Allman Bros. & Cheap Trick in class action against Sony BMG

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This is more than a week old, but I haven't had a chance to post about it. I think it's pretty interesting.
The bands & others in the class claim they're not being paid properly when it comes to their share of the money that comes in on digital downloads through services such as ITunes. I think a lot of people were skeptical that the arrangement would prove fair to the artists prior to knowing anything about the way royalties would be paid simply based on past history, but that's uninformed & unfair speculation. However, if what they're claiming here is true, then any fears that the record labels would do anything & everything to pay as little as possible to the artists are confirmed to be valid.
There are differences between music sold on CDs & digital downloads, obviously. And those differences should be reflected in the contracts, but it seems that they haven't. I saw a thread on another board that went into this in great detail, and there are two major differences here. The first involves the difference between a physical sale, and purchasing a license to use a digital file. The downloads one purchases on, say, ITunes, are encrypted with DRM, digital rights management. There are restrictions on what you can do with that file, such as the number of times you can burn that file to a CDR, etc. That differs greatly from the sale that occurs when you can purchase a CD that you can do virtually anything (short of "unauthorized" reproduction) with: purchasing a license, rather than a physical product. And from what I understand, the language is pretty clear when one purchases a download, that it's merely a license. No 'physical' sale has taken place. And there's a different rate that artists are to be paid for such transactions, which I think is 50% of all monies received.
But the labels have apparently been collecting the revenues from what the download services classify as licensing, and only paying the lower rate as contractually stipulated for a sales transaction. And that rate reflects the second big difference, which has to do with allowances built into their deductions for issues such as physical breakage of product that normally occurs in the course of shipping.
But there's no physical product involved in purchasing a digital download.
Nevertheless, the labels have been deducting such charges from what they're deigning to pay the artists. They're accepting that it's a licensing transaction on the download end, but taking the position that it's a physical sale when it comes to compensating the artists, resulting in far lower payments due.
Nice, huh?

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Topic - Allman Bros. & Cheap Trick in class action against Sony BMG - J 09:46:32 05/08/06 (0)

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