Fighting the Power

It seems to be a recurring theme in this blog, but now Chuck D has gotten in on the fun that artists like Eminem, Rob Zombie, and Rick James' estate have been enjoying. Chuck is now suing UMG, alleging that it has routinely miscalculated the royalties owed to artists like him for digital downloads, such as MP3s and ringtones, by treating them as "sales" of physical records rather than "licenses." This miscalculation in the aggregate could cost UMG millions.

What's more, Chuck's case could have an even bigger impact on EMI which has been up for sale since Citigroup took over the struggling company when previous owner, Terra Firma, defaulted on loan payments. As reported, any potential buyer will want to be protected against this looming financial disaster.

Your thoughts?

I'm Rick James, UMG!

If cocaine is a helluva drug, then recent decision rendered against Universal Music Group could prove to be a helluva problem as well - how problematic should be revealed soon. Following in Em's footsteps, the estate of Rick James has filed a class-action suit against the UMG arguing that the company has failed to properly account for royalties and may owe its artists tens of millions of dollars. As I previously blogged here, here and here, at issue is whether record companies are cheating artists out of royalties by counting sales of downloads the same way it counts physical CDs (entilting the artist to royalty typically ranging from 10 - 18%), rather than as a license (which is typically split 50/50 between artist and record company). James' suit claims “By this lawsuit, the plaintiff seeks to compel UMG to account to and pay its other recording artists and music producers (ie, those not directly involved in the FBT litigation) their rightful share of the licensing income paid to UMG for downloads and mastertones of the recorded music licensed by UMG to these entities”. However, prior to evaluating James' claims, the courts must decide whether to grant the James estate’s case class action status, i.e. one that would allow any artists in a similar position to claim the larger royalty on digital revenues if the lawsuit were to be successful.

The saga continues...

Ready or Not - Here Comes a New Rap App

I love win-win scenarios. So I was particularly intrigued by this new XXL app. Through this iPhone/iPad app, XXL magazine is giving aspiring mcs the opportunity to showcase their skills in 30 second clips. For $.99/upload, each mc can upload his/her performance, and will have the chance to be heard by music executives looking for the next big thing. Additionally, the best clips will be showcased on the XXL website and possibly in the magazine.

In addition to the recording function, the app also delivers hip hop news updates, and other hip hop-related content.

So, aspiring rappers have a new outlet to be heard, XXL extends its brand in meaningful ways, and consumers benefit from it all. I think this may actually be a win-win-win.

Check out a video report focusing on the app here.

Former Members of Misfits Band Punked in Trademark Dispute?

The punk rock band the Misfits have found themselves in court over a trademark dispute. While the band broke up in 1983, a former member (Caiafa) did not register the band's trademark until some 17 years later in 2000. The registering former member has since gone on to make a small fortune licensing the use of the Misfits trademark on such items as skateboards and Vans sneakers. The remaining members claim that they never abandoned the trademark using it after the 1983 breakup, and therefore, are seeking an accounting of all licensing revenues generated by Caiafa's exploitation of the trademark.

The Misfit's predicament begs the question: Who owns your band's name? If your group were to break up tomorrow, who would own the right to continue using the group's name and logo? It may surprise you to learn that unless you and your group agree otherwise, your band is likely a partnership. Under partnership law, all partners would be equal owners of the band's name and any associated logo designs, and any current and former member would be permitted to use the name after the band's split. Trademark rights are determined on the basis of the "use" of a mark, not on who created it first. Considering each of the members of the group would be an equal co-owner of the group name under trademark law, the goodwill associated with that mark could become essentially worthless without the full cooperation of the former members - a highly unlikely result. In the end, it makes sense to have a band partnership in agreement in place to provide for a smooth post-band transition. Had the Misfits agreed, they likely wouldn't be involved in litigation now.

Eminem Wins Yet Again...

It looks like we may be able to put the Eminem royalty case behind us. You may recall in my earlier posts here and here that at issue was whether digital downloads of Em's music are actually licensed uses (for which Em would be entitled to a 50/50 split) or the digital equivalent of physical sales (entitling him to a relatively paltry 12% royalty by comparison). The courts have sided with Em on this one, and the Supremes have upheld the lower courts deciding not to entertain Universal Records' appeal, thus ending this interesting chapter in an evolving industry.

Just how many contracts may be affected by the decision is unclear. Note the contract at issue is from the late 90's, prior to the advent of Napster, I-tunes and the like.While this certainly is an interesting topic, it probably won't have far-reaching consequences because the labels have long been hip to this glaring problem, and have shored up their agreements accordingly.

Obama Administration Calls for Copyright Crackdown

In an apparent bow to the lobbying might of Big Media in the forms of the RIAA and the MPAA, the Obama administration has offered 20 recommendations to Congress regarding it proposed methods for shoring up the current state of copyright law. Among the general recommendations for stricter copyright laws and greater enforcement powers, specifically the administration has called on Congress to make illegally streaming copyrighted content online a felony offense in certain instances. Also amongst the proposals is a request that Congress enact a public performance right for sound recordings allowing for royalty compensation to artists and record labels when their music is played over terrestrial radio. Currently, sound recording copyright owners enjoy a public performance right only for certain digital performances.

To be sure, the rapid advance of technology has caught copyright holders off guard and scrambling for ways to compete against free. To the extent the administration's policy proposals are adopted, their jobs in this regard will be a bit easier, but by no means done.

Chicago Shows its Artists Love

Just happened upon a great article recapping what sounds like an amazing event for the creative person wondering how to eat from her art - the Creative Chicago Expo.

The event provided a range of resources for creative artist including e-mail marketing, on-line fundraising, and music publishing. The goal at the end of the day was to empower creative people to earn a living from their passions.

What was particularly interesting to me was the idea that artists are "de facto businesses". Yet very few seem themselves as such, or have even basic business skills necessary to survive much less thrive in a competitive business environment. I enjoy working with budding "artistpreneurs" always attempting to ensure the marriage between art and commerce is preceded with the appropriate pre-nuptial agreementor in other instances, doesn't end in a messy divorce.

I applaud Chicago for its artist empowering efforts, and look forward to hearing about more initiatives like CCE. If you know of any such events, let me know!