The InsiderOne Daily Report

  Friday, May 4, 2001

Monster Bites Own Tail

InsiderOne's Michael Goldberg writes: The corporate music business is a multi-headed monster. Occasionally, one of those heads spits at one of the others, or even bites its own tail, which makes us laugh. In the most recent such incident, one of those heads is Vivendi Universal SA's Universal Music Group (the company that has recording deals with such artists as U2, Dr. Dre, NIN, Marilyn Manson and Limp Bizkit); the other is the National Music Publishers Association (NMPA). NMPA has sued Universal, claiming that Universal made songs available on its Farmclub Web site without getting permission from the songs' publishers. Record companies typically own a particular recording of a song (for example, Warner Bros. owns the recording of R.E.M.'s "Losing My Religion" that appeared on Out of Time; if R.E.M. sign with another record company in the future, they could record a live album that included "Losing My Religion," and Warner Bros. wouldn't own that version). The record company an artist is signed to may or may not own other rights as well. If R.E.M. record The Beatles' "Help!" while the group is still under contract to Warner Bros., Warner Bros. would own that specific recording of "Help!," but not the song itself, which is owned by Paul McCartney and Yoko Ono and the song publisher (a company owned by Michael Jackson). For every song that appears on an album, EP or single, the record company must pay a publishing royalty, which is split between the song's publisher and writer(s). In the offline world, a standard rate — 7.55 cents per song — was agreed to years ago; it rises slightly every so often. But in the online world, the record companies and the NMPA have no agreement. For online electronic sales (paid downloads) the NMPA would like the labels to pay writers and publishers a lot more — closer to a 50/50 split — while the labels would like to pay as little as possible. (Interestingly, the corporate parents of the record companies also own huge publishing companies — in many cases, however, an artist signed to a label is also signed to a publishing company owned by a different corporate parent.) A deal regarding online publishing royalties is clearly unlikely to happen anytime soon; until it does, those music-subscription services the major labels started talking about recently probably can't launch. If they do launch, the labels could face more lawsuits. Let the tail-biting continue.

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Michael Goldberg is the president of He founded Addicted To Noise in 1994.

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