the way they want, they sue? Damn.

Filed Under: blocking, copyright, entitlement, injunctions, ireland, pipa, protect ip, record labels, sopa
Companies: emi, riaa

Wayne Coyne Of The Flaming Lips On Twitter, Pirate Sites, Coldplay v. Spotify And How To Use 'All Technologies' To Reach Your Fans

from the knocking-down-barriers-faster-than-the-gatekeepers-can-set-them-up dept

Rose M. Welch sends in this brief interview with Flaming Lips lead singer Wayne Coyne, which touches on a lot of the band's recent activities, including its use of social media like Twitter to stay connected with its fan base.

Coyne himself is prolific user and has nearly 75,000 followers. Add The Lips' 560,000 more, and you've got a potent medium for getting the word out, right now, about the band's many new projects.

And the band has several new projects. In addition to a recent Parking Lot Experiment (where Coyne got 30 people together to play 30 different Flaming Lips songs from 30 different cars), the Lips have also cranked out a 6-hour song and a 24-hour (!) song, the latter of which is available embedded in a skull(!!).

As tireless and prolific as the Lips are, it's tough for anyone to keep up with them, whether it's the internet itself or their record label, Warner Brothers. In fact, the world's biggest distributor of digital music isn't responsive enough for Coyne:

iTunes is a bit formal and slow and wonderful, but still seems based on release dates and albums. We've moved into an area where there is actually no outlet other than our Web sites and a lot of pirate download sites where a portion of our audience will have fun and get easy access to our spontaneous output. I announce something on Twitter for a week, and sometimes it generates quite a bit of interest. We have done some of our recent recordings, tweeted about them, and a week later, it is out in the world. That's still hard or impossible to do on a giant record label.

I'm sure many of you caught Coyne referring to a legitimate use of a "pirate" site as a convenient distribution point. I'll just leave that hanging in the air for SOPA-boxers.

Coyne also has a rather blunt but interesting take on Coldplay's recent decision to withhold their new album from Spotify:

It seems like a bad idea. Maybe they need more cash?

Coyne would rather take advantage of "all technologies" to get the Lips' music to their listeners:

Our philosophy is that we love our fans and we realize that having our music available virtually for free allows some of our audience that doesn't have much money to still hear it. We've found that a lot of people will listen to it for free and still buy it.

The interview ends with Coyne stating that he doesn't think major labels have much to offer a band like the Flaming Lips but believes that, like the irrepressible optimist he obviously is, the labels will come up with something in the future. After all, "they're smart."

It's tough to scan that last statement for any traces of sarcasm, seeing as this was an IM interview, but Coyne seems good natured enough to actually mean it. If the labels are smart, they'll give more of their artists free reign to come up with innovations and solutions of their own, even if that means distributing their music through "rogue sites" or via a four-disc album that's meant to be played on four different stereos simultaneously(!!!).

Filed Under: connect with fans, flaming lips, record labels, sharing, wayne coyne

And Then There Were Three: Bye, Bye EMI

from the another-one-bites-the-dust dept

The major labels have been dropping one by one. Of course, they never "die out" completely... they just get weak enough until someone buys someone else. The Big Six became the Big Five when Universal took over Polygram. The Big Five became the Big Four when Sony (formerly CBS Records) and BMG effectively merged. And, now we're down to the Big Three as Universal and Sony pick off the remains of EMI. This was pretty much a foregone conclusion that there would be some sort of merger, when Citibank took over EMI after EMI defaulted on its debt obligations. Universal is picking up the music division for $1.9 billion while Sony gets the publishing side for $2.2 billion. Universal was already the world's largest record label, so adding the likes of the Beatles, Coldplay and Katy Perry to its roster must be appealing. Of course, there's some concern among regulators that this raises antitrust questions, but I really don't see the issue here. Universal Music has been self-imploding by failing to adapt. I don't see how merging it with EMI will do much other than to allow it to continue to be a nuisance and continue to not understand how to embrace the internet. Besides, spending $1.9 billion for more back catalog, rather than investing that kind of money into actually adapting? If anything, this simply accelerates the decline of these labels.

Filed Under: major labels, mergers, record labels
Companies: citigroup, emi, sony, universal music group

Toughest Job In All Of Showbiz? Trying To Teach Major Record Labels How To Adapt

from the great-way-to-get-fired dept

Want to know what the toughest gig in show business might be? Perhaps it's teaching the major record labels how to adapt to new technologies from within. Digital Music News has a list of 34 former execs at the various major labels, whose role it was to help get those companies up to speed on new technologies and new media -- all of which were "pushed, fired, or otherwise jumped ship over just the past few years." While the stories behind what happened to the different individuals may be different, from those on the list who I'm familiar with, there's a common refrain: the label they worked for had no real interest in embracing what the technology allowed. They hired these execs because they thought that just hiring such people would fix their problems, but then they generally didn't like what they were hearing... which is why they all ended up moving on.

Filed Under: adapt, digital, execs, music, new media, record labels

Cocaine Ring Used Universal Music's Interscope Label To Ship Drugs & Cash

from the drugs-and-music dept

It's no secret that there was a close connection between major record labels and drugs in the past -- but people keep insisting that's all ancient history these days. So it's interesting to find out, via a federal prosecution of a cocaine ring, the news that the effort apparently hid the shipping of cash and cocaine around the country by using concert "road cases" and shipping them to and from Interscope Records' offices. Interscope, of course, is a Universal Music sub-label, which is home to the likes of Eminem and Lady Gaga.

Department of Justice prosecutors this week provided defense lawyers with shipping records detailing “pickups and deliveries” made at Interscope’s Los Angeles office by a cargo firm that was used to transport the music cases, which were alternately stuffed with kilos of cocaine and upwards of $1 million in cash.

Perhaps, rather than worrying so much about the impact of "piracy," the folks at Universal Music should be paying attention to the drug dealing happening via its own offices. Just saying.

Filed Under: drugs, record labels
Companies: interscope, universal music

EMI Doesn't Pay Royalties, Or It Does, But To The Wrong People, Or It Doesn't, Or Maybe It Does...

from the ah,-major-labels dept

A few years ago, we wrote about Tim Quirk's struggle to get Warner Music to actually provide any sort of accounting for the money earned by his band, Too Much Joy. There have been a few similar stories over the years, and what you begin to realize is that it appears the major labels basically don't even track this stuff. They seem to assume most bands just won't recoup, and so they never have to provide any accounting to them at all (and just keep the money for themselves). From what I've heard, if a band is truly successful and keeps bugging the label, eventually they'll put together something approximating an accounting of what's been earned. Who knows how accurate these statements are.

Of course, sometimes these stories go from just wacky to downright insane. Hans Ridder points us to the story of Bill Nelson, of the band Be-Bop Deluxe, and the rather ridiculous situation he went through over the years. The actual story is about a decade old, but got some renewed attention earlier this year when a bunch of blogs reposted it. We just came across it when Ridder sent it in, and wanted to post it here because it really shows how these labels treat some of their artists -- never giving any actual accounting, always slow to reply with any details, always denying that anything's been recouped. The fact that they then started changing their story and claimed they actually gave the money to the wrong people -- then denied that, then again said that was the case later -- is only an added dimension to the insanity.

The story began with Nelson asking EMI repeatedly for an accounting of what had been earned for Be-Bop Deluxe, and either getting no answer at all or (after asking many times over) being told that the band had "not recouped." There was never any evidence presented for this. The label kept reissuing works, and even contacted him to work on some of them. In one case, they told him that if he helped work on a "best of" offering, that would tip the account over, and he'd start receiving royalties. Of course, that never happened. Yet EMI came back again to ask him to work on a box set, and he asked again. And that's when things got bizarre:

Over a period of two years, a very strange story emerged. The first communication the lawyers received from EMI said that they HAD, in fact, been paying royalties...to 'the band.' My response to the lawyers was..., "Ask them which band," as I certainly had not received any royalty payments from the record company. After a long time and further prompting from the lawyers, EMI said that they actually had been making royalty payments to Nick Dew, Ian Parkin and Rob Bryan. The amazing thing about this is that these three people were NOT on any of the Be Bop Deluxe albums except the very first one, 'Axe Victim.' All the other albums were recorded with different musicians, (Charlie Tumahai, Simon Fox and Andy Clarke), under a different contractual set-up. It seemed that the first line-up, who only ever recorded the ONE album, had been receiving royalty payments from EMI for ALL Be Bop recordings, including re-issues... Recordings in which they had taken NO part, either as performers or otherwise. The really damning thing about this is that none of the original members of the band ever spoke up about it and said, "hang on a minute, I'm getting money here for music I didn't even make!" (It would be evident from the royalty statements they received that the payments were for various albums from the Be Bop catalogue, and not just the 'Axe Victim' album.) Record company cock-up aside, what does this say about people you once regarded as your friends?

Anyway, after I had explained to the lawyers, via Richard, that these people had not earned royalties on anything except the band's first album, letters were then sent to EMI requesting an explanation. Again, some months went by before any reply. I seem to remember that there was some muttering about EMI not knowing where to contact me to send royalties, (and me the only member of the original line up to have continued with a professional and public career in music), but, at a later date, they seemed to change their story and said that they hadn't paid the other members after all. Actually, they said, EMI were only obliged to pay a company called 'Be Bop Deluxe Ltd,' which had been set up by Be Bop's manager Mike Dolan and which no longer existed. As the company no longer existed, there was, EMI claimed, no legal requirement for them to pay any royalties generated by the product. (Despite earlier claiming to have paid money to the band's first line-up.)

Whilst trying to decide what to do next, I suggested that the lawyers should ask EMI to at least let me know how much my 'lost' royalty figures would have been. This would help me to decide whether it was worth pursuing EMI further. The legal costs are, of course, prohibitive, very much so for me. A major company like EMI can easily afford to spin things out until any opponent breaks under the financial strain. I, as they well know, can't.

Again, time passed, further reminders were sent to EMI and they finally replied. It seems that they had now gone back to their first story, that they HAD made payments but only to the three other members of the 'Axe Victim' line-up, excluding myself. A circular argument? Since then, further communications have been made between my side and theirs. These communications have always been marked by a painfully slow response from EMI. Spinning it out as long as possible, hoping that it might go away, perhaps? Eventually, an offer came... EMI would pay me any future royalties generated by Be Bop Deluxe product, provided, one suspects, that I didn't cause any more fuss. Basically, they said that they were under no legal obligation to pay me anything at all, (due to the 'Be Bop Deluxe Ltd' company's demise), although they do admit to paying royalties to the wrong members of the band. An administration mistake, apparently. Does that make it OK then?

In the end, his lawyers basically told him there was nothing he could do, except potentially sue the original members of the band, and that going any further with pretty much any strategy would be horrifically expensive. In the meantime, we're still supposed to believe that record labels have the best interests of artists at heart? Why does anyone believe this myth?

Filed Under: bill nelson, music, record labels, recording industry
Companies: emi

RIAA Accounting: How To Sell 1 Million Albums And Still Owe $500,000

from the who's-ripping-off-whom-again? dept

Last year, we had a post on RIAA accounting, detailing how labels screw over many musicians, even some of the best selling ones, such that they never actually make a dime in royalties. Bas points us to an excellent 14 minute video from lawyer Martin Frascogna, entitled How To Sell 1 Million Albums and Owe $500,000: It definitely covers a lot of the same ground (in fact, his advance numbers and sales numbers match up exactly with the numbers we quoted last time from Courtney Love), but it also delves into some of the sneakier aspects of record label contracts with musicians -- things that many musicians simply won't know about or understand when they sign their contract. Using those points, he breaks down how a band might think it's getting royalties on $20 million worth of sales but then find out that, thanks to some of these fun tricks, the basis for calculating the royalty takes that number all the way down to $4.9 million (and then with a 10% royalty, the official take is $490,000 -- but if the advance is $1 million... the band still technically "owes" $500,000).

And, as we noted in the post last year, don't think that because a band goes "unrecouped" that the label loses money on them. The "recouping" only comes from the 10% royalty rates, which are really much, much lower (in this example, the "real" royalty rate is more like 2.5% due to the clauses in the contract). That leaves 97.5% of the money in play. Obviously, some of that is covering costs and expenses. But there's plenty of cash that makes its way into the label's bank account, when an album sells $20 million.

As for what kinds of tricks the labels use, well, Frascogna notes "breakage fees" of 20%, which are based on breakage rates for vinyl from half a century ago. That CDs don't break so much and that digital files don't break at all, doesn't matter. The labels still try to get a super high breakage rate that they get to deduct. For them, it's pure profit. Then there are "uncollected account" withholdings, on the basis that some retailers go bankrupt and don't pay for the stock they had. The way it's described here, that's often just a set number, rather than based on any actual, documented cases of uncollected fees. Next up? "Free goods." Now, we talk about the importance of free goods all the time. But here it's used in a different manner. Basically the labels deduct the "cost" of providing reviewers/radio stations/etc. with "free" copies of your album. That money comes straight out of the gross that the royalty is calculated on. The fact that you could just email the mp3 to those folks yourself? Well, pay no attention to that newfangled technology.

Next up, there are "container charges." That's for things like the jewel cases and inserts for CDs. Again, the fact that digital music doesn't have such expenses is pretty much ignored. Also, the fact that all of these expenses get deducted from the artists' share? That also seems wrong. Even more insane? Apparently the standard "container charge" is an additional 30% off the revenue. Again, in many cases that's just pure profit for the labels.

Finally, there's the ever lovely and totally amorphous "reserves." As Frascogna notes: "no one really knows what reserves entail." It's basically a blank check for the record labels to claim they have to keep some of the money themselves for "other stuff," which is mostly undefined. In this case, some labels simply set a straight percentage, up to 20% more of the gross that artists never get to see as part of their own royalties.

Bring all that together, and the 10% royalty looks more like a 2.5% royalty, and that's not enough to even get halfway to recouping even if you sell 1 million albums at the high high price of $20/album. And that doesn't even touch on splitting up any money you get between band members and paying the manager/agent, etc. When you dig in to things like this, you can understand how artists like Lyle Lovett can say they've sold 4.6 million albums and never made a dime in royalties from album sales.

Now, many of these points can be negotiable if you're knowledgeable about them. But many artists sign such contracts without realizing what that fine print really means -- and that's just what a lot of the labels are counting on.

Filed Under: accounting, musicians, record labels

Dubious Record Label Insists It Has A 'Patent-Pending' Method To Guarantee A Platinum Selling Album

from the there's-this-bridge-in-brooklyn... dept

Do you remember Zer01? Two years ago, there was all sorts of buzz around this "mobile VoIP" company that was mostly deflated after a few articles dug into the company, its product and its plan, and questioned whether there was anything real there, or if it was an elaborate multi-level marketing scam designed to part people from their money without delivering any product. The company's one big accolade, a "Best of Show" award from Laptop Magazine, was rescinded after the details and questions came out suggesting that Zer01 was a pure vaporware company that may have been cashing in on getting multi-level marketers to pay upfront for a product that was never going to be delivered. Despite "true believers" stopping by our comments on some of those posts to insist that Zer01 was real and was going to make them rich, in the end it went nowhere, with the website disappearing and Zer01 losing a $43 million lawsuit to its "multi-level marketing" partner, Global Verge. Of course, it didn't help that Zer01's lawyers dropped the company after Zer01's boastful CEO Ben Piilani, who blamed everyone else for the company's troubles, "stopped replying to contact" from his lawyers.

So, it was with interest that I learned (from our own Derek Kerton, who helped expose Zer01 along with reporter Nancy Gohring) that Piilani is apparently back in business, with a new company in a totally different space claiming to have created a patent-pending method to guarantee a new album goes platinum. The label, with the horrible name, 5iveSe7en Records (he just loves mixing words and numbers, apparently) makes some pretty out there claims, just like with Zer01:

We have devised a patent pending method and process that will allow us to guarantee platinum recording status to every artist we sign, all while leveraging the power of the Internet and subsequently revitalizing the music industry back into something worth-while, meaningful, and exciting to both the artist and the consumers alike.

5iveSe7en Records will extrapolate the full power of our patent pending methods by leverage the power of the Internet by using readily available proven tools such as social based member networks in the music niche, along with social gaming and digital content distribution to create value amongst music enthusiast and artist alike.

5iveSe7en discovers and gives commercial viability to thousands of underground artists who these days populate the playlists of music enthusiasts. Many start-ups have tried but failed to address this market. That’s where we come in.

5iveSe7en will turn the record industry on its head. Each month we launch a new artist/group that will go "Platinum" out of the gate. Our method has been vetted by the RIAA. Think of us as "American Idol" meets "Facebook."

Of course, if you look at the company's website (I won't link to it from here, as it doesn't deserve the link bump), it looks like the site hasn't been updated since the beginning of 2010, which seems like a long time for a company supposedly releasing a new platinum recording every month (vetted by the RIAA!). Also... none of the links on the website appear to work. I tried clicking on the details of its business model, its list of albums and current releases... and it all took me right back to the front page.

The original link to a company "profile" has some more details. It kicks off with a fantasy-land version of what's happening in the music industry (apparently, since people are downloading music, less music is being made, and now the charts are dominated by crap). Then it explains that they'll magically build a "million-plus audience" of people who will pay in advance to receive 12 digital albums per year -- which the RIAA insists will count towards platinum status. Of course, the plan is basically that a bunch of bands supposedly pay the label to be one of 300 bands that might get included that month, and then people vote (the "American Idol" part) as to which band wins. The "winner" gets a "recording contract," the release through this system which goes to the subscribers, and a promise of a big fancy launch party. The company already claims to have partnered with Sony Music, Universal Music and EMI (poor Warner Music, left in the cold, I guess).

Of course, all of this requires those million-plus subscribers. Each of whom have to be willing to pay $9.99 per year for 12 albums which they might not even like.

Have no fear, Piilani has figured that out too:

We understand that getting anyone to purchase something not only is a barrier to entry for the consumer, but also affects our dynamic growth potential. In example, FaceBook and Twitter have no problems gaining consumer traction because they give away the memberships. If they charged fifty cents they would not have experienced the growth that they have had, let alone $9.99 like we are attempting to do. So in order to address this we have decided to seek investors to purchase our first 1 million subscribers so that we can give the memberships away. In addition by having our first million subscribers acquired by our investors, we will be able to guarantee Platinum Recording status from the very start. This will also give us a large enough membership base that will appeal to future sponsors and advertisers. We continue this business model by finding corporate sponsors to continue to purchase subscribers from us that they can give away during their own promotions along with the fact that they will gain brand concentration with our membership base and advertising. Eventually we will have enough critical mass that consumers will pay the $9.99 to participate.

Yes, you read that correctly. The plan is that investors will pay for the subscriptions, followed by advertisers, rather than users.

I have to admit that the idea is just ridiculous enough to be brilliant. Of course, the devil's in the details, and some of the details look pretty questionable for any artists. Obviously, they're not making much in royalties from that "platinum selling" record, since each album is technically being "sold" for less than $1. Of course, in exchange for widespread publicity, that's probably worth it. However, the published business plan also suggests that any artists that sign up with the company are also handing over lifetime management rights:

We own the management contract for the artist, so after we create a Platinum Recording Artist we can solicit them to be acquired by larger labels and we will receive 15% of all the artist’s future income.

What artists agree to let the record label that signs them also manage them? That seems like a major conflict of interest. Also, they downplay the fact that artists have to pay to "enter" for the chance to be "signed" to this label. In fact, the details there aren't mentioned at all, other than in the middle of a long list of "revenue streams" for the company. How many bands are willing to pay for a 1 in 300 chance to maybe get sent to a bunch of people?

The plan also highlights the "qualified management team led by our CEO, Ben Piilani," whose bio mentions that a technology he worked on "won Best of Show at CTIA in 2009." Curious that he doesn't name Zer01 as the company... and appears to totally omit the fact that the "Best of Show" award was rescinded a few months later by Laptop Magazine who clearly regretted the award and stated: "At this time we can only urge extreme caution to those interested in using or selling Zer01's service."

I think we'd argue the same thing for anyone looking to invest in 5iveSe7en Records.

Filed Under: ben piilani, patents, platinum selling, record labels
Companies: 5ivese7en records, buzzirk, global verge, zer01