Monday, December 14, 2009
WHY RECORD COMPANIES SHOULD LOSE MONEY
The implication that major labels will be devastated by the litigation of hundreds of artists receiving their copyrights is really humorous. Especially when one looks at exactly what the major labels currently own.
Major record companies have a built in money machine selling the catalog of past artists. The sales of cd, vinyl and “Live show” DVD keep the lights on while new artist sales fluctuate. During the 1980’s the major labels came up with a scheme that put the independent retailer out of business while solidifying their own distribution divisions. They created the Sound Scan system (digital database using a products UPC code) and gave free computers to the independent store owners and coalitions. This gave the labels direct access to the independent store data and told them what catalog items were consistent sellers. Now they could lower product manufacturing costs and increase profits on products they were paying little or no royalty on. And since they owned the copyrights, they paid themselves for mechanicals, synchronization and performance publishing rights.
The recording contracts written before and during that period gave the major labels ALL of the revenue streams from the copyright. The only stream left to the artist was possibly a percentage of the Writer’s share of publishing, performing and merchandising. PA & SR copyrights, for virtually every hit song prior to 1984, are either owned, or controlled by a major label or major label affiliate. Example Sony records will control the SR copyright on a song, contracted at least 50% of the PA copyright, which in turn is part of the Sony publishing(100% owned) catalog ultimately allowing one pocket to pay the other. Most artists have taken an advance against royalties that allows the major label to own even the original songwriters 50%.
Just so you don’t forget, here are a few of those affected artists.
Aretha Franklin, Marvin Gaye, Otis Redding, Ray Charles, Chuck Berry, James Brown, Clyde McPhatter & The Drifters, Big Joe Turner, The Temptations, Little Richard, Wilson Pickett, Fats Domino, The Dominoes, Sly & The Family Stone, Lloyd Price, Martha & The Vandellas, Parliment Funkadelic, The Four Tops, The Isley Brothers, Jackie Wilson, Smokey Robinson & The Miracles, Kool & The Gang, The Supremes, Frankie Lymon & The Teenagers, Earth, Wind & Fire, etc..
Ultimately, worst case scenario, the labels will have to re-negotiate with a few wise and non-hungry copyright owners, otherwise it will just be business as usual by advancing some monies and getting another contract.
These catalogs still have a valuable worth in digital downloads, film & commercial licensing and corporate licensing, the labels have the staff, connections and technical support to pursue this.