
My Hilarious Warner Bros. Royalty Statement - soundsop
http://www.toomuchjoy.com/?p=1397
======
ars
So, the labels charge the bands for everything they do for them? So why do
they then also take 90% of the income?

You get a profit if you make an investment, but if you charge for all your
services, you didn't make an investment, so why do you deserve a profit?

But, I guess it works, since people are doing it.

~~~
tezza
Plenty of businesses have multiple ways of billing.

If you order repeat bank statements from your mortgage bank, are they not
allowed to charge you for postage??

As far as the article can show, Warner Bros is out $300K on the deal with
little prospect of getting it back. That's presuming the digital download sum
was actually $92,000 instead of $65.

~~~
Quarrelsome
You missed the bit where he points out that 90% that Warner take off the CD
sales are not deducted from the advance. In his figures Warner only had to
sell 15,000 of each CD to break even (which the author seems to suggest they
did). At this point the band will still be in the red with the label but the
label wont be in the red with the band.

~~~
tezza
I didn't miss that bit.

That 90-10% repayment split is part of the contract agreement he made with WB.
If it isn't he can sue WB.

\---

Other world examples: When one pays off a mortgage, you need to pay both for
the interest portion as well as the consideration portion.

That can vary over time. First you are paying off interest, later a mix.

Again very clearly a contract term and not morally wrong.

~~~
Quarrelsome
A mortgage has an interest rate set (in part) by an idependant body. This is
generally below 10%. You will find that this deal we're discussing is the
other way round the label slicing off 90% off the actual sales. That is their
"interest charge" for the loan they provided.

If we're going to stick to this mortgage comparison: do you think it would be
fair if all the banks colluded to charge interest rates starting at 90%?

Right/wrong, morally/legally that doesn't bother me. Is it fair? That's the
question. The answer IMO is "No".

This is what riles me, especially when as a consumer it is very difficult to
find this kind of information so it is difficult to make "fair" purchases to
stop this kind of thing.

~~~
tezza
The base interest rate is set by the government and the banks can whack on
whatever margin they want (including negative for a period)

Do you think it's "fair" that banks offer Interest Only[1] mortgages, where
you the householder can pay off 100% of the price of the house... and then owe
the bank the same amount again?

I understand why you are riled... but see my other post about my friend who
offered better terms to bands and got no business[2]

\-----

[1] [http://www.thisismoney.co.uk/mortgages-and-homes/tips-and-
gu...](http://www.thisismoney.co.uk/mortgages-and-homes/tips-and-
guides/article.html?in_article_id=415637&in_page_id=53957&in_advicepage_id=97)

[2] <http://news.ycombinator.com/item?id=971950>

~~~
Quarrelsome
Yea, I used to work in the mortgage industry. Interest only mortgages are
there for people who have investments to cover the cost but just to want to
ensure the liability doesn't increase.

What is unfair is selling these mortgages with endowment plans as a "dead
cert" to consumers like banks did in the 80s in the UK. They were all
successfully sued and settled in the late 90's / 2000s.

In the UK the council that sets interest rates is an independant entity.

------
Tangurena
Courtney Love gave an interesting speech several years ago on this very
subject: <http://archive.salon.com/tech/feature/2000/06/14/love>

~~~
redcap
Interesting article, but if you were after just the details on how fucked over
artists are, check out the Steve Albini article listed below.

~~~
Quarrelsome
Albini doesn't reference the Satellite Home Viewing Act 1999 though. That bit
of Courtney's rant is interesting. Also the reason why this article doesn't
appear on her own site anymore is interesting.

It's all interesting stuff and this is an area where there is limited
information. Read both!

------
pierrefar
The numbers are scary: WB claims to be $300k out but they're not accounting
for a sizable revenue stream. The post mentions the band earned $12k in 5
years from albums they control, and they expected the albums WB control to
earn 2-5X more. Assume 5x$12, and you'll get closer to $200k.

Do that over quite a few years, and they'll end up owing the band money while
the band members are alive. Keep telling them $62 over five years and they'll
never ever need to write them a cheque.

How is this not pure and simple theft?

~~~
dazzawazza
Because they singed a contract stating that advances are to come out of their
share of the profits.

It sucks but that's how it has worked and sometimes still works for artists
although a lot of them are wise to this game.

~~~
jcl
His point is that the company is misrepresenting money _promised by the
contract_ ; if the contract were actually enforced, the band might completely
repay their advance in another five years and be owed money.

It's like in _The Producers_... Whether intentionally or not, the record
labels are banking on the fact that people do not look too closely at the
accounting of a losing enterprise.

------
wgj
Here is Steve Albini's famous article on the generalized situation between
labels and bands:

<http://www.negativland.com/albini.html>

~~~
aerique
What are these "points" Albini is talking about in his article?

Like here: _"Wasn't it Buffalo Tom that were only getting 12% less 10?
Whatever. The old label only wants 50 grand, an no points. Hell, Sub Pop got 3
points when they let Nirvana go."_

~~~
Luc
Percentage points on the gross retail revenue. Look at the spreadsheet under
the article - the producer gets $90,000 (-$50,000 advance), being 3% of
$3,000,000 record sales.

------
sethg
_I am conflicted about whether I am actually being a petty jerk by pursuing
this, or whether labels just thrive on making fools like me feel like petty
jerks._

I vote for the second option.

~~~
zackattack
what's your surname?

------
chrischen
That's what's great about the internet. Fuck the distributors.

Want to be a journalist? Start a blog or a site.

Sell shit nationwide? Make a website, ebay, Amazon, etc.

Be famous across the world? Youtube.

Distribute an indie movie? Video sites and online stores.

The important feature of the internet here is that it allows _anyone_ to be a
distributor. Survival of the fittest can work more ideally. No more
people/companies being there simply because they were there first.

~~~
pyre
> _That's what's great about the internet. Fuck the distributors._

> _ebay, Amazon, etc._

> _Youtube._

> _Video sites and online stores._

Unless you are selling directly from your site there is still a middle-
man/distributor. As a content-creator, 'distributors' are a middle-man between
you and the retailers, but the retailers are middle-men between the
distributors and the end-user/customer.

The internet is really for reducing costs, but doing something like selling
streaming HD video (or just HD video downloads) is not something you can
economically accomplish on your own with just a hosting service. You need a
framework (iTunes, YouTube, etc) and they become the new distributor. They may
be a _better_ distributor (or just more 'barebones'), but they are still a
distributor.

~~~
chrischen
>Unless you are selling directly from your site there is still a middle-
man/distributor Right. And I said:

>The important feature of the internet here is that it allows anyone to be a
distributor.

Anyone can be the distributor, so competition is fiercer.
Monopolies/oligopolies are harder to maintain. Competition can be more ideal.

> doing something like selling streaming HD video (or just HD video downloads)
> is not something you can economically accomplish on your own with just a
> hosting service.

But more companies can jump into the space, even if one cannot do it
individually. The barrier to entry to a lot of industries is reduced because
of the internet.

My point was not that it makes everything accomplishable by _one_ person, my
point was that the internet _lowers_ the barriers to entry and encourages more
ideal capitalism.

> ...they are still a distributor.

Yes, and if you _self-distribute_ , _you_ become the distributor. There will
be a distributor. My "fuck the distributors" statement was directed at the
current distributors. It was a statement directed at all the inefficiencies of
their current systems.

Distributors will always be there. Of course. But the internet will allow more
distributors, because the internet gives all access to the world.

~~~
pyre
> _Yes, and if you self-distribute, you become the distributor._

I interpreted your post as saying that everyone can become a self-distributor
on the internet. So I was commenting that if you use iTunes/Amazon/YouTube/etc
you are not a self-distributor, you've just moved to a different distributor
that may provide better service/terms/etc. So we are essentially on the same
page.

------
zacharye
Terrific read, as unfortunate and common as the content may be.

As an aside that some may find of interest, and since the article mentions the
Red Hot Chili Peppers, I forwarded it to a friend who works with the firm that
does royalty audits for the Chili Peppers. His response (the auditor's name
has been removed):

"The Chili Peppers use ____ to audit their royalty statements, which they pay
____ a lot of money for, and they always get checks for hundreds of thousands
of dollars when ____ settles the audits with Warner Bros. Obviously, Too Much
Joy can’t afford ____’s level of expertise. So the little guy gets screwed...
No surprise there!"

------
invisible
What I find reprehensible about this is that while he believes he'll never
repay WB, it looks to me as though he could be at least a hell of a lot closer
to $0. So why should it be OK for WB to say keeping him further from $0 is OK?

You are not being a jerk by trying to zero out your balance. If what you said
about your other albums is correct, you could be at $250K currently rather
than the $400K. That means reaching "recouped" (whatever that means in this
insane contract you're bound to) could be possible in 10-15 years.

------
aresant
I think the record companies are spot on - spend your time with the 20% of
artists that are making money, ignore the 80% that are not.

The crooked side in this is that the labels outright own rights to the small
80%'s catalogs.

It would be better for everybody if Warner let them out of the pen so that
artists could deal with rhapsody, etc themselves.

I doubt that the book-keeping and time spent on uploading, cashing tiny
checks, etc would work out to being a positive net gain for the artists.

~~~
waterlesscloud
The exact same software that would allow for accurate tracking of the 20% that
make money would work for the 80% that don't.

The fact that they can't properly account for the 80% strongly implies that
they can't properly account for the 20%.

~~~
pyre
It's entirely possible that all of the numbers are being moved around _by
hand_ through various large Excel spreadsheets rather than in an actual
accounting system. You might think this unlikely for a large corporation, but
it happens. In this case, shuffling around the numbers for the 80% would be
extra time and money.

edit: Maybe I should mention that I'm not defending them, just pointing out
that there _could_ be a plausible explanation. In this case, the plausible
explanation is that their accounting people are idiots (they probably think
that their system is more reliable because an accountant is looking at all of
the numbers instead of some automated process, not taking into account that MS
Excel isn't exactly bullet-proof software).

~~~
cabalamat
Assuming royalties are often incorrectly calculated, what's the likelihood
that the innaccuracies are almost always in the favour of the record company?
I suspect very likely indeed, and IMO it constitutes fraud.

When record companies deprive artists of income through misaccounting, they
should be charged with copyright infringement, and fined at the same high rate
per copy that they have bribed legisltors to apply when others infringe
copyright. And if that means they go bankrupt, it's no more than they deserve.

------
codexon
Seems to be down sporadically. Here's a mirror.

<http://www.toomuchjoy.com.nyud.net/?p=1397>

------
pbhjpbhj
Can they somehow count unrecouped monies against profits on their accounting
sheets and so reduce apparent profit and pay less tax? Sounds like some sort
of accounting scam (as well) whether this is possible or not.

------
JacobAldridge
Funny, if it weren't so tragic.

------
Luyt
The financial statement seems to be printed... on a matrix printer! It looks
very 80's to me.

