Copyright Royalty Board Keeps Download Rates The Same; iTunes 'Saved'

from the compulsory-mess dept

I tend to think the whole concept of compulsory license rates in the music space is rather backwards. There are a bunch of different rates for all different participants, and it's basically the opposite of letting a market work. It's the government setting a handout rate for many different groups who don't want to create their own business model. The whole process serves to significantly hold back a number of new and innovative business models by letting many to rely on the government to effectively set their revenue for them. That said, one of the worst things is that a single decision by whoever sets the royalties can completely change how an industry works with a single vote. Earlier this week, we noted that Apple was threatening to shutter iTunes if the Copyright Royalty Board raised the rates for publishers on downloads. The threat was probably pretty baseless, but apparently it worked. The CRB has kept rates the same, which is going to upset many songwriters and publishers.

Filed Under: compulsory licensing, copyright, downloads, itunes, music, publishers, royalties, songwriters
Companies: apple

Apple Threatened To Close iTunes If Royalties Were Raised?

from the empty-threats dept

According to Fortune, Apple threatened to shut down iTunes if copyright royalties were raised by the Copyright Royalty Board. I tend to share Greg Sandoval's skepticism about the seriousness of this statement. Apple makes most of its money from selling hardware platforms, and iTunes is mostly designed to make those platforms more valuable. While some reports suggest that Apple ekes out a tiny profit on iTunes, others have reported that it's already something of a loss leader for the company, with razor thin margins. You can certainly understand why the company would be upset about the idea of increased royalties, which would shrink those margins even further, but the idea that the company would shut down iTunes, seems like a case of cutting off your nose to spite your face. Even at a small loss, iTunes makes iPods and iPhones much more valuable, and Apple should be able to absorb the hit on the iTunes side via the hardware side. The same is probably not true for other digital media sellers, however.

Filed Under: copyright, itunes, loss leader, royalties
Companies: apple

NAB Trying To Cut Off Pandora's Air Supply

from the can't-stand-the-heat,-huh? dept

We've already covered how Pandora will most likely need to shut down, if the royalty rates set for web streaming aren't changed. While there were agreements earlier this week on some forms of online streaming royalties, it was not the ones that are the problem for Pandora. Pandora has been negotiating a more reasonable rate that would let the company survive, and it has been making progress. However, it needs a bit more time. Amazingly, Pandora, the RIAA and SoundExchange all agree that they're making progress, and with a bit more time they can probably iron this out. To that end, Rep. Jay Inslee introduced a minor bit of legislation to give them more time to work things out.

So what happens? The National Association of Broadcasters (NAB) has started actively lobbying against the bill. Basically, the NAB recognizes that Pandora is a direct competitor to the terrestrial radio stations who make up its members. But, rather than compete, it's hoping that the RIAA's fight with Pandora will cause Pandora to go out of business. This is, of course, quite typical of the NAB's lobbying efforts. Remember how strongly it fought against allowing XM and Sirius to merge. It was the same situation, where it was hoping to use legal efforts to kill off competitors, rather than competing in the market. Pandora is asking people to contact their congressional Reps. to make sure that the NAB isn't allowed to cut off Pandora's air supply, just as it gets close to (finally) working out an agreement to stay alive.

Filed Under: congress, nab, royalties, streaming radio
Companies: nab, pandora, riaa, sound exchange

Ugandan Composer Wants Royalties For The National Anthem

from the welcome-to-ownership-culture dept

One of the unfortunate byproducts of a culture that teaches us that something like a song can be "owned" and that each time it's played the "owner" needs to get paid, is you end up with situations like the following one, where the composer of Uganda's national anthem is suing the government for copyright infringement, claiming it owes him royalties for every time the song has been played by the government. Without knowing the details of Ugandan copyright law, there's a bit of a problem in that it appears the government did pay him (not very much) initially for composing the song, which would suggest that it was a work for hire, and he shouldn't have retained the copyright. However, from the sound of things, that wasn't particularly explicit. Either way, it sounds like cold hard cash outweighs national pride -- though, it is odd that the guy waited 45 years before suddenly realizing that he should get paid.

Filed Under: copyright, national anthem, royalties, uganda

One Of Many Online Music Royalty Rates Settled (For Now)

from the keeping-it-straight dept

The copyright system was never designed for modern technology -- which is why every time some new technology comes along, there are all these legal battles until some awful patch (often in the form of compulsory licensing) is applied. However, because there have been so many new technology changes over the years, and so many different people demanding a piece of the pie, these days the compulsory licensing and royalty process for any sort of music licensing is so complex that almost no one can actually understand what's going on. At any moment there are a bunch of different battles over the various rates that should be used, and over whether or not they apply to some new technology. One of those many battles has come to at least a temporary settlement, as seven years of fighting over mechanical royalty rates on interactive streaming and limited download services have been agreed to by all parties involved. The RIAA put out some PR happy quote about how this will "support innovative business models." Sorry, but when you're talking about a seven-year dispute to work out these rates, you've probably already killed off those innovative business models.

Filed Under: compulsory licensing, copyright, music, royalties

EA Has To Back Off Sims Karaoke Due To Licensing Problems

from the yay,-royalties dept

It's been quite a difficult time lately for various online music efforts. Pandora on the verge of shutting down, Muxtape already shut down and now EA is apparently scaling back its online Sims On Stage karaoke offerings over a vague, but unexplained, song licensing issue. How dare people sing along online? You get the feeling that the recording industry would go after people singing in the shower if they could.

Filed Under: karaoke, licensing, music, royalties, sims
Companies: ea

EMI/Virgin Records Sues Platinum Selling Band For $30 Million... Despite Not Paying Them A Dime In Royalties

from the the-music-business-at-work dept

It's always fun to remember stories like the following one the next time you hear some RIAA exec claim that it represents musicians. The RIAA represents the record labels and record labels are continually at odds with musicians -- sometimes to extreme levels. Wired reported that EMI/Virgin Records had sued the band 30 Seconds To Mars for $30 million recently. The band is apparently fronted by movie star Jared Leto, and is considered something of a success. Its last album went platinum and won some awards. So why the lawsuit? Well, EMI implied that the band failed to deliver its latest record on time, but members of the band have now responded with a very different story. Wired now points us to the response from 30 Seconds To Mars, where the band notes that the lawsuit appears to have a lot more to do with the band opting out of its contract. The band points out that, under California law, a contract of more than seven years is not valid -- and the contract EMI held with the band was for nine years.

So why opt out? Perhaps this has something to do with it:

If you think the fact that we have sold in excess of 2 million records and have never been paid a penny is pretty unbelievable, well, so do we. And the fact that EMI informed us that not only aren't they going to pay us AT ALL but that we are still 1.4 million dollars in debt to them is even crazier. That the next record we make will be used to pay off that old supposed debt just makes you start wondering what is going on. Shouldn't a record company be able to turn a profit from selling that many records? Or, at the very least, break even? We think so.

This is, of course, rather par for the course in the recording industry. As Courtney Love explained years ago, it's quite rare for a recording artist to ever see a dime of royalties from selling music. The label gives the band an "advance" which really isn't that much, and then uses some funky accounting tricks to claim all of the band's royalties as paying off that advance as well as covering other fees involved in the marketing and distribution of the album. In this case, apparently, despite selling 2 million records, EMI is still claiming that the band has $1.4 million to pay back. Not so long ago, we noted that Lyle Lovett was in the same boat: 4.6 million albums sold, no royalties paid.

So, at what point will the press and politicians stop buying the RIAA's claims that it's looking out for the musicians and trying to get them paid? The RIAA has always been in the business of not paying musicians.

Filed Under: 30 seconds to mars, advances, contracts, jared leto, music, royalties
Companies: emi, virgin records

RIAA May Get Its Wish: Pandora Leaning Towards Shutting Down Over Webcasting Royalties

from the how-the-RIAA-killed-internet-radio dept

Last year, we noted that the new webcasting royalty rates pushed through by the RIAA appeared designed specifically to kill internet radio. These royalties are different and much higher than things like traditional and satellite radio, despite being much more fragile at this point in their development. As if to prove the point, Pandora, one of the largest and most successful online streaming radio providers is now saying that it's going to have to shut down if the royalty rates aren't changed shortly.

This is exactly what the RIAA wants, by the way. Even if services like Pandora introduce people to tons of music (personally, I've bought a ton of music I found on Pandora), much of that music is not from an RIAA-member label. The RIAA knew exactly what it was doing in pushing these higher rates: it was killing off alternative routes to promoting non-RIAA music. The RIAA labels have always thrived off a very limited distribution and promotion channel. After all, distribution and promotion are where record labels really make their money. Competing methods of distribution and promotion are threats to be killed off -- and the RIAA may have succeeded here (with Congress' and the courts' help, of course).

Oh, and don't think the solution is to only play non-RIAA music. The RIAA's spinoff, SoundExchange, gets to collect money on non-RIAA music as well. Oh yeah, it gets better too: if SoundExchange can't find the musicians to pay, it gets to keep the money. That's why it has a history of not looking very hard for musicians in order to pay them.

Filed Under: royalties, streaming music
Companies: pandora, riaa, sound exchange

Allman Brothers Sue Yet Another Record Label Over iTunes Royalties

from the all-for-the-artists dept

Reuters is running an article about how the Allman Brothers Band is suing Universal Music for apparently not paying the band royalties owed for iTunes downloads. This seemed like yet another example of a record label squeezing its artists, while insisting that it's always looking out for the artists' best interests. Of course, then I remembered that this isn't the first time this has come up with the Allman Brothers. More than two years ago, we wrote about the Allmans suing Sony over the same issue. At that time, there was a dispute over how the label was counting iTunes downloads, and which clause iTunes downloads fit under in the band's contract. This recent lawsuit seems like a similar dispute with Universal, but it does make you wonder why the band sued Sony back in 2006, but waited until now to sue Universal?

Filed Under: allman brothers, copyright, downloads, itunes, music, royalties
Companies: universal music

Copyright Office May Have Just Added New Royalties For Webcasts

from the you-can't-be-serious dept

Well, this is just downright disturbing. Jon Healy has a quick summary of a totally unexpected and unnecessary proposed rulemaking from the Copyright Office that could add additional royalties that webcasters would need to pay (on top of the already onerous webcasting rates). Basically, the Copyright Office had been asked to decide on a totally different question concerning royalties back in 2000. That issue isn't even in question any more, as the two sides had already worked out their differences, and the Copyright Office didn't do much to give an official answer on that question anyway.

Instead, it came up with an idea out of the blue that music publishers are entitled to an additional mechanical royalty for non-interactive streams (e.g., webcasts, satellite radio, etc.). As Healy explains, this makes no sense and seems to go against previous agreements on these types of royalties. Mechanical royalties are supposed to be for actual copies of the music. Non-interactive streams are basically the same as radio -- which requires performance royalties, but not mechanical royalties.

This reminds me of the column by Rasmus Fleischer we wrote about a little while ago, where he noted how silly copyright law can get with all these different royalty rates that were designed for a different time. The borderlines between radio, streams, downloads, recordings and all other ways of accessing and hearing music are blending together, and trying to match the old rights to the new ways that people interact with music just leads to more problems -- such as multiple levels of royalties all being heaped upon the same single action, making it effectively uneconomical to actually do the most natural thing with music: play it online.

Filed Under: copyright, copyright office, royalties, webcasts