In 2011, a proposed class action lawsuit was launched against Universal Music Group over digital income. The litigation from Rob Zombie and Rick James on behalf of themselves and others under the UMG umbrella seeks substantial damages from the record label’s decision to treat income from downloads off of venues like Apple’s iTunes as “sales” instead of “licenses.”
Just how much money is at stake is an open question.
The lawyers representing the plaintiffs want UMG to turn over download revenue and volume data tied to particular artists so they are able to come up with a calculation of damages and order the information in an effort to gain class certification.
But UMG is telling a judge that’s not reasonable, and if it happens, the privacy of artists will suffer.
The current litigation, in many ways, is a follow-up from a path-breaking 2010 ruling by the Ninth Circuit Court of Appeals over a dispute pitting Eminem’s production team of Mark and Jeff Bass against Eminem’s record label, Aftermath (a subsidiary of UMG). At the 9th Circuit, the judges ruled that a lower court had erred by not deeming the label’s agreements with third-parties download providers as licenses instead of sales.
The attorneys for other UMG artists want to repeat the success, which would entitle these artists to collect about 50 percent of collected digital revenue instead of about 15 percent.
But this case is somewhat more complicated given the potential number of artists who have contracts with UMG. Not every artist has precisely the same contract. Not all artists enjoy the same level of success. Commonality is one of the factors that a judge will consider when deciding whether or not to certify a class action.
The plaintiffs’ lawyers think that having access to data will help them sort through the issues in preparation for certification. And they’re not willing to settle for data that leans on anonymity such as “Artist #437 had 1000 downloads and $785 in download revenue in 2005.”
The plaintiffs are willing to designate the information potentially handed over as “Attorneys’ Eyes Only,” but UMG is objecting with a noteworthy argument on “third-party privacy interests.”
UMG says that “the issue’ here is that the plaintiffs’ attorneys — “all 50 or so of them” — do work in the music industry. UMG lawyers stated in a court filing on Friday, “Under plaintiffs’ proposal, plaintiffs’ attorneys and music-industry professionals could review the private financial information of thousands of recording artists with whom they may have adverse relationships, and who have not indicated any desire to be part of any class or to be represented by these attorneys or professionals.”
In the case involving Eminem’s music referenced above, UMG asserts that “when plaintiffs earlier sought private download data for just a single artist, Eminem… he strenuously objected, and was prepared to intervene until Plaintiffs agreed not to seek such data at all.”
UMG also believes that the “true, disguised purpose in seeking the artist names is to help evaluate their case for settlement purposes.”
Nonsense, responds the other side.
According to the court documents, the plaintiffs tell the judge, “It is ironic that UMGR continues to press for more information about how Plaintiffs will calculate their damages, but seeks here to deprive Plaintiffs of important data Plaintiffs can use both for internal analysis of class certification theories, and to illustrate for the Court available methods for calculating damages for any class or subclass. Plaintiffs should not be handicapped in these tasks.”
Source: Billboard (by Eriq Gardner)
And then there were three.
The bidding war for EMI — the record label behind Katy Perry, Lady Antebellum, and Coldplay — is over. A consortium headed by Sony (SNE) agreed to pay $2.1 billion for EMI’s publishing business earlier this month, while Vivendi’s Universal Music was the last suitor standing with its $1.9 billion bid for the label itself.
Breaking EMI in two was inevitable, but the meaty morsel here is that EMI’s publishing arm sold for more than the label itself. In other words, EMI’s past is more valuable than its present and future.
Need a Tissue?
There aren’t too many people mourning the passing of the major labels. The labels and their thin artist rosters monopolize the already limited playlists of commercial radio. Then there’s the negative publicity stirred up when the label-backed RIAA went after unemployed moms downloading tracks. Music piracy is a problem that needs to be addressed, but the labels didn’t do themselves any favor by making it personal.
Even the fact that Universal will now control nearly 40% of the market — leaving Sony at 30%, Warner Music Group at 19%, and a smattering of indies battling for the rest — is unlikely to raise eyebrows with antitrust regulators. Prerecorded music has been a fading industry for years, and herding struggling labels together will only make it that much easier to identify the remains.
The Gradual Fadeout
CD sales peaked in 2000 when the labels sold 942 million units, raking in $13.2 billion in sales. It’s been pretty much downhill the rest of the way.
Digital sales were supposed to save the day, but the label-backed MusicNet and pressplay initiatives were too restrictive. It didn’t make sense that music lovers had to jump through more hoops to pay for music than the pirated options available on peer-to-peer file-sharing networks.
Apple (AAPL) finally got it right with the iTunes Music Store, which launched in 2003. Labels didn’t like the $0.99 price point for singles. Artists didn’t like the pricing either, since it found consumers cherry-picking the songs they actually liked instead of paying $9.99 for complete albums. However, Apple’s storefront was far better for the industry than the piracy alternative.
Legal downloads should have been the industry’s salvation. Record companies — what were then five major labels and countless independents — would benefit from the benefits of digital distribution. Labels wouldn’t have to worry about pressing and packaging discs. There were no shipping or return hassles. Apple did all of the work, and labels got to keep roughly two-thirds of the sales. Unfortunately, it didn’t play out that way. The growth in digital music — which by 2008 found Apple replacing Wal-Mart (WMT) as the country’s largest music retailer — wasn’t enough to offset the serious slide in CD sales.
Internet Killed the Radio Star
What went wrong? The labels will point back to Napster, LimeWire, Kazaa, and other disruptive peer-to-peer networks that swayed countless Web-savvy users to download and share pirated tracks. They’re right, but there’s a bigger picture that the major labels are missing.
The Internet made it easier to swap virtual mix tapes, but it also armed garage bands with the tools to get noticed. The playing field was leveled as artists set up MySpace music pages and uploaded tracks to the original MP3.com website.
Where would Justin Bieber or Susan Boyle be without YouTube? How many bands are scoring national attention through Facebook fan pages?
For better or regrettably worse, everyone’s demo tape is now a click away.
Who says you need a major label for digital distribution? Getting your music on iTunes, Spotify, or any of the popular e-music stores and streaming sites will cost most artists less than a video game.
In terms of getting noticed, setting up pages on YouTube, MySpace, and Facebook are no-brainers, but music-dedicated sites including Bandcamp and SoundCloud are also there for promoting your digital presence.
The opportunities keep coming. Google (GOOG) introduced the Google Music Artist Hub last Wednesday, giving artists a free way to get their music available on what are now 200 million activated Android devices.
Last Round for the Music Moguls
The record companies aren’t worthless, even in this scorched climate. Even if CDs go away, there are still promotional, radio, and touring benefits that are easier to secure under a major label. The problem for the prerecorded music industry is that the gap between the signed and unsigned has narrowed.
Even proven bands are finding it more lucrative to leave their labels and strike out on their own. As home recording equipment gets better and cheaper, record companies are no longer necessary to bankroll the once costly recording sessions.
Labels used to love signing artists with established followings, but now those same artists are wondering why they should be tied down to long-term deals when they have the digital distribution tools at their disposal to reach their growing audiences.
There’s a new world out there, and its soundtrack is being scored by unsigned artists that you don’t know — yet.
That is, according to federal court documents filed Wednesday by attorneys for Chuck D. The detailed breakdown shows that for every 1,000 iTunes downloads sold, a UMG-signed artist gets paid $80.33. And that’s after the label collects on a 25% ‘Container Charge for Audiophile Records,’ as well as a 15% ‘Net Sales Deduction’.
Which means that for every one download, the payout is roughly 8.033 cents.
Which is wildly different than the payout from other distribution companies, which most likely pay the full 70-cents. That is, after yearly fees, and without any of the marketing push, but that’s another article entirely.
Actually, the ringtone payout is loaded with even more artificial ingredients, including the same ‘Audiophile Packaging Deduction’. In fact, despite a much higher price tag on ringtones (ie, $3 listed here), the major label artist gets a paltry per-ringtone payout of 5 cents.
Article originally appeared on Digital Music News (http://www.digitalmusicnews.com) and was written by Paul Resnicoff.
The title of Elizabeth and the Catapult’s Verve Forecast debut album Taller Children reflects the unique blend of pop playfulness and grown-up introspection that defines Ziman’s distinctive songwriting. Such memorable originals as “Rainiest Day of Summer,” “Apathy,” “The Hang Up” and “Hit the Wall” embody a vibrant mix of open-hearted wonder, whimsical humor and forthright emotional insight, merging classic pop melodicism with an array of acoustic textures, jazz twists and orchestral flourishes.
The quality of the songs—including a memorable reading of the Leonard Cohen classic “Everybody Knows” —is matched by intimate, effortlessly soulful performances by the Brooklyn trio, which also includes guitarist Pete Lalish and drummer Danny Molad.
Although the bulk of Taller Children was recorded with producer Mike Mogis (noted for his work with the likes of Bright Eyes, M. Ward and Rilo Kiley), several of the album’s performances were drawn from the homespun demos that the band recorded in drummer Molad’s home studio. The resulting album strikes a vital balance between lush sophistication (with such elements as Ziman’s elegant string arrangements) and spare, unadorned simplicity.
The qualities that make Taller Children such a refreshing surprise have already made Elizabeth and the Catapult a beloved favorite on New York’s downtown club scene, where the threesome’s winsome tunes and energetic, surprise-filled live shows have won them a large and devoted local fan base.
Elizabeth’s warmly personal songs reflect the diverse influences of her lifelong pursuit of music. She grew up in New York’s Greenwich Village, just down the street from the Cafe Wha? and the Fat Black Pussycat, where her future heroes Bob Dylan and Joni Mitchell got their start.