Nail in the Coffin for Record Labels??

09May11

Record labels have always been the “enemy” in the recording industry, robbing our beloved artists of all their hard-earned money. That sentence is of course exaggerated, because without the structure that labels have provided to artists, they may never have known how to distribute their music and make money. Regardless which side of this emotional debate you side with, there is a major legal battle going on that may put all the financial power back into the hands of those who were “robbed”.

The contracts agreed upon by modern recording artists factor in all kinds of music distribution. Each one of us probably owns CDs, mp3s, songs purchased through iTunes/Amazon, and whatever else. Record labels know that, so new artist contracts account for every possible kind of music distribution. But back before digital music files, the artists’ contracts only negotiated terms of compensation for sales of physically pressed music (records, 8-tracks, tapes, CDs, etc). How could Elvis, for example, have known to include mp3 sales in his contracts? And in case you’re wondering why that matters (since he is dead), remember that his “estate” still makes money, and that money/royalties are passed onto his beneficiaries. So remember that for the purposes of this discussion, we are only talking about artists who signed contracts before digital music distribution was a factor.

Here’s the deal:
— Record labels normally pay the artist around 15% of the money from each “sale”.
— Artists get around 50% for a “license”, like if a TV show or commercial uses your song.
— And…digital music distribution has always been considered a “sale”.
BUT! if current lawsuits (led by the estate of Rick James) (bitch) are successful, digital distribution like an iTunes download will become a “license” instead of a “sale”, meaning that these artists will be owed hefty back-pay for the last decade of music purchases, to account for the difference in being paid 15% versus 50%.

WOW!

The record industry is already limping, and writing checks for millions of dollars to these older artists would make matters much worse. Eminem has also been heavily involved in this battle, and needless to say, his download #s are off the charts. What the hell are the record labels supposed to do to survive? For starters, they will try their best to win this legal battle…although with Rick James’ estate possibly setting legal precedent, the end will be nigh.

Many young artists are already doing whatever they can to bypass record labels by releasing free mixtapes/LPs online. But let’s be honest: the majority of music fans are lemmings attached to their radios, waiting for the next canned radio hit. Is that wrong? Well, it’s LAME…but we’re talking about the overwhelming majority here, so obviously the record labels are still relevant.

Who knows how this will turn out, but I wanted yall to know that this is going on. Always always always support your favorite artists by attending their concerts, and buying their music directly from them if possible! Check out this awesome podcast from NPR that summarizes the situation nicely. And a few other sources who have written about this topic are Frost Illustrated, Guardian and Pollstar.

Shout out to my dude Page for the scoop!

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2 Responses to “Nail in the Coffin for Record Labels??”

  1. 1 trojananteater

    awesome post

  2. 2 page23

    Nicely written….scary stuff for music industry!!!


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