Apple has the power to break the RIAA and end the label's abuse of artists. The technology is here, it is in place, Apple needs only to flip a switch. We'll get there in a second, first let's go over the problem:
In 1994 TLC released Crazy Sexy Cool, one of the best R&B albums of all time. Over 11 million copies sold, 1996 Grammy for Best Album and one of seven R&B albums to ever go Diamond. In 1994 Lisa "Left Eye" Lopes did the best thing for the group she could: she burned down Andre Rison's house. Convicted of arson, left with a 3.5 million dollar bill, the group was able to file for bankruptcy. Why was this a good thing? Because after a year of Crazy Sexy Cool, of "Waterfalls" on MTV every 30 minutes, the group took home less than $35,000 a year. How can this be? Let's do some math...
A label will approach a new artist with a "letter of intent." This sounds harmless, but in reality it is a contract that states the artist agrees to sign the label's contract. If the artist doesn't sign, they are not able to release anything without the label's premission. Faced with the contract or never releasing anything, most artists cave and sign the contract.
A standard contract gives the artist royalties of 7-10% after 10% is taken off of retail sales for cost, and is less recoupable expenses. That last part is a zinger, of the artists 6-9% effective royalty, expenses are deducted. These include, but are not limited to, manager fees, legal fees, studio time, producer's fee, media used, equipment rental, catering, promotion fees, tour bus, fuel, wardrobe, and lodging. If this sounds like the entire cost of making the album deducted from the artists 6-9%, it is. It gets worse...
An artist is given an advance, many times what the expected royalties will be. This allows the artist to be in debt to the label even if the album sold well. Since they are in debt, the label requires them to produce another album. What if you fight? Wonder why TLC released their follow-up to Crazy Sexy Cool 6 years later? Or why Bruce "Boss" Springsteen fell off the map in the 90s? Labels will tie you up with lawyers so long that you fade from the public eye, to let other artists know what happens to those who choose to fight back.
What can Apple do? Take away the power from the labels. The labels hold all the cards because they control the methods of distribution; they own the record stores, the radio stations, and the tv channels. Not the internet. All Apple needs to do is provide the distribution, and it doesn't even require effort.
Apple requires the labels to encode the album into mp3-like (more on this in a moment) format. Apple requires the label to write the artist bios, classify the genre, upload images, and set pricing. Apple pays the label (roughly) 70 cents for a 99 cent download. Apple covers all server fees, all credit card transaction fees, and deals with all customer issues. When Apple started, it openly objected to the idea of placing DRM, aka copy protection, in the downloaded songs. The labels forced the issue, and Apple gave in to be the first online music store with all major labels and a simple pricing scheme.
Fast forward to today and iTunes dominates. The iPod is so huge even things that had nothing to do with it use the name (podcasting). Apple is the target of Microsoft, Wal-mart and countless others wanting a piece. Here is the catch; Apple's FairPlay DRM only lets iTune's songs play on devices Apple allows. The DMCA ensures no one can develop a compatible device without going through Apple. Further, other online stores must beg Apple to adopt their DRM to allow customers to play their songs on the iPod, and the labels require DRM. Apple is sitting on the greatest lock-in device in music today.
Apple should know what it's like to be victim of lock-in. Microsoft has dangled MS Office support for decades now. I can understand a desire to hurt the bullies, but there is something else to consider here. The artists (the ones who love Macs) need help. Apple can give the tools the labels use to the artists to upload their songs without a label. Apple can use the existing iTunes features to help people find cool independent talent. Apple can open up addition revenue streams in helping artists find studios that will produce songs in an iTunes format. Apple can launch a website artists pay to be on that gives them the ability to have a homepage, community forums, sell t-shirts.
Apple should also understand if they don't do this, someone else will. There is too much money on the table for it to be left alone. There is probably a report locked away inside of Google looking at what it would take to do this. Google is already going after video, how far away is audio? Time to think different Apple, don't go chasing waterfalls.
Posted By Mike On Tuesday, February 21, 2006
Filed under politics apple music |
Comments (3)
Perry
-
Wednesday, February 22, 2006
1:59:00 AM
One of the lines in my tagline file says: "Not even the Devil makes deals with a record company. That's why the Devil is still in business." -- Patrick McLean, The Seanachai
