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Not much joy: The tricky issue of major label royalty reporting
By CMU Editorial | Published on Friday 4 December 2009
The way I see it, there are at least six main reasons everyone hates the (major) record companies.
First, the Recording Industry Association Of America are idiots, and many people equate the voice of the RIAA with the thinking of every record label boss in the world. Second, labels generally drive a very hard bargain when it comes to any artist’s first record deal and most artists resent that fact for the rest of their careers.
Third, most business partnerships come to an end, and many end acrimoniously, and when this happens to label/artist partnerships, the public only normally hear the artist’s side. Fourth, record label execs sometimes screw up crucial albums – artistically or commercially – and destroy that artist’s career. Fifth, record company execs don’t get the internet. And sixth, despite nearly a century’s worth of practice, and the invention of accountancy software, major record companies are notoriously bad at accounting for record sales to their artists.
Given I was accused on a Times message board of sounding like I was being paid by the major record companies to do their PR last month (ha, I wish, cheques to the usual address major label people), let’s defend the majors on each of those points, shall we?
First, even the RIAA have stopped their self-harming ‘sue-the-fans’ strategy of coping with the internet, and the trade body never spoke for everyone in the industry anyway, not even everyone in the US majors. Second, of course labels drive a hard bargain when signing, and funding, an unknown band, they are taking quite a risk with quite a lot of money; in this context the accountants at the major labels are the bankers of the record industry, and all bankers are cunts, they just happen to be essential cunts.
Third, some artists are dropped because, despite everyone’s best efforts, the public just can’t be persuaded to buy their music, which possibly wasn’t as good as everyone initially thought anyway – and some artists are cunts too. Fourth, yes record label execs screw up albums, but there’s many an album out there that has only succeeded because of the interference – creative or otherwise – of A&R or marketing execs at a label. Fifth, yes, we know, the major labels screwed up the internet monumentally at the start of the decade, but they’re getting there, people. Slower than you’d all like, admittedly, but they will make it work, eventually. Probably by shunting most digital licensing over to the collecting societies.
But what about point six? Even if we assume half the artists and managers who moan about royalty statements are in fact just depressed no one is buying their music, it does really seem that there are some major failings in the way some record companies inform their artist partners how much money their music has generated, especially in an era when surely a big chunk of that work could be automated, taking spreadsheets of stats straight from digital music sellers.
All of which brings us to the blog of the week. Tim Quirk was the frontman of early nineties American alternative rockers Too Much Joy. This week he posted his latest Warner Music royalty statement on the internet, and then explained in a blog entry why what was written on it was so ridiculous.
You should read the blog for yourself, but the basic gist is that until now Quirk has never seen any digital revenues on his royalty statement, because it’s taken this long for Warner to start reporting such things. As the band’s physical albums have been out of print for years, that means there have been few positive figures on his royalty statements for some time. The band weren’t overly successful when working with Warner and never recouped (that is to say record sales never repaid the money Warner spent releasing their albums – in fact they have another $395,277.18 to go before recouping), so Quirk isn’t pining after an actual royalty cheque, just accuracy for accuracy’s sake.
Which brings us to the latest royalty statement, which, after much badgering on Quirk’s part, actually includes digital. And the document provided reckons that Quirk and his band have, until now, generated $62.47 in digital royalties. Meaning they are now a mere $395,214.71 from recouping!
However, Quirk begs to differ with the digital figure. Firstly because, after parting company with Warner, the band self-released four albums, which are now distributed by indie distributor IODA. In the time covered by the Warner royalty statement those albums generated $12,000 in digital royalties. Given the earlier albums were actually more popular, you’d expect them to have generated at least similar digital revenues.
Second, Quirk works for Real Network’s Rhapsody – one of the big digital music players in the US – and so has access to stats for how many times his music has been streamed via that service and knowledge of what that would translate to in terms of royalty payments. Basically, this isn’t the guy to send a made up royalty statement to.
You can read the blog – which also offers some interesting insights into the efficiencies of Warner’s reporting systems, and some equally interesting allegations about their priorities in this regard – at this URL: www.toomuchjoy.com/?p=1397.nyud.net
Asked about why he decided to post his royalty statement, Quirk told Billboard: “The first [reason] was, I’m tired and frustrated from having to ask for something that’s contractually obligated – accurate accounting. It was silly to me that I had to push so hard for something that should come naturally. And then when I got it, I was so underwhelmed and depressed. So, partly I’m trying to prod them into giving me what they’re obligated to, which is a statement, not money. Just accurate accounting. Secondly, this is complicated stuff that most people don’t have a lot of insight into and I figured being as transparent as possible would do some good”.
Warner declined to comment on the specifics of Quirk’s allegations, but told Billboard: “Accurate accounting to our artists is a high priority for WMG. We take these issues seriously and Mr Quirk’s implications to the contrary are flat-out wrong”.
Quirk subsequently revealed to the trade mag that a Warner exec had been in touch that told him “folks are running a special report [on your sales, and] I think some additional sales activity was located; trust you’ll get something soon”.
Of course major record companies are sitting on vast catalogues of music, much of which was more or less dormant until the arrival of iTunes meant that, in theory, every record ever made could be on sale all the time. Reporting to the artists behind all those recordings on a regular basis is a big task. As with the way they licence their music to digital services, the majors are several years behind where they should be, but, they’d say, possibly correctly, they’re getting there.
But, if the majors are trying to reposition themselves as artist-services companies as well as creative investors and content owners, then surely this is an issue that really needs some serious thought and speedy resolution. Shouldn’t some of those up-front payments paid to labels by the big digital operators – most of which will never be shared with artists – be used to step-up each label’s accounting systems so to cope with the way music is bought in the digital era?
And it’s not as if any of this is rocket science. As Quirk concludes in his interview with Billboard: “One of the important things to me is that IODA can do this easily. IODA tells me exactly to the penny each month how much I’ve earned from multiple services. Whether its Rhapsody, Ecast, Verizon, Nokia – there’s dozens. And if IODA can do it – clearly the problem isn’t that Apple isn’t reporting, because Apple is reporting to IODA, and IODA is reporting to me on Apple activity. Services, such as the one I work for, are reporting to thousands of labels. If the services are reporting to the labels, and other labels are reporting to their artists, there’s no reason why a major can’t report to all of their artists”.
