April 28, 2006 6:42 PM PDT

Sony playing a Cheap Trick on musicians?

Two rock bands, the Allman Brothers Band and Cheap Trick, have filed a lawsuit against Sony BMG alleging that they are shortchanged when Sony divvies up royalties from digital downloads.

Filed Thursday in U.S. District Court in New York, the suit claims Sony should pay its musicians more as part of a contract the company has allegedly failed to live up to, according to reports published on the Web sites of Forbes and Billboard magazines.

The bands, which were at the height of their popularity more than 20 years ago, claim in their suit that they're entitled to half of the profits from online sales at sites such as iTunes and Napster, Forbes reported.

Right now the bands receive only 4.5 cents on every 99 cent sale of one of their songs, the suit claims.

Neither Sony representatives nor managers for the bands could be reached for comment Friday evening.

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Profit Margin
So the bands recieve 4.5 cents for every 99 cent song, but what is the label profit margin? 99 cents would be the retail price, what would make the article informative would be the wholesale price and the label profit margin and not the bands cut compared to the retail price.
Posted by jmmejzz (107 comments )
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67 Cents
Apple pays the labels at least 67 cents out of the 99 cents it sells the music files for. Most online music services pay around the same amount too.

Now, for artists to only get paid 4.5 cents it's outrageous. There's no physical product expense to cover here. This is pure profit. It's not like the labels have been spending millions of dollars to promote these artists. So, where is the justification for such a low margin.

Now, this sounds close enough for what artists get paid when their song is played over the radio. But, that's different because the artist gets paid every time the song it's played and weather 5 or 500,000 listeners are tuning in. It would be nice if artists would get paid by the amount of listeners. But, you know then radio stations would start playing with the real numbers.

Downloading files it's different because there's a transaction every single time the song is downloaded and the labels are getting paid as much, if not more. as if a physical cd had been sold. But, without spending a cent on anything.

Thieves. One more reason to delay my purchase of a Sony PSP. But, I'm sure Sony's not the only one doing these. Most labels have been taking advantage "gouging" artists since music became "the music business."
Posted by Dead Soulman (245 comments )
Link Flag
Wholesale, Distribution, as well as marketing...
The music business is slowly eroding, maybe because of all of the stealing that has gone on before.

Getting publishing rights and creative rights to one's music allows him/her to distribute the 99 cents. With 50% going to publishing the creative person is supposed to get the other 50%.

Sounds like a win for the musicians here if it goes through according to the law.
Posted by pmpscheduler (11 comments )
Link Flag
Yes this article needs an update
Basically the bands say that there are extra, costs like for CD breakage etc., being used for this digital mediaum; that don't need to be there.

But when you sign your music rights away to a record service what would they expect? it's been going on since the Beatles.
Posted by Blito (436 comments )
Reply Link Flag
Digital Download-only reissues
Sony further screws artists such as Cheap trick and Mott The Hoople by reissuing a couple of their remastered albums as digital downloads only! Aaargh!
Posted by Galley (55 comments )
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First Payola, Now This
What is it with Sony these days? They got nailed by Spitzer for payola, then the rootkit debacle, now this. Their products aren't even technologically superior, to justify their bad behavior. If your're going to be a crook, at least be a smart crook.
Posted by Stating (869 comments )
Reply Link Flag
Some details
From MacWorld UK
<a class="jive-link-external" href="http://www.macworld.co.uk/news/index.cfm?NewsID=14495" target="_newWindow">http://www.macworld.co.uk/news/index.cfm?NewsID=14495</a>

At issue is the way Sony accounts for such sales.
Rather than paying artists approximately 30 cents of the 70
cents it receives for digital downloads (after deducting payments
to music publishers), the suit alleges that Sony Music treats each
download as a sale of a physical CD or cassette tape, only paying
on 85 per cent of such "sales" (due to a fiction that there is
breakage of product), deducting a further 20 per cent fee for
container/packaging charges associated with the digital
downloads (although there are none), and reducing its payments
by a further 50 per cent "audiofile" deduction, yielding a
payment to the Sony Music recording artists of approximately 4
1/2 cents per digital download.

After the light slap on the wrist Sony got from the rootkit class
action, why wouldn't they?

Posted by lampietheclown (73 comments )
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That still blows me away....
Sony is becoming the new Microsoft. I still can't believe they got off so lightly for the rootkit fiasco. They will never learn. They'll just find a "legal" means of doing what they wanted to do (think congressional lobbyist). If it doesn't seriously hurt their bottom line, they simply won't learn a thing.
Posted by drfrost (467 comments )
Link Flag
typical Sony
nobody expects much from Sony anyway
Posted by Stan Johnson (322 comments )
Reply Link Flag
How else can they pay for Micheal's catalogue?
Sony and the rest of the monopolistic corporations such as BMG, Time Warner all will continue to cheat musicians and artists to drive up their obviously dwindling profits.
Posted by pmpscheduler (11 comments )
Reply Link Flag
Interestingly, in May '04 Eliot Spitzer Attorney General New York State, Fined the Big Four for failing to pay a minimum of USD$100 million in back royalties to noted recording Artists, like Madonna, David Bowie etc! Strangely the majority of whom they had current addresses for and were able to charge a minimum of $50K each to attend the function, to be inducted into RIAA sponsored Rock Hall of Fame(Sex Pistols web site has the comments about that form of ha! ha! embezzlement!)

Anyway, the big 4 signed under their corporate seals, they gave various strenuous legal undertakings to be followed at all times! These large cleared funds plus interest could be easily tapped for nefarious illegal deeds like payola, outright bribery and any other questionable legal activity, rather than use any corporate funds or profits which could be subject to external scrutiny!

The other interesting aspect, is the double standard the record companies say to the artists on one hand and what the contract with Apple Computer says!

At last check, when pushing for variable fees up to $2-79 new releases to discount old, the record majors let it slip, that they will make a minimum of 79 cents out of each 99 cents that APPLE charges at zero cost to themselves!(all data is supplied in the standardard regular Computer Data Tape format as specified by the record companies!! Apple does all the marketing , conversion and storage on their servers in their specific lossy drm'd format!)

I can see why they filed it in New York State, as it all the companies legal registered home office, with Eliot's corporate seal signed legal doc's and thus leading to his investigating notes from '02 to '04 , together with the Apple's Legal Contract obtained under the discovery motions! Thus the attorneys at SONY BMG's with even a lonely brain cell , will realise they have minimal chance of winning in any Federal Court!

Sadly, it does show however that Record Companies, have no soul and are not adverse to stealing from both the customer and the entertainer simultaneously!

Nice one guys!, your future choices may be limited once the RICO charges start flying after this case, for people who steal, deserve no less???????
Posted by heystoopid (691 comments )
Reply Link Flag
Think there is any possiblity of the politicians who "appear" to be in bed with the RIAA and the record companies going with them?
Posted by dland51 (91 comments )
Link Flag
Who's stealing from the Musicians?
Makes you wonder who is actually ripping off who? Seems to me that the Recording Industry is screwing both the consumers and the artist.
Posted by System Tyrant (1453 comments )
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That's why big studio days are numbered
...and it has nothing to do with piracy, and everything to do with technology.

There is no longer any economy of scale advantage to being a large studio...

any competent artist can find all the resources he needs at low cost from independent small suppliers.

Record at a rented studio, hire a project manager, produce to an audio file or optical disk, promote in the local music circuit, promote on the web, on music websites, sell on iTunes or any other online music store.

Big enough to do a concert? get an event organizer. Best of all, keep your royalties to yourself.
Posted by Maccess (610 comments )
Link Flag
now new tale to tell
The RIAA repeated proves to be lying thieving hypocrits stealing from the artists (the REAL content providers and IP owners) and consumers and yet somehow Congress still bows the the URGENT need for DMCA part 2 which will allow property seizure, criminal penalties and jailtime for teens trading songs or ripping the CD I purchased into my iPod.
But I'm sure there is no corruption or anything... ;)
Posted by skeptik (590 comments )
Reply Link Flag
This is why people have no qualms about file sharing.
The RIAA keeps crying that we are "stealing" from them,
********..! THEY are the thieves, not us..!!!
Posted by imacpwr (456 comments )
Reply Link Flag
No Kidding?!
What, MORE proof of deep corruption with the RIAA and the music labels (which are one and the same, DON'T get confused by that)?!

The major labels are no longer needed. They should have been dissolved at least a decade ago. Why do you think they want to go to subscription services? So it becomes even more difficult to see who should get paid, and at the same time, dilluting the efforts, and livelihood of the artists.

It is disgusting, and sick, that the RIAA/Labels have any weight at all, since the only thing they produce are new methods to steal, sue, coerce, and lobby to protect their illegal business practices.

May the RIAA burn in Hades, or whatever dark abyss they wish not to go.
Posted by Thomas, David (1947 comments )
Reply Link Flag
What I don't understand is this...
I know that all these great artists initially signed contracts with
major labels in order to get their careers off the ground. They
got marketing and distribution support in exchange for signing
on the dotted line. But that was in the day of vinyl and CD's.
Now it's different, since we can download. So why don't any of
the big name musicians jump ship? Why do they still continue to
work under these draconian contracts? If Madonna (or some
other big name artist) decided to go it alone, I'm sure we'd all be
just as happy to pay to download her stuff as when it was under
a label. She doesn't need the support of a label anymore, she's
already very famous. Anyone know how these contracts are
written? Do they indenture the artist for life? That would be like
slavery and should be illegal.
Posted by cubicleslave1 (27 comments )
Reply Link Flag
contracts are hard to break
Madonna gets more than Cheap Trick and to quit a contract the
artist needs to prove in a court that the label isn't doing its best.
Paying a fair price is part of this so i think some artists will use this
to break with Sony, especially older bands that totally rely and
there name and not the label. This case is the first step into leaving
Posted by Peter Bonte (316 comments )
Link Flag
I think perhaps when a record is released with a label it is for life, maybe 70 years copyright life, so for example if someone covers a song 9 cents is paid, half goes to the writer and half to the publisher...I don't know why the Allman Bros would get 4.5 cents a song from a digital download but that is sick!
Posted by ELSOL102 (1 comment )
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