Now Warners face digital royalty claim

March 2012

Artistes, record labels

With Sony and Universal already facing claims over the way royalties are calculated (with actions from artistes including The Allman Brothers, Cheap Trick, Rob Zombie, Whitesnake, Chuck D and the Estate of Rick James) and the successful action already won by FBT Productions against UMG (in the ‘Eminen’ case) which set a precedent that royalties for iTunes-style downloads should not be treated the same as selling CD singles or albums and should attract a higher payment – usually a share of the profits from licensing revenues  – rather than a ‘per unit’ royalty based on dealer price, Warners are now facing an action from Sister Sledge and singer  Ronee Blakely whose lawsuit claims: “Rather than paying its recording artists and producers the percentage of net receipts it received – and continues to receive – from digital content providers for ‘licenses’, Warner wrongfully treats each digital download as a ‘sale’ of a physical phonorecord … which are governed by much lower royalty provisions than ‘licenses’ in Warner’s standard recording agreements”. Universal continues to insist the ruling in the FBT case is only relevant to the wording of that exact contract, and does not set a more general precedent. It seems Toto are launching a similar claim against Sony.

But the low level of artiste royalties that many heritage acts face, and in particular the use of ‘royalty reducers’ in contracts between record labels and artistes to reduce the ‘headline’ level of royalties that would otherwise be payable really are a disgrace the music industry has conveniently brushed under the carpet for far far too long. In my own opinion, politicians around the globe but particularly in Japan, Europe and the USA where major labels and film companies have substantial bases, and who legislate on copyright, really should have a look at some of the recorded music sector’s (and indeed film companies’) accounting practices to see what they really get up to, particularly when they take the moral high ground in arguments against pirates and ‘digital theft’. To my own mind, applying a ‘packaging’ reducer of say 30% and a ‘breakages’ reducers of say 10% against digital royalties, thereby substantially reducing the already meagre share of revenue the artiste earns, is as scandalous as many of the unsavoury practices the music industry faces in the digital realm. In his 1994 court case against Sony, George Michael revealed that he was still suffering a 25% royalty reducer on all CD sales as CD was still deemed by his label to be a new technology (despite by that date being the dominant format). Kenny Rogers is the latest star to launch a claim (against EMI’s Capitol Records) and it’s been going on for decades ……

And see Artist’s digital royalty beef with Universal will go to court and see

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