Music industry wants performance compensation from iTunes

[AppleInsider]

A consortium of music industry groups has begun lobbying the U.S. Congress to receive what they believe is their fair share of revenue from online music sales services like Apple's iTunes.

In a new story from CNet, music industry representatives plead their case as to why they are entitled to revenue for downloads of films, TV shows, and 30-second song samples that feature their work. Songwriters say they do not receive enough revenue from the Web to live off of, and they believe they are owed a larger share of sales.

With regards to the 30-second samples shoppers can stream before the buy, industry officials believe they should be paid a "performance" income from Apple, much like when a song is played in a public venue like on the radio or at a sports game. It's the same situation, they say, for movies and TV shows that feature licensed music.

Because negotiations have apparently not produced results, the music industry has reportedly begun to lobby Congress. Their goal: Anyone who sells music, movies or TV shows online would be required to pay a performance fee with that transaction.

"If you watch a TV show on broadcast, cable or satellite TV there is a performance fee collected," David Israelite, president and CEO of the National Music Publishers Association, told CNet. "But if that same TV show is downloaded over iTunes, there's not. We're arguing that the law needs to be clarified that regardless of the method by which a consumer watches the show there is a performance right."

Israelite said that composers and songwriters are traditionally paid not only for the rights to a song when it is included in a movie or TV show, but also a performance fee from the networks or studios.

However, there is a question as to whether an online download could be considered a "performance." After all, there is a difference between a publicly or widely broadcast piece of content, and one simply used in a person's home for personal use, argued Jonathan Potter, executive director of the Digital Media Association.

"They are picking on Apple because they say Apple is making a bundle of money," Potter said. "But these companies should be thrilled that Apple and the other services are selling music and generating millions, maybe tens of millions, in royalties."

Earlier this year, iTunes went DRM free after the largest music labels -- Universal Music Group, Sony BMG, Warner Music Group and EMI -- conceded to Apple's requests. In exchange, Apple allowed variable pricing on iTunes songs, ranging from 69 cents to $1.29.

iTunes has had its share of troubles with content providers in the past, most famously NBC Universal, which pulled its television content from the online store in 2007 after a feud with Apple over pricing structures. A year later, the two companies were able to work out an agreement, offering high definition content for $2.99.

[sheff]

"They are picking on Apple because they say Apple is making a bundle of money," Potter said. "But these companies should be thrilled that Apple and the other services are selling music and generating millions, maybe tens of millions, in royalties."

I think that the artists should be more concerned with youtube (and sites like vixy.net) then with iTunes playing a 30 second sample, and actually selling their work for a fee.

[Robin Huber]

Royalties for your own ads? Those 30 sec. free samples are ADVERTISING for your work, songwriters. You want Apple to pay for the privilege of increasing sales of your work? How stupid are you?

[Dorotea]

I see those 30 second snippets as free advertising. How many of the songs have I purchased been because of the 30 second snippet? Maybe 1/2 to 3/4.

I swear that greed rules these people.

[MissionGrey]

This really troubles me and it speaks to what has happened to real capitalism.

If you don't like something, get the Government to put there nose in it.

[Ronbo]

But no one is doing that 30-second sample as an alternative to buying the song. There's no song that you intend to buy, which you're content to just preview over and over. That's like publishers saying you have to pay to check out what the back of the book says. That's the universal freebie they have to get you to purchase.

I'm all for asking for what's fair. But unless I'm misunderstanding this, it doesn't make a lot of sense.

And if you go to Barnes & Noble, you can listen to the music before you buy. Do they pay a performance fee?

[JupiterOne]

I'm wondering what the "music industry" thinks of the performances watched/listened to on airplanes. Are there performance fees tacked onto your $2 purchase of airplane headphones? Or what about those CD stores that let you walk up, put on a pair of headphones and listen to CDs to your heart's content.

[MacTel]

Do music stores pay performance fees everytime someone samples a CD? If not, then Apple shouldn't be required to.

When I buy or rent a DVD the same laws that govern those should apply to downloads of movies whether on NetFlix or from iTunes.

[Ronbo]

Originally Posted by sheff

I think that the artists should be more concerned with youtube (and sites like vixy.net) then with iTunes playing a 30 second sample, and actually selling their work for a fee.

Exactly. Remember that Apple is the first company to really offer a legitimate alternative to the torrents. How much money were they artists making on THAT? I have heard torrent users who explained how they were doing the artists a favor by listening to the music (without paying) because it was like free advertising. That kind of advertising is bogus. The 30-second preview is not.

[Superbass]

Originally Posted by Ronbo

But no one is doing that 30-second sample as an alternative to buying the song. There's no song that you intend to buy, which you're content to just preview over and over. That's like publishers saying you have to pay to check out what the back of the book says. That's the universal freebie they have to get you to purchase.

I'm all for asking for what's fair. But unless I'm misunderstanding this, it doesn't make a lot of sense.

And if you go to Barnes & Noble, you can listen to the music before you buy. Do they pay a performance fee?

You're all focusing on the 30-second samples, but the case also encompasses full downloads. The 30 second samples are long enough to be included in, for example, a television advertisement.

This also gets back to the fact that Apple needs the music providers just as much, or more than the music providers need Apple.

[foobar]

Frankly, I thought musicians were already getting royalties from movie purchases on DVD and over iTunes. It seems fair to me. However, if they don't like it, they should just change their damn contracts.

And I suspect they're not getting anything from DVDs, but are going only after iTunes, because they think they can make it sound like a broadcast... That's pretty absurd.

And about the 30s samples? Again, they should look into their iTunes contracts. If artists don't want to do it, fine, let's see where their sales go.

It's amazing how much the market can sort out on its own...

[stuartf]

What incredible stupidity.

The record companies no longer have to pay for distribution

The quality of the music I buy on line is lower than that of 20 years ago.

Yet the price is still the same as physical media and in some instances more expensive

Now they want to charge for a preview

Someone is making more money somewhere and supposedly it isn't the artist!

It's way past the time for the record companies to stop whining and develop a model that actually encourages more on-line sales, with better quality and fair pricing

Stuart

[B747]

My God, what are these people on?

I really hope Congress disregards this. Utter greed.

[hmurchison]

I don't know sounds they they failed to negotiate properly.

I certainly cannot get behind performance fees attached to 30 second sound
snippets as the intent of such snippets is to create an urge to purchase.

However on downloaded TV shows and the like they have a more legitimate (IMO)
because they would often have performance fees attached to broadcasted shows.

I think there is room here for negotiation but asking for fees to be attached to what is
tantamount to advertising really looks bad.

[MacTripper]

"...industry officials believe they should be paid a "performance" income from Apple, much like when a song is played in a public venue like on the radio or at a sports game. It's the same situation, they say, for movies and TV shows that feature licensed music."

Talk about killing your free advertising!

You got to get people hooked on your music so they will want to buy it to listen to it over and over and whenever they want too.

Instead labels want to charge everyone, when instead they should be happy they get free publicity/sales. There is a huge flood of good music, the labels really have no room to bargain.


I got people wanting me to DJ my nice sized (paid for and highly organized) music collection for bars and parties, etc. Great music most people haven't even heard before by famous artists.

But the threat of somebody snitching me off to the labels and the large and complicated fee's they charge can't be offset by what people can afford to pay for my time and effort.

You want to know why one hears the same crap played over and over on the radio?

Now you know. The labels, the RIAA.

DJ's hands are tied by the bean counters because of the greedy labels who need even more and more cocaine.

[webweasel]

Totally ridiculous. By the same reasoning, iIf I go to Waterstones (The Barnes and Noble of the UK) and leaf through a few paperbacks, does Waterstones have to pay a royalty to the publisher? This is lunacy!

[Ronbo]

Originally Posted by Superbass

You're all focusing on the 30-second samples, but the case also encompasses full downloads. The 30 second samples are long enough to be included in, for example, a television advertisement.

This also gets back to the fact that Apple needs the music providers just as much, or more than the music providers need Apple.

Sorry. I am indeed. It sounded like that's what this was about, though.

[charlituna]

Originally Posted by Ronbo

And if you go to Barnes & Noble, you can listen to the music before you buy. Do they pay a performance fee?

Actually I believe it is the other way around. or used to be when the samples were limited. the labels had to pay to be included.

perhaps that is what itunes should do. drop all previews and make the labels pay to have songs clipped for such means.

on the flip, I do agree that perhaps the songwriters should get the same performance pay from a tv show or movie download that they get when it is aired in theatres and tv (and I think they get it for home video sales as well) but they need to address that issue with the studios who were careful/less over putting said issue in the contracts. similar issues have come up with writers and actors in recent months so they can use that as a guide to proceed

[solipsism]

A few year from now the music industry will be asking for royalties if you hum or whistle a popular song to yourself.

[Dlux]

I think that merely saying the artist's name should be considered a performance, and subject to royalties. In fact, if I were - purely as a hypothetical - to simply write 'Metallica' in this post, I now owe the band one dollar.

Whoops.

[llewien]

The point is that anyone would run to the government to resolve a private matter. If you don't like the deal, don't accept it. If you accept it, don't run to the government. The two parties to a deal decide if it's a good deal, not an outside arbitrator of "fairness." That concept is now unfortunately pervasive, but it is foreign to the freedom our society is built on. If it comes to dominate privity of contract, the American experiment will have suffered a life-threatening blow. Indeed we are suffering those blows daily.

[mpw]

Originally Posted by webweasel

Totally ridiculous. By the same reasoning, iIf I go to Waterstones (The Barnes and Noble of the UK) and leaf through a few paperbacks, does Waterstones have to pay a royalty to the publisher? This is lunacy!

Waterstones have already paid the royalty to the publisher having purchased the stock, as I understand it iTMS only pays the royalty on sale. And I'm pretty sure that if they thought you were planning to read 20% of a book Waterstones would be asking you to either buy it or leave.

Personally I don't have a problem with a copyright owner asking to be paid for the preview, but it's an issue between him and the store; Apple could choose to not offer a preview, or he could not let them sell his music. It's not for governments to get involved in unless you take the view that Apple's iTMS has too much of a monopoly.

[jcsegenmd]

The music industry is populated by morons from the looks of it. Before iTunes came along, it was easier to get illegal copies of songs and movies than purchase them. With 8.5 billion units of media sold, the industry should be thanking apple for creating a business model in which they got revenues. And they make a lot more money on downloads than they do on hard copies, which have to be sold in a brick and mortar or by mail, warehoused, size of pressings guessed, you name it. And they're complaining that they don't get enough money ("only" 70%) when apple is picking all the transaction costs, offering gobs of free content, and so on.

NBC stormed out demanding more and came back groveling...I bet NBC isn't part of the whiner group; they remember the egg on their faces, I'd imagine

lordy lordy lordy

[hezekiahb]

Originally Posted by Superbass

You're all focusing on the 30-second samples, but the case also encompasses full downloads. The 30 second samples are long enough to be included in, for example, a television advertisement.

This also gets back to the fact that Apple needs the music providers just as much, or more than the music providers need Apple.

So the question needs to be whether they receive any of these fees when a movie or TV show is purchased on DVD at a store? These downloads should be treated the same way with regards to physical media.

As far as the 30sec previews, pretty sure that issue is related more to the fact that people can listen to all songs in an album & weigh whether it is worth buying the whole album. In this regard record companies are a bunch of greedy jerks. If I bought any other product & it turned out to be crap I could return it to the store. Because digital content can't be returned then I, as the consumer, should have every right to be able to preview content before I buy it!

[djames42]

Please everyone, read the cnet article before posting. AppleInsider neglected to specify just which group is going after royalties here. My own knee-jerk reaction was initially to slam the RIAA for going after additional revenue, this time targeting song previews. There I was thinking to myself, first these retards go after and try to shut down (thankfully without success) Internet Radio, what I believe to be their best source of free adversising (I have bought soooo much music because of Live365 and last.fm), and now they're going after another free advertising source?

It's not the RIAA this time, it's the group representing song writers (such as ASCAP). I would argue that they probably should be entitled to a slice of the pie when it comes to the sale of music online. I don't agree they should be granted royalties for music previews (that's just stupid).

As for the sale of video content, aren't royalties currently paid out every time a song used in a TV show, commercial or movie when it's played or sold (which is why episodes of WKRP being sold on iTunes and on DVD do not contain the original episode music)?

[SpamSandwich]

Originally Posted by MissionGrey

This really troubles me and it speaks to what has happened to real capitalism.

If you don't like something, get the Government to put there nose in it.

It's called lobbying, and every group and industry does it. Although legal, it's basically asking the government to be your own protection racket.

[webpoet73]

I have been on the side of the RIAA when it comes to pirating music (not really the sueing their own customers... but the message) but this is just ridiculous... they really have lost touch with reality. And of course, Apple is at the center of it because iTunes has been so successful.

Am I supposed to pay a performance fee if I play a movie at home for more than just myself... screw that.

The MPAA and the RIAA are their own worst enemies.

[Roc Ingersol]

Originally Posted by JupiterOne

I'm wondering what the "music industry" thinks of the performances watched/listened to on airplanes.

The airlines negotiate for performance rights for movies/music that they present to their passengers.

Performance rights have a reasonable place imo and that's one of them.
But if you're not 'performing' a substantial piece of the work, reasonableness has left the equation; regardless of other facts. (E.g. how much iTunes makes, whether they're 'performing' or not, etc)

[dcorban]

If authors/publishers want more money for their work, then why don't they negotiate for more money when they authorize their songs for sale in the itunes store?

[bspears]

Great. Now Levi's will want to start charging me for "trying on" a pair of jeans. Listening to the low bit rate 30 sec sample of music is like looking at something before you buy it. This is ridiculous and if they truly want to start charging for this they are further out of touch than I thought. Steve won't even give this one a thought. He will laugh and say......."next stupid idea".

[hedgeland]

Why are they publishing groups trying to squeeze money out of the consumer and the retailer? The record labels are making the lion's share of revenues and profits from each transaction on iTunes. Get it from them. They have plenty to spare.

[treestman]

Originally Posted by solipsism

A few year from now the music industry will be asking for royalties if you hum or whistle a popular song to yourself.

Or even just posting about it. That'll be 50 cents, please.

[Roc Ingersol]

Originally Posted by webpoet73

Am I supposed to pay a performance fee if I play a movie at home for more than just myself

Honestly, it depends how many people are at your house. There's no codified limit on the subject. If it goes to court, it's up to what a judge feels crosses the threshold from 'private' to 'public' performance.

ASCAP/BMI/SESAC have been known to shake down house- and block-parties that 'perform' the work they hold rights to. I don't know of a movie group doing anything on that scale, but it wouldn't surprise me.

[kaioslider]

Has the music industry not been struggling to find a way of profiting in the digital since the rise of digital downloads (as seen with year-over-year CD sale declines). This concept of making money for a sample is just a new area for the music industry to try and make a profit in a failing industry. Selling your product by giving out free "samples" is a marketing norm - you see folks giving away free samples in the grocery store all the time, I get free samples of laundry detergents and dryers sheets etc. all the time, magazines are all littered with free fragrance samples - the try-before-you-buy concept is not new.

Here's a compromise: Instead of sampling a piece of music, I just buy a song and if I don't like it you pay me back. How about this, I will pay you to listen to a sample of your music, but if I don't like it you have to pay me for wasting my time. Forget about iTunes needing the labels, the labels need us to be interested in making the transaction. Here's another thing that gets me: At the height of the whole DRM thing, shouldn't the DRM really have worked both ways? For example, if I by a license that says only I can play this music since I paid for it (limited to what kind and how many devices I can play it on), then since I now own my copy of the music, and it's digital, then if I already for it, but lost it somehow, shouldn't I be able to get a legal copy of that music back? What it I lost my digital copy, but then ripped a copy from a friends CD, if I was brought to court and could produce a receipt and say "look here, I have a right to copy of this song" won't that hold up? Of course not, that would be a potential profit not realized by the label, even though logically it makes sense. The labels are not 'really' concerned about what's fair, they are concerned about getting as much money from you as they can - if that means you pay twice or three times, too bad for you. My point is simply this, the industry has been changing and the labels have year after year been trying to stop that change - to maintain the status quo. It's icing on the cake how the labels are coming at this by championing the artist.

I think what we need see happen here is a new label model. At this point, I think the likes of iTunes and Amazon should start taking the role of labels and actually signing artist. Work out the distribution between competitors, and this time give more power to the artist. If the label no longer has to print CDs, or jackets, and manage distribution cost of physical media, they shouldn't the artist be benefiting more? Lets not take the eye off the ball when it comes to the bottom line when it comes to the artists - it's the labels that are trying to maintain 'their' profits margins at the expense of the artist.

As for paying for music used included in a downloaded program - you mean there's no negotiated deal that pays an artist for every DVD movie sold? What is the issue here? Sounds kinda simple.

[DKWalsh4]

Originally Posted by B747

My God, what are these people on?

I really hope Congress disregards this. Utter greed.

Congress? Disregard greed?

[thanx_al]

Music Industry to Charge God for Listening to Prayers Couched as Hymns.

[solipsism]

Originally Posted by treestman

Or even just posting about it. That'll be 50 cents, please.

Now you owe 50 Cent royalties, too.

edit: Shit, now I do, too.

[Paladinkn00be]

First off, they will have to prove that people are using the 30s samples as a alternative to purchasing the songs or albums. That by playing those 30s samples won't possibly lead to a purchase decision. Which sometimes listening to bad music will deter you from buying the album, but that revolves around a purchase decision.

Secondly, if they want performance royalties for TV/Movie downloads off the iTunes music store, they will need to take that up with the content owners, like Sony, Fox, Universal etc. It isn't fair to petition the government to step into Apple's success.

This is the problem of having a large controlling government who wants to spread the wealth. Songwriters, composers and artists have been on the wrong side of the deal since the beginning when the label executives formed a contract that screws those who perform and create the music. The Label records the music and creates a tangible object for distribution.

Really though, if your gonna whine about 30s samples, throw a hissyfit over the fact that radio is getting away scott free and keeps using the same lying argument. As it turns out Pandora, who was almost shutdown due to an intense royalty fee hike, induces more CD sales than radio. I stopped listening to radio because they don't actually play anything new, they repeat their playlists. Driving from Vegas to Flagstaff (4 hour drive) I heard 3 songs played 3 different times. Radio doesnt deserve to continue in their free escapades while Pandora has to make up industry losses.

[mac_dog]

Originally Posted by MissionGrey

This really troubles me and it speaks to what has happened to real capitalism.

If you don't like something, get the Government to put there nose in it.

those who hate the government are the ones who fucked it up in the first place. they're also the ones who hate the government unless it suits them.

[gmcalpin]

Originally Posted by Superbass

You're all focusing on the 30-second samples, but the case also encompasses full downloads. The 30 second samples are long enough to be included in, for example, a television advertisement.

I think the reason most of us are focusing on the 30-second samples is because that's the stupid part of it.

Very few (reasonable) people would argue that they shouldn't be entitled to the same percentage in royalties from a download versus a DVD sale. It's ludicrous that they're not getting that — but that's their own fault for signing moronic contracts with the networks and the movie studios, not Apple's!

A 30-second sample played for a music store customer should absolutely be free! It's an advertisement for their own music. It benefits them that they're free.

The fact that someone could take that snippet and use it in a commercial is irrelevant, because that use is already illegal.