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Unsettled Issues

Jerry Lucky Commentary December 2011

Copyright Jerry Lucky © 2010 All Rights Reserved

 

There were a couple stories that crossed my desk recently that reminded me of the ever shifting music business and pointed out

how unsettled things are for many artists.

 

The first story was where Pete Townsend of the Who called iTunes a “digital Vampire.” Now he said a lot of other things in a speech he made to music industry people, but I want to focus on just that phrase, because I think his use of it has been taken slightly out of context and muddied by his other comments. To my mind his use of the “life draining” metaphor was really about how services like iTunes inordinately reap the benefits of an artist’s work. There were some who quickly rose to the defense of iTunes saying it was no different from the relationship with any “brick-and-mortar” shop. But that’s where I think they might have been missing the point. I believe Townsend’s comments stem from the “share” that iTunes receives versus the minimal investment in “store-front”.

 

Some time back, Weird Al, who’s no stranger to success, wrote a blog detailing how he actually made more money per track by selling the physical CD than by selling it through iTunes. Another words for some strange reason iTunes was able to attribute MORE costs involved in disseminating the music even though they weren’t having to press the actual physical disc or provide the printed materials with the ordered track. Weird Al felt this was somewhat strange and of course took issue with being held somewhat captive to the dictates of the near “monopolistic” service.

 

It strikes me that Pete Townsend was speaking for many artists, some who are in no position to speak up or are afraid to do so when he says that a service like iTunes is simply “sucking the life” out of the very thing it provides by demanding so much per track and giving nothing in return. This is clearly an unsettled issue and will probably remain so for the foreseeable future. ITunes has become so large and so pervasive it’s hard for artists to ignore and that perhaps is the other part of the problem.

 

The other story that caught my eye also had to do with the issue of digital downloads and whether or not the download constitutes an act of licensing or an actual sale. The headline of the story read; “Universal Music Loses Bid to Dismiss Class Action Over Digital Revenue.” How this story actually pans out could have far reaching implications on an artist’s revenue. It seems the record labels like Universal tend to see a digital download as a sale and that means the artist gets somewhere between 10 – 20% of the revenue. However the artists will argue in court that the digital download is actually more of a licensing issue and if the courts agree that puts the split closer to 50/50! Huge difference.

 

Interestingly there has been some precedent set by a case in 2010 involving the artist Eminem where a judge did in fact rule that his early recordings transferred on line constituted a licensing issue. So now the judge has ruled the artists in the current case can proceed with legal action against Universal. Where this will go is anyone’s guess, but I’m putting my money on the artists. And it will end up costing the record label billions!

 

Then there’s the question of whether other labels will be drawn into this fight. As I read things like this its yet another sign that the big label business model is still in need of change. From the beginning it has been about control but with the advent of the digital age we continue to see them losing control and yet fighting to keep it. They’ve explored how they can charge artists in other ways and they keep experimenting only it seems to stave off the inevitable. After all let’s face it, once you’ve gotten used to caviar it’s hard to go back to sardines.

 

These are just a couple of current stories. I’m sure there are others with defenders on each side. What intrigues me is just how unsettled things are in the music business. And it doesn’t look like it’s going to sort itself out anytime soon. At least that’s what I think. 

 

Jerry Lucky

(12/2/11)