The major Record Labels own the majority of copyrights and don’t they love to overvalue their content. As soon as a product is seen making money or drawing an audience from music, the big copyright owners swoop in. And when they do swoop in a few things begin to happen;
The Product will get threatened. Think of Napster, Limewire, AudioGalaxy and MegaUpload. All gone. Pandora is constantly battling against rates of payments as they struggle to make a profit. Spotify, in order to trade in the U.S had to give the major labels a share of the company. It was either that or the labels would not license them. Google is always blamed for linking to pirated content.
The Product will get litigated into non-existenance. Mp3.com, hotfile, isohunt are three that come to mind.
The Product will move on to different areas of innovation.
The Product will get saturated with content from the copyright industries that a lot of the people who flocked to the product in the first place will just move on to another product.
MySpace was once a haven for finding out independent/underground music. The whole culture and market reach of MySpace was built around this premise. Of course MySpace got so popular that it was inevitable that the major legacy players would take notice. Eventually, MySpace was littered with content from the major players. Ads of major label artists popped up everywhere and all of the independent content that made MySpace popular got pushed further into the background, making it harder to find.
Eventually those people who made MySpace popular started to abandon the site in droves, moving onto other social media sites, like Facebook and YouTube.
Anyone heard this quote from Robert A. Heinlein.
“There has grown up in the minds of certain groups in this country the notion that because a man or corporation has made a profit out of the public for a number of years, the government and the courts are charged with the duty of guaranteeing such profit in the future, even in the face of changing circumstances and contrary to public interest. This strange doctrine is not supported by statute nor common law. Neither individuals nor corporations have any right to come into court and ask that the clock of history be stopped, or turned back.”
Does it all sound eerily familiar? Does it sound like the attitude of the content industries for the last 40 years?
The MPAA and RIAA have never stopped lobbying the Government to pass laws that will protect their business models. Even Irving Azoff still blames technology for diminishing the music business profits instead of blaming the real devil, which is the GREED of the POWER PLAYERS. Someone like Azoff had a career on the backs of music that artists created.
The blame should be at the way the Record Labels/RIAA treated their artists and the fans of the artist.
The blame should be in the way the Labels creatively structured deals to ensure that most musicians never get paid a real dime.
Yes, back when the Record Labels controlled everything, artists are given advances, however the real term used should have been “loans on terrible repayment rates” in which the labels would add-on every expense that needs to be “paid back”.
Very few musicians ever “recouped” even after the labels made back many times what they actually gave the artists.
RATT sold 7.5 million albums in the U.S alone which meant total gross sales of $75 million. Even if the label gave them $1 million dollar advances for each album, that is $5 million the label would have spent on the band and in the process the Label made $70 million. I bet if the financials are made available, it would show Ratt as a band that still hasn’t recouped.
There is a post over at Techdirt that covers this in a bit more depth. The following comments are from Tim Quirk and how record label accounting relates to his band, Too Much Joy (TMJ):
A word here about that unrecouped balance, for those uninitiated in the complex mechanics of major label accounting. While our royalty statement shows Too Much Joy in the red with Warner Bros. (now by only $395,214.71 after that $62.47 digital windfall), this doesn’t mean Warner “lost” nearly $400,000 on the band. That’s how much they spent on us, and we don’t see any royalty checks until it’s paid back, but it doesn’t get paid back out of the full price of every album sold. It gets paid back out of the band’s share of every album sold, which is roughly 10% of the retail price. So, using round numbers to make the math as easy as possible to understand, let’s say Warner Bros. spent something like $450,000 total on TMJ. If Warner sold 15,000 copies of each of the three TMJ records they released at a wholesale price of $10 each, they would have earned back the $450,000. But if those records were retailing for $15, TMJ would have only paid back $67,500, and our statement would show an unrecouped balance of $382,500.
So going back to my Ratt example, it is a well-known fact that artist in the Eighties signed contracts that gave them a 5% cut of the album sold. Do the math? I am pretty sure it will come out that Ratt didn’t recoup.
As the Techdirt post pointed out;
“In other words, musicians don’t get paid anything in most cases, while the labels can earn a tidy profit for years and years, still insisting the band hasn’t recouped. It’s why a band can sell a million albums and still owe $500,000.”
The whole doctrine of “getting the government and the courts to guarantee profits in the future” is the reason why copyright trolls like Rightscorp have come into existence. It has also given rise to law enforcement working for the content industries as a pseudo “Copyright Police”, which in reality was always a civil matter, never a criminal matter.
In the end, the real copyright infringers and abusers are the actual Record Labels.