It is no secret that most entertainment companies are inefficient businesses — they spend far too much and save far too little. Nothing exposes this inefficiency like digital distribution. Even better — nothing exposes the inequities in artist compensation like digital distribution.
Artist royalties are calculated based on a contractual formula. Depending on your agreement, you might get a percentage of net revenue that takes the sales price less returns, bad debt that sort of thing. Or a percentage of net revenue that factors in certain costs like product manufacturing, mastering, freight, whatnot. The deals differ across industries, but, interestingly, when you look at how book royalties, music royalties, and home entertainment, formerly video, royalties are calculated, they are remarkably similar. Motion picture participations (video royalties are a subset of this) have additional complexities that I won’t cover here.
According to at least one major label, they are both!! It just depends on whether you’re an artist or a consumer . . .
I know that it’s old news that Cheap Trick and the Allman Brothers are suing Sony over download royalties: a while back, Kassia did an excellent analysis on it.
The other day, however, I came across a posting on P2Pnet.net (love that name!) that discussed this very topic. The posting had an excerpt from an article in the Internationl Herald Tribune that reminded me just how two-faced the record companies really are when it comes to this issue, and why you have to take it with a grain of salt when they say that they’re (all together now) “just trying to protect the artists” with their draconian download restrictions.
In what is nearly the polar opposite of U.S. record labels trying to goose album sales by not releasing singles for downloads, the U.K. music industry is releasing a cell-phone only single.
That’s right: a cell-phone only single. “Stop Me,” by Planet Funk. Can anybody say “Publicity Stunt”??
According to the New York Times, in a desperate attempt to goose CD sales, major labels are considering stepping back a decade, and experimenting with the concept of not releasing advance single downloads from upcoming albums.
So just as iTunes hits it’s billionth download; and it’s clear that people are embracing downloading as a viable option the major labels decide, welllll, that ain’t good enough.
Have you ever wondered why it costs roughly the same for you to purchase a CD of, say, Bob Dylan’s Blonde on Blonde — an universally acknolwedged classic of 75 minutes of sublime music, and Bob Dylan’s Down in the Groove — a universally acknowedged piece of crap that barely breaks a half-hour? As a music fan, of course, you’ve probably come to expect that all albums, then CDs, then downloads all cost pretty much the same. It’s just that some enrich your life forever and others get you maybe a buck and for sure a snide look from the guy at the used CD counter.
In a lot of ways, this pricing is kind of like paying the same amount of money for a McDonald’s hamburger and a Prime porterhouse at Morton’s. Only in entertainment do we risk essentially the same money for such wildly varying degrees of pleasure. Part of that is wrapped up in our understanding of art: not even the greatest are great every time out — and of course, to be fair, even Down in the Groove no doubt has its defenders — but part of that is wrapped up in the methods of those who control the distribution.
In this case, that would be the major labels — these days they are configured as such: SonyBMG, Universal, EMI, and Warner — in the past, configured differently, but it doesn’t really matter. What matters is, no matter how they are configured, from the consumer standpoint they’ve artificially set the prices to be the same, regardless of quality, regardless of manufacture cost, regardless of length (except that a 80-minute double-CD could be sold for twice as much as a 78-minute single CD), regardless of just about anything. As it was in the beginning, is now, and ever shall be, world without end amen.