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How iTunes Hurts Weird Al

Posted by samzenpus on Wed Jun 14, 2006 10:35 PM
from the eat-it dept.
Johnny X writes "Weird Al Yankovic recently said he makes far less money when you buy from iTunes than when you buy an actual CD. This guy did the math and showed that Weird Al could be losing up to 85% of his record sales income due to the 'weird' ways the record companies compute digital sales. Are all artists getting the shaft like this?"
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[+] News: Weird Al Premiere Cancelled Due to Net Leak 266 comments
SilentChris writes "In what's probably a first, AOL cancelled the 'World Premiere' of Weird Al's newest video 'White and Nerdy' due to it being leaked on the internet. Al writes on his MySpace page: 'Apparently, the video has already leaked online, and AOL doesn't feel comfortable doing a World Premiere promotion for a video that a number of people have seen already ... Anyway, it's really a bummer... it would have been great promotion for the album... but hey, life goes on.' As for the video? Arguably Al's best work (but I'm a little biased)."
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  • by spune (715782) on Wednesday June 14 2006, @10:37PM (#15537151) Homepage
    Is the RIAA still in charge?
    • by Total_Wimp (564548) on Wednesday June 14 2006, @11:22PM (#15537405)
      Forget the RIAA, Weird Al's record label is definately the entity in charge.

      I know you all hate the labels, but it doesn't make sense to assume they're stupid. They may be greedy, exploitive and unfriendly to their own customers, but "stupid" would not be a word I would use to describe them.

      Weird Al said that he didn't really "get" the part of his contract that gave him far less money for digital downloads. He signed it anyway. That tells me pretty clearly that what Al didn't really "get" was the business of digital downloads in general. If he had, he woul have realized that paid downloads are increasing at roughly the rate of iPod sales and those iPod sales are through the roof. If he "got" digital downloads, he would have realized that 5 years from now digital could easily be a bigger business than CD.

      The thing is, his recording label did get it. They got it so well that they presented him a deal that looks pretty good now, while CD sales are still king, but will totaly bite ass in the near future when downloads are more common than CD sales. Yes, they're little better than the slickest of con men who will tell you exactly how they will get your money in the same breath that they con you out of it, but stupid? Hell no. They're in charge.

      TW
      • Forget the RIAA, Weird Al's record label is definately the entity in charge.

        It's kind of funny that the names of the companies involved haven't been mentioned, so I'll go ahead and do that: Al's current label is "Volcano" which is owned by "Zomba" which is owned by "BMG" which, of course, is part of the "Sony/BMG" ubercorporation...OMGWTFBBQ, I just realized! This is yet another anti-Sony story!
  • by Flimzy (657419) on Wednesday June 14 2006, @10:37PM (#15537153)
    Sounds like a good opporitunity to write an R.E.M. parody... "Losing my Commission"
    • by Sentri (910293) * on Wednesday June 14 2006, @10:59PM (#15537277) Homepage
      ...
      That's me on their ipod
      That's me on i - tunes
      Losing my comission
      Trying to keep up with tech
      And I don't know if you can do it
      Oh no you took too much
      I haven't got enough
      I thought that I heard price-fixing
      I thought that I heard you steal
      I think I thought I got ripped off ...
  • Cuplrit? (Score:5, Insightful)

    by Southpaw018 (793465) * on Wednesday June 14 2006, @10:40PM (#15537174) Journal
    TFA seems to blame iTunes, at least at heart. Wouldn't the actual problem here be the messed up, backwards, hacked way the (MP|RI)AA have decided to handle this newfangled technology called the internet?
    • Re:Cuplrit? (Score:5, Insightful)

      by Babbster (107076) <aaronbabb@NOsPaM.gmail.com> on Wednesday June 14 2006, @11:10PM (#15537341) Homepage
      Actually, I thought the analysis seemed to blame everybody: iTunes for charging 30+ cents per dollar for their web services (that surely does seem high, which makes me wonder if the mentioned 80/19 split isn't more accurate), the record company for not splitting their cut more fairly with the artist, and the implied blame of Al for signing what seems on the surface to be a pretty lousy deal.
    • Re:Cuplrit? (Score:5, Insightful)

      by UnknowingFool (672806) on Wednesday June 14 2006, @11:44PM (#15537507)

      Agreed. Here's what I understand.

      A consumer buys a record on iTunes for the flat $10 price. Apple takes its cut (30% or $3.00) but gives the rest to the record company. The record company takes out costs and then gives the artist a small percentage. For our example, let's say 10% or $0.70 goes to the artist.

      If the consumer had bought a $10.00 CD instead, the record company would still take the same of costs in terms of percentage but Apple would not have taken the first piece out. The artist would have gotten $1.00 in royalties.

      On the surface, it seems contradictory that artist would get less with iTunes and it would seem that Apple is to blame. The real culprit is what the record company considers as "costs." Every contract allows the record company to take out costs before royalties are paid. Traditionally the costs for the record company were things like distribution, marketing, and packaging for CDs and tapes. These were not minor costs.

      But in terms of digital downloads, Wierd Al (and other artists) are complaining that the record companies are taking out these traditional costs as if the work had been sold as a traditional CD or tape. What the record companies are doing are simply taking out the same percentages insteading computing the real costs.

      If the record companies had computed real costs for distribution and packaging for a download, it would have found that they are next to nothing. The artists should receive more. This is due to either the record companies not updating their accounting to deal with digital medium or purposefully shorting the artists. As a pessimist, I would think the latter.

  • So what's new? (Score:5, Insightful)

    by Anonymous Coward on Wednesday June 14 2006, @10:41PM (#15537179)
    Record companies find ways to give artists even less money. You knew it was going to happen. To the record companies, it is not about the music, but the money. Since the early days in the 50's they have been writing draconian contracts, then stealing the copyrights from the artists (remember the "musicians are craftsmen not artists" argument they were throwing around) and now this. Pretty soon, the artists will have to PAY the record companies for the priviledge of getting screwed.
  • The Shaft (Score:5, Insightful)

    by Poppler (822173) on Wednesday June 14 2006, @10:43PM (#15537186) Journal
    Isn't this interesting, after all the noise the industry made about going after illegal music downloads, all in the name of helping the artists. They then turn around and pay the artist next to nothing for the iTunes download you are supposed to buy because you want to 'support the artist'.
    Musicians will continue to "get the shaft" as long as they rely on majors.
    • Re:The Shaft (Score:5, Informative)

      by Geno Z Heinlein (659438) on Wednesday June 14 2006, @11:23PM (#15537407)
      Musicians will continue to "get the shaft" as long as they rely on majors.

      One of the best references on the subject: Courtney Love Does The Math [jdray.com].

    • by raehl (609729) <raehl311.yahoo@com> on Wednesday June 14 2006, @11:30PM (#15537450) Homepage
      There are very few people who actually have any taste in music. The vast majority of music purchases are made by shleps buying whatever is on the radio or MTV. So who is on the radio or MTV?

      Whoever the record labels SAY should be on the radio or MTV.

      So, no reason to pay the artists anything - if the artist you're talking to doesn't want to take a small percentage of the record sales, then you just find somebody else who will, make THEM the star, and then they can rake it in on concert ticket sales.

      People do not understand that pricing has NOTHING to do with what it costs to provide a service. It has to do with what people are willing to pay to get a service. And most new artists are willing to pay the vast majority of their record (or download) sales to have the services of a record label.

      Also, the article is wrong about WHO is getting the artist's money. The money the artist isn't getting isn't going to the LABEL, it's going to the CONSUMER:

      Price of Al's CD on Amazon: $14.98
      Price of Al's CD on iTunes: $11.88

      That's a difference of $3.10. Al 'apparently' loses $0.27 per song (not $0.265, article has rounding problems). $0.27 x 12 = $3.24!

      So, when Al comes up short $3.24 because a consumer got an album for $3.24 less on iTuns than on Amazon, who got that $3.24?

      The CONSUMER did!

      Now, I'm not saying this is FAIR. Clearly, the record label is making much more money on iTunes sales since, as mentioned, they don't have to pay for a lot of things they would if they distributed music by physical CD. But... why should Al get any of that? Al has agreed to pay the record company a certain amount for the record company's services. The record company gets the same amount whether the CD is sold online or on the shelves. If Al doesn't want to lose money to his stuff being sold on iTunes, he should renegotiate his contract to not allow iTunes sales. I bet most artists wouldn't do that though, because they make most of their money on concerts, and being on iTunes helps them sell tickets.

      The *REAL* problem here is not that Al isn't getting more money. The real problem is that the CONSUMER is still paying the record company CD distribution prices instead of digital distribution prices. In a free market, we would expect digital downloads to be much cheaper than $0.99, because the various distributors would compete against each other reduce the inflated margins the record companies (and iTunes) are getting based on CD priving. But since iTunes is a fairly insulated monopoly at this point, even though the CD *COSTS* of distribution have gone away, the CD *PRICING* hasn't.

      So, who is REALLY at fault for the artist getting no money AND the record company and iTunes still getting full price?

      APPLE! They've set the $0.99 price and are putting no pressure on the record labels to lower it.
  • by xmas2003 (739875) * on Wednesday June 14 2006, @10:44PM (#15537196) Homepage
    Submitter's (?) blog references this, but here is Weird's Al's website [weirdal.com] where he actually talks about it ... his response on this topic is the 4th bold one down.
    • by xplenumx (703804) on Wednesday June 14 2006, @11:21PM (#15537400)
      In cases like this, I'm all in favor of the editors modifying the submitter's links. Not only does Aaron Hockley's blog offer no more information than what he submitted to Slashdot, but in his "Blogging" cattegory he clearly states that he's actively engaging in this sort of activity for his own personal benefit (don't bother, it's not worth the look nor the additional clicks to his 'blog').
  • apples to oranges? (Score:5, Insightful)

    by TheSHAD0W (258774) on Wednesday June 14 2006, @10:45PM (#15537200) Homepage
    Even if Al is making less per song, does that mean anyone who bought one of his songs or records from iTunes would've otherwise purchased a brand new CD? Or might they have bought a used one, or none at all?
  • by Marsmensch (870400) on Wednesday June 14 2006, @10:56PM (#15537261)

    I remember reading a UNDP [undp.org] report a while back on the development of countries in Africa. The researchers observed that the international market prices of commodities such as coffee or sugar were higher then than at any time in the past, and yet in the last few years the prices payed to the small farmers was at its lowest point in the past 60 years.

    The reason for this apparent contradiction was the fact that small farmers can't sell their wares directly to the final consumer who brews coffee at home. Rather, this coffee is bought up by one of a handful of multinationals, who because they are so few, more or less dictate prices to the farmers, and then sell it on to the consumers. The fact that there are few of these middle men puts them in a position of power which allows them to make off with the king's share of the profits, and indeed they absorb the price hikes.

    Maybe its time musicians got together and set up an electronic coop to sell their music the way farmers sometimes set up "farmers markets". They could have more control over their prices, and how much of what consumers pay goes to them.

    Shouldn't the internet be making it easier to cut out the middle man like this?

  • by melted (227442) on Wednesday June 14 2006, @11:41PM (#15537492) Homepage
    Steve Vai said the same thing a couple of years ago: http://www.vai.com/AllAboutSteve/postcard_040220.h tml [vai.com]

    Here's an excerpt about iTunes in particular:

    For instance, If you go to Itunes and download a song for $.99, Apple retains about $.34 and the label receives about $.65. Labels then calculate a royalty base price to apply to the artists deal points. Following are some of the deductions:

            a. A packaging fee (container cost) of up to, and sometimes more than, 25%. That's 25% of retail which is $.99 equaling about $.25 (by the way, there is no packaging on a digital download).

            b. A 15% deduction for free goods. That's an additional $.15 or so. (There is usually no free goods with digital downloads unless someone is ripping it from the net.
            That leaves a royalty base price of close to $.60 per track that the artists royalty is calculated against. If an artist receives 15 points in their deal (and remember, that's a very good deal) then he is entitled to aprox. $.09 a track. This is then cut in half because of the "new technology clause" that is incorporated into most deals. The artists royalty is then calced out at $.04-.05 a download and from that, 100% of it is withheld by the label to go towards recoupment of any advances to make the record, advances in general, tour support, radio promotion and other things in some cases. Most managers and producers are paid from record one and are paid regardless of the expenses, leaving the artists with even more of a recoupment burden before they start to see any income.

    IOW, freakin' artist needs to be extremely lucky to see ANY of the money, ever, despite the fact that it's his work being sold. OTOH he may be able repay his debt to the label - this is something they won't be able to do if their stuff is sold through allofmp3.com.
    • RTFA (Score:5, Informative)

      by Chuck Chunder (21021) on Wednesday June 14 2006, @10:41PM (#15537181) Homepage Journal
      I am extremely grateful for your support, no matter which format you choose to legally obtain my music in, so you should do whatever makes the most sense for you personally. But since you ASKED
    • Re:New name (Score:5, Informative)

      by sketerpot (454020) <sketerpot&gmail,com> on Wednesday June 14 2006, @11:25PM (#15537424)
      Fuck you, asshole. Here's what Weird Al actually said:
      Tim Sloane of Ijamsville, MD asks: Al, which of these purchasing methods should I use in order to make sure the most profit gets to you: Buying one of your albums on CD, or buying one of your albums on iTunes? I am extremely grateful for your support, no matter which format you choose to legally obtain my music in, so you should do whatever makes the most sense for you personally. But since you ASKED... I actually do get significantly more money from CD sales, as opposed to downloads. This is the one thing about my renegotiated record contract that never made much sense to me. It costs the label NOTHING for somebody to download an album (no manufacturing costs, shipping, or really any overhead of any kind) and yet the artist (me) winds up making less from it. Go figure.

      He's not the greedy one here.

    • by EvanED (569694) <`evaned' `at' `gmail.com'> on Wednesday June 14 2006, @11:41PM (#15537491)
      Would you RTFA?

      Al's not really complaining. Someone asked him what medium gets him the most money, and here's what he had to say:

      "I am extremely grateful for your support, no matter which format you choose to legally obtain my music in, so you should do whatever makes the most sense for you personally. But since you ASKED... I actually do get significantly more money from CD sales, as opposed to downloads. This is the one thing about my renegotiated record contract that never made much sense to me. It costs the label NOTHING for somebody to download an album (no manufacturing costs, shipping, or really any overhead of any kind) and yet the artist (me) winds up making less from it. Go figure."


      He's a little sarcastic about it, but that IMO doesn't come close to "complaining".