Alyosha: Eminem shows the changing heart of music
So, Eminem’s royalties case against Universal finally reached the courts last week in what had been billed as far lower-key news than it actually is. I can hear the collective groan of disinterest out there but bear with me - these dealings in the murky world of music legalities could actually make a massive difference to the future of music. It may not sound very sexy, but the potential fall-out from this case could lead to an orgy of legal action and possibly the end of some record labels (at the very least as we know them). It’s been initially rejected, but apparently going to appeal.
It goes a little something like this: back in the day, when an artist put out an album, the money they received for the physical sale of their music was at a pre-determined royalty rate which took into account the cost of producing the physical product - the CD / vinyl, the packaging, the marketing, and the distribution. The label recouped their costs and the artist received a flat percentage which was agreed at the time of putting the record out.
Since then, things have come a long way and physical sales are no longer the only, or even the main, way to promote or release a record. Many artists now do much of their trade online and generate large chunks of their income from various “add-ons”, notably ringtones, and through a massive variety of portals both on and off the high-street. In other words, we now have the internet, mobile phones and more digital music channels than good taste.
However, despite the fact that many of these advancements in technology mean that there is no longer a manufacturing, packaging and direct distribution cost involved in buying some music (you just go to a website and download an electronic copy of a song), record companies are still trying to pass on the physical production costs for digital downloads. Eminem’s spokesperson:
“If you give the music to a third party without cost to you, like manufacturing or packaging, that’s the same as a licensing agreement… [Universal] are characterising it as something else.”
On the surface of it, this seems like a no-brainer. It seems totally unjustifiable to treat digital downloads the same way you would a physical CD and to take a cut for something you are essentially not doing.
That’s why iTunes are taking a cut, for instance, because they’re doing the distribution for you. There is no packaging or manufacturing involved in the sale of a digital download, so how on earth can anyone argue the toss that you should apply the same royalty rate as you would to something on the shelf in HMV?
The industry argument has so far been that that’s the contract so people have to suck it up, and with good reason - if Eminem finally wins this case, every label in the world will be fighting against their own roster of artists who will be demanding a better cut of the royalties and back-payments as well.
In the short term, this could be catastrophic for a lot of labels at the moment. In the longer term, I’d be surprised if they didn’t find ways around it with new artists, should the case against Universal be eventually successful.
The only potential downside to artists in this deal, as far as I can see, would be that if labels have to pay a bigger cut to artists (especially the bigger cash-cows on the roster) they may then have less money in the kitty to invest in new acts or to keep less lucrative acts in the stable. The big hitters of the pop world are unlikely to suffer, but those bands still developing and cutting their teeth may well end up being collateral in the process.
Still, it’s hard to argue against. After all, it doesn’t matter how much you’re earning - no-one has the right to rip you off. I’d rather see the bigger fish in the pond “taxed” and asked to put something back into the kitty to help sustain the grass-roots (a bit like the Premier League’s largest teams do at the moment), but with or without that, I’ll be following this case with great interest and hoping for the unusual outcome that Mr Mathers becomes an even richer man than he already is.
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