[LINK] Radiohead: Artists often screwed by digital downloads

[Roger Clarke]

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Radiohead: Artists often screwed by digital downloads
By Nate Anderson | Published: January 02, 2008 - 03:35PM CT
http://arstechnica.com/news.ars/post/20080102-radiohead-artists-often-screwed-by-digital-downloads.html

You might think, if you didn't work in the music business, that 
famous artists stand to make mad cash from popular albums on iTunes 
and other digital storefronts. Sadly, that's not the case, and 
Radiohead frontman Thom Yorke has spent the last week calling out the 
labels for it. He recently told BBC Radio 4 that "the big 
infrastructure of the music business has not addressed the way 
artists communicate directly with their fans. In fact, they seem to 
basically get in the way. Not only do they get in the way, but they 
take all the cash."

Yorke said the same thing in a widely-quoted recent interview with 
David Byrne. His advice to young artists in that piece was, "Don't 
sign a huge record contract that strips you of all your digital 
rights, so that when you do sell something on iTunes you get 
absolutely zero. That would be the first priority." He went on to say 
that selling the new album, In Rainbows, directly to fans made the 
band more money from digital distribution than "all the other 
Radiohead albums put together, forever."

It's a common complaint from artists. "Weird Al" Yankovic noted on 
his web site last year that "I actually do get significantly more 
money from CD sales, as opposed to downloads," though he seemed a bit 
puzzled about why this was the case. "This is the one thing about my 
renegotiated record contract that never made much sense to me. It 
costs the label NOTHING for somebody to download an album (no 
manufacturing costs, shipping, or really any overhead of any kind) 
and yet the artist (me) winds up making less from it. Go figure."

The labels do "go figure," of course, and they've spent decades 
coming up with figures that lower artists' royalty percentages. (If 
you want to get a general sense of how this works with physical 
distribution, the Future of Music Coalition has a nice explanation of 
many standard contract features and how they affect artists.)

Digital downloads should make many of the standard industry 
deductions irrelevant (such as breakage and production costs), but 
the whole issue is complicated by the fact that many contracts didn't 
included any provisions for digital download sales when they were 
signed. Radiohead's Yorke complained in the Wired article that "EMI 
wasn't giving us any money for digital sales. All the contracts 
signed in a certain era have none of that stuff." Artists today are 
savvier about the need to protect their download royalties, but the 
rate of return is still quite low.

[See WIRED MAGAZINE:  16.01  18 Dec 2007
'David Byrne and Thom Yorke on the Real Value of Music'
http://www.wired.com/entertainment/music/magazine/16-01/ff_yorke?currentPage=all 
]

Such contractual agreements have taken on a special importance this 
holiday season as major-label CD sales tanked by 20 percent from the 
same time period in 2006. Such a sudden collapse may be indicative of 
a real tipping point to digital, and it means that artists who sign 
with record labels need to pay special attention to their 
downloadable royalties.

Services like TuneCore and CD Baby now make it possible to get music 
up on iTunes and other services for low fees, and artists can 
maintain all their rights. The deals don't cover marketing or 
recording costs, of course, but with computer equipment and home 
studios driving the cost of recording into the ground, more bands 
could find that it makes little sense these days to aspire to a 
major-label contract.

Of course, if you're Radiohead, the built-in publicity makes a 
direct-to-fans model much easier than if you're, say, the "Free As In 
Beer" out of Dayton, Ohio.

So how many copies did Yorke & Co. move with their experiment? Yorke 
isn't telling, though he does dismiss as absurd the 1.2 million album 
guesstimate that has been floating around. And the band knows that it 
can't stay all-digital yet; a CD release of In Rainbows is planned as 
well. (Update: the disc came out on January 1 in the US.)


[Slowly, music artists are noticing that the mega-corps that control 
the music industry, even though they're extracting revenues from 
digital distribution way in excess of that needed to cover costs, are 
not passing on very much of the revenue to the artists.

[If even established groups are getting very little, imagine what 
share of revenues from digital distribution is going to *new* artists.

[Lots of us have warned for years that public payment morality was 
being seriously undermined, and hence that an increasing proportion 
of consumers would appropriate content.  Now the alienation of 
artists is going to extremes, at the same time as alternative 
channels to market are maturing.  Business historians may come to 
write case studies of the collapse of a vast industry 1980-2020.]


-- 
Roger Clarke                  http://www.anu.edu.au/people/Roger.Clarke/
			            
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Visiting Professor in Info Science & Eng  Australian National University
Visiting Professor in the eCommerce Program      University of Hong Kong
Visiting Professor in the Cyberspace Law & Policy Centre      Uni of NSW