Japanese Musicians Defy Sony by Joining iTunes 320
Homework Help writes "Japanese musicians under contract by Sony are defying their contracts by using Apple's iTunes service to deliver songs. Rock Musician Hotoharu Sano points out: 'It is an individual's freedom where that person chooses to listen to music. I want to deliver my music wherever my listeners are.' Sony Music Entertainment and Apple are still locked in talks and no agreement has been reached so far. Apple's offering of its iTunes service at lower cost in Japan is greatly attributed to their success." From the article: " Before iTunes' arrival, Japan's top music download service, which is backed by Sony and includes Sony recording artists, averaged about 450,000 downloads a month. By offering its service for lower prices, Apple is undercutting such online music services. Japanese are accustomed to paying twice as much as Apple is charging in Japan, which are still higher than the 99 cents charged in the U.S."
Hobo King Band (Score:5, Informative)
Re:Hobo King Band (Score:3, Informative)
This is the way it should be (Score:3, Informative)
Re:Nice to see Apple being fair (Score:2, Informative)
Why iTunes is popular in Japan (Score:2, Informative)
Re:In Search of the Lost Accord (Score:2, Informative)
You're both mistaken. (Score:5, Informative)
More importantly, it's a loan from which the costs of recording are paid. In other words... Out of that advance, Britney has to pay:
1. The studio
2. The producer
3. The musicians
4. The songwriters
5. The backup singers
6. The business agent
7. The manager
8. Security
9. Staff
10. Personal assistants
11. Music techs
12. Sound engineers (yes, they cost extra)
13. Transportation
Usually, the entire advance gets spent on all of the above... the artist is now sitting with zero in the bank or even a negative balance after all is said and done.
Now here's where it gets scary...
The entire advance is a loan... That's right... it's owed back to the record company.
Recoupment works like this...
If Warner Bros. pays you a $500,000 advance for album 1, and has you optioned for three more...
First you have to recoup the $500,000... but you don't recoup it at the gross MSRP of the albums sold. You recoup it at your royalty rate.
The royalty rate an artist gets is not based on the MSRP. In other words, if an album retails for $15.98, the artist's cut... probably around 14% for Britney... is not 14% of $15.98. It's 14% of the royalty base less gross margin, i.e. about $7.98 ... after deducting marketing, distribution, packaging, promotions, and related costs.
So now, that's about $1.12... pretty high actually for a Britney, believe it or not. But let's be generous and say that her royalty is $1.12.
She has to recoup the $500,000 at that rate... $1.12 per album. So, she has to sell 446,428 albums just to pay back her advance.
Now... UNTIL she pays back her advance, she does not get to keep a DIME of royalties. So, given that with a $500,000 advance she's probably spent every last dime of it, she's going to be broke if her album doesn't go gold. What's worse, she's still tied to her contract until she delivers the other optioned albums.
But wait, it gets worse...
If she gets a larger advance, she now has to sell even more albums to pay back the advance, meaning it takes even longer before she gets paid a dime... and usually when artists get a larger advance, they still blow every dime of it on all the aforementioned expenses.
But here's what's more... If she has any contracts with band members or producers to get paid royalties... their percentage take comes OUT OF that $1.12... Then the business agent and managers take their cut... 15% of what's left? No, 15% of $1.12 per album.
It still gets worse... the artist is the last person to get paid. The business manager handles all disbursements (just like a lawyer on retainer)... everybody else gets paid, then the artist takes what's left.
It gets worse, still... If any tracks on the demo submitted to the A&R department are rejected, Britney has to go back to the studio and record some more...but if she's blown her advance already, then the additional recording costs come out of her pocket.
It gets even worse, even now...
If Britney's album is a failure and lets say $200,000 has not been recouped... When her next album is due, the $200,000 unrecouped balance gets pooled with the advance for the new album. Now she has to still recoup both... but there's more. Until she has paid off all her debts, she cannot get out of her contract... she still owes the record company material.
But there's still more...
The record company may incur additional expenses related to the promotion of the album... whenever an A&R agent wines & dines a program director at a radio station, whenever someone uses a jet to fly from LA to New York and meet with program directors there, whenever transportation costs and other overhead expenditures are incurred in relation to the promotion of her album, etc.... all these expenses are deducted from her advance and/or royalty checks first.
You're mistaken. (Score:3, Informative)
deja vu all over again (Score:2, Informative)
Re:You're both mistaken. (Score:1, Informative)
Right of First Refusal comes into play with material beyond that covered in the contract (especially in the case of popular brand names) as well as optioned material, this protects the producing party when the distributing party is unwilling or unable to uphold the options. For instance, Fox probably had Right of First Refusal for Futurama. Even though the creators of Futurama own the material themselves, they must give Fox the first crack at distributing it. Once Fox refused to broadcast any more Futurama, they were free to take the series to anyone else who would pay.