Tuesday, July 16, 2013

Warner's Pays Up

Michael McDonald image
One of the primary operating principles of major labels has always been to get away with as much as possible when it comes to underpaying artist royalties. The idea is something like, "Let's not pay this, and if he ever finds out, he'll have to sue us first. Then maybe we can settle for less that we owe." That's the way it's always worked, and that's why record labels in general have received the reputations they now live with.

Another example of this came to light recently when singer Michael McDonald settled with Warner Bros for deliberately underpaying him on itunes downloads for his Doobie Brothers big hits. He's not the only one though. Artists like Kenny Rogers, Peter Frampton, The Cars and Queen's producer Roy Thomas Baker have all received recent settlements as well.

This particular line of suits came about as a result of the Eminem suit a few years ago, where his production company successfully argued that a download constituted a license and not a sale. As a result, the royalty should be 50% of the sale instead of the normal 12 to 20%.

Even though this might seem like a win, it's never really a total victory with record labels, since you never know for sure what the exact sales of your records are. Sure they send you a statement, but chances are the numbers favor the label and not the artist.

Even in todays online world of vastly improved measurement, it doesn't necessarily mean you're seeing the real numbers. No wonder so many artists would rather go the DIY route.

But let's face it, record labels aren't in the business to make money for their artists. The major labels only care about their shareholders, and well they should, since that's their real business. The real fact of the matter is that they care more about the artist's audience than the artist themselves. Every artist should understand this going into a record deal, and expect that they may have to do what Michael McDonald and all the others did if they have some success. It's just the way the business is.

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