Kazaa Agrees to Pay $100m to the Record Industry

siddesu writes "BBC has the following breaking story: File-sharing site Kazaa will become a legal music download service following a series of high-profile legal battles. The peer-to-peer network has also agreed to pay $100m (£53m) in damages to the record industry. The announcement follows the release of a music industry report that says more than 20 billion music tracks have been downloaded illegally in the last year. Hungry artists across the globe rejoice."

just how much will each artist make?

I know theres a lot of artists, but does anybody know just how many and just how much of this money will actually go to the artists?

I personally think they will still be hungry.

Re:just how much will each artist make?

I know theres a lot of artists, but does anybody know just how many and just how much of this money will actually go to the artists?

Technically, the artists now owe the RIAA money.

Re:just how much will each artist make?

Who knows... but it doesn't look good for the smaller artists I guess.

To quote Janis Ian:

...from personal experience: in 37 years as a recording artist, I've created 25+ albums for major labels, and I've never once received a royalty check that didn't show I owed them money. So I make the bulk of my living from live touring, playing for 80-1500 people a night, doing my own show.

And she goes on to state her opinion on the downloads as:

Who gets hurt by free downloads? Save a handful of super-successes like Celine Dion, none of us. We only get helped.

Source: http://www.janisian.com/article-internet_debacle.h tml [janisian.com]

Re:just how much will each artist make?

Then I guess she shouldn't have entered into a contract that was a bad business deal for her.

I'm sick of this stupid hivemind attitude where the artists are so downtrodden and abused. Like it or lump it, these people aren't being mugged of their rights, they have to willingly sign them away. If they don't understand what they're signing, they should get a lawyer.

And, of course, the argument that there's no other way to make it big is pointless too. Nobody is guaranteed the right to make money, only the freedom to attempt it. If they want to make money, and they can't do it through cartel members under teh RIAA, they should make an attempt on their own. If they don't make it, and fail, then they can go sit and cry in a beer with the other 90% of businesses that don't make it either (of course, we all know that because freedom provided by p2p and such is this huge legit business model rather than a place where 99.99% of all traffic is copyright infringement and/or porn or viruses, indy artists are all just going to be rolling in dough without the marketing muscle of the RIAA studios, right?).

Is the RIAA and its members abusive to artists and consumers? Absolutely.

Are artists under any obligation to sign contracts with them? Absolutely not.

Are consumers obligated to buy music from them? Absolutely not.

Re:just how much will each artist make?

I'm sick of this stupid hivemind attitude where the artists are so downtrodden and abused. Like it or lump it, these people aren't being mugged of their rights, they have to willingly sign them away.

Have you ever managed to change the terms and conditions of your power bill, your phone contract, the EULA on your XP installation? When you are small fry you have the choice of signing what the record company offer, or nothing. Sure you can go somewhere else, but that other label is just has harsh.

The record companies have all the power; They have nothing to lose and will tell you that they'll 'just sign someone else'. You might get room to move a little within your 'negotiation', but until you make it big you have nothing to negotiate with.

That said, I'm glad you recognize that the RIAA is abusing its powers. Massive Props to you.

Re:just how much will each artist make?

When you are small fry you have the choice of signing what the record company offer, or nothing. Sure you can go somewhere else, but that other label is just has harsh.

How can you say "or nothing"? I'm pretty sure that I can record a CD, burn it, and sell it, all without involving any major corporation. Hell, why even burn it? Why not just post it on my own webspace? I'm not sure about Apple distribution agreements, but perhaps you could get it posted on the iTunes Music Store, at minimal cost to you (we've all heard Apple makes about a penny or two profit per song, and most of the rest goes to the label, which in this case would be you).

Or maybe it's time for a whole new economic model. Let's be honest: why do artists want to get signed? They want to do it because it feels like a finish line. Get signed, get money, done. Of course the labels are ruthless, because their job is to tantamount to panhandling: they are trying to take the consumer's money by selling something on good faith. Who knows whether the CD you're about to buy in Tower sucks? You sure as hell can't download it for free to decide for yourself--you must do the honorable thing and take the plunge, because that's what keeps our culturemachine rolling, right?

Let's just consider a different way of doing things. What if I were to post my self-recorded, self-produced CD online, and charge nothing for it? I have a dayjob--I'm not throwing my life out the window or putting myself in financial jeopardy, doing what I love in my free time and sharing it. I could put a PayPal link on my site, and people who really enjoyed my work would pay me. Honestly, I've heard songs that I would pay never to hear again (an insurance policy of some kind). I also own CDs for which I'd've paid the artist upwards of $100, if I had had a way to do it directly.

In our ardently capitalistic market, money is no longer used to promote future growth. Money is a throwaway commodity, and we buy things that are designed not to last. Record companies want their artists to be forgettable--no one's looking to sign the next Beatles, because such a phenomenon has become unthinkable to our market, meaning the bar is low. So how about a system where the consumer and the artist are actively considering the allocation of money toward the future. "I want more of this. Yes. I'll pour money into this, because this guy understands." The artist has to earn my money, rather than the label.

We aren't liberal enough with our money in this culture. Why is it impolite, nay, taboo, to pay someone a quarter for a really funny joke? A dollar? Twenty? We aren't paying for satisfaction any longer, we're paying out of guilt because we don't feel like understanding. We'd rather pay than think.

Maybe I should start putting a PayPal link in my sig. =D

Re:just how much will each artist make?

I'm sick of this stupid hivemind attitude where the artists are so downtrodden and abused. Like it or lump it, these people aren't being mugged of their rights, they have to willingly sign them away.

Ever considered that it could be the only way to be published big time? For them it's the choice between "A chance to make it big time" and "Would you like fries with that?"

Re:just how much will each artist make?

It doesn't matter one bit. If the risks are large for a certain potential payout, they must weigh their goals against those risks and make an informed decision. This is called "business". Hundreds of thousands of regular people try it every year and lose everything, make a modest living, or in some cases strike it rich. If they want to be in the business of big time entertainment, they can make the decision to take the necessary risks.

It is entirely on them if they choose to take on huge risks in the pursuit of huge payouts, and it is nobody else's fault if those payouts do not materialize. Nobody is guaranteed the right to become rich, only the freedom to try. They under no obligation to take this path in their lives.

Re:just how much will each artist make?

That's the problem, most artists have no business sense and thus get fleeced. My wife was watching Biography a couple weeks ago and it talked about Dolly Parton...

Things have changed a lot since Dolly had no reputation and no audience. For one, basically all the radio stations weren't owned by a single corporation. Second, the RIAA members had not consolidated their stranglehold on all major distribution channels. Right now the normal artist's main goal is to be heard. They want everyone to hear their music because they are an artist first and a businessman second. Very few people go into music because they think it is a path to wealth. Given the choice between possibly reaching a large audience, or being specifically stopped from reaching a large audience by a large cartel repeatedly convicted of collaborating to abuse their consolidated position, many choose the former. If they don't they will never sell a CD in a major store or be heard on the radio and most people will never, ever hear of them.

Sure there are counter examples of those few independent artists that won out against all odds, but they are the rare exceptions. Copyright law was designed to benefit artists and encourage them to make more works. It has been abused and morphed by powerful corporations so that it instead is a tool to control art and make sure artists in general make no money off their art. If copyright was abolished entirely it would be a boon to the average recording artist, since the RIAA would have no motivation to stop their distribution and they could still make money the way almost all of them do now, concerts and merchandise.

Re:just how much will each artist make?

Then I guess she shouldn't have entered into a contract that was a bad business deal for her.

I'm sick of this stupid hivemind attitude where the artists are so downtrodden and abused. Like it or lump it, these people aren't being mugged of their rights, they have to willingly sign them away. If they don't understand what they're signing, they should get a lawyer.

You are correct, but you forgot to mention one thing...

American musicians have no real alternatives to the RIAA!

Sure there are many Indie labels out there (such as my own), but we don't have the ability to put our CDs in walmart, put music videos on TV, and send our musicans on tours that cost ten's of thousands of dollars (have you ever looked into the logistics of having a road crew and a tour bus... it ain't cheap)

I will have to admit, if it weren't for the internet I wouldn't be able to do what I do today with promotion, sales, and distribution but we aren't making enough money to quit our day jobs.

So unless you have enough money to make your own label, an underground musician won't be able to compete with the RIAA's music.... Unless of course you don't mind doing it for free and the love of the music (which many do).

On the other hand... European major labels tend to be a bit more diverse and fair to their musicians.

Re:just how much will each artist make?

"Like it or lump it, these people aren't being mugged of their rights, they have to willingly sign them away"

Oh, bull, the entire structure of IP legislation is aimed squarely at protecting publishers from competition. Those 'rights' are monopoly protection laws that in themselves create the market failure. The effect being, the rights creating the media concentration which effectively marginalizes any non-signer.

The artists are effectively mugged of their right to compete on a fair market; the inequality of resources are an effect of legislation, not an inherent nature in the market.

Re:just how much will each artist make?

Then I guess she shouldn't have entered into a contract that was a bad business deal for her.

Then probably I guess you never tried to record, publish and promote your own album. You can pick lots of funny information by yourself.

There is no other word for that business but "mafia". They are middle man, standing between creators and fans. They rob artists of what they create - under guise of helping them with all the bureaucracy and formalities (All the bureaucracy and formalities help nobody else but recording companies - and quite questionable why it is there in first place). Then they force DRMs on consumers and restrictive contracts on broadcasters makeing sure that you get the work of artist only from them and only on condition they have set.

FYI.

Have you ever wondered by some crap like "Britney Spears"/etc make so high in hit lists? I asked that question to DJ of one german FM radio I met in pub. (Well, Okay, I asked why they have for every hour of good new music they 12 hours of old trash. Do you start guessing how the questions relate?) Right, RIAA (or its german face Sony BMG) sets in (very long) contract conditions on programming of FM stations with restriction like: "two new promoted songs cannot be aired in the same hour", "new promoted song has to be separated at least by 5(?) minutes from any other song", "you can't air more than 4 news songs per hour", "you can't air new or promoted song next to another promoted or new song respectively." I can't tell the restrictions precisely. But I hope you get the spirit of the conditions boradcaster have to deal with.

The goal of such silly conditions to make sure that some stupid talentless voiceless signer(in) would catch your attention. No way you would get away from that promoted song: first they assault your brain with 100 times repeated hit of 80s and then BA-BAM! new song. No way human brain (exhausted by the commercials and old crap before) would manage to reject the new song. The content of the song is irrelevant - it just has to be new/different.

Conditions in the contract make sure that song would stand out on the dull background. And here you have it: some talentless voiceless macho gets on top of hit lists, while probaly having only sex appeal.

Often, they just approach young performer with offer "Do you wanna us to make you the star???" Who of beginners in his/her right ming would turn down such offer.

Are artists under any obligation to sign contracts with them? Absolutely not.

Step by step.

1. Renting recording studio is very expensive. Very.

2. Hiring professional sound editor is very very expensive. You can edit by yourself - but quality would be not sufficient for most broadcasters.

3. Okay, we pulled the bills for recording the album. What's next? Right, "Music" == "CD". Publishing. (Oh, crap, we forgot covers! - the work of cover designed is very expensive.) How mush CDs do you want? 100'000 - that would be 0.25 per disk. You can't pull that? - Okay you can make 1000 disks for $1-2.50 each.

4. Suppose we made it. Now we want to sell it. How would we do that? We contact the retailers. What they say us? - "Pay us money. People do not know you. The sales would be very slow. Etc." Right, to start selling we have to pay the bills of retailers so they would manage to keep your album on the shelfs.

5. How would we make people buy it? We need FM promotion. We come to FM stations: they wanna money since the only way they would accept your work as if it was commercial. (That's right, airing songs (which help promote radio) on behalf of commercials. That's why you need one good catching song - and short song in your album.)

I can go on, but I hope you got the spirit. I intentionally omitted steps like buying musical equipment and finding/renting room for trainings. But you can imaging that all that requires time and money. Lots of them.

And now enter recording compani

Re:just how much will each artist make?

I think the ones that are hungry are the ones that WANT people to download their stuff. And I think that labels are a monument to mediocrity and mistreatment. Let's not forget the guy from Creedence Clearwater, who got sued for copyright infringement OF HIS OWN WORK because the record label owned the copyright. Or, much as I may hate them, the Backstreet Boys, who, after several hugely popular albums, testified that they hadn't ever received a royalty cheque. Or DMX, who compared the music business to legalized slavery. Let's not forget that the major labels were convicted of price-fixing, and got the tiniest penalty imaginable. This is a short beginning of a very long list, but I'm not going to type it all. The point is: pretty much anything that results in the major labels getting more money is bad. And this likely will.

Re:just how much will each artist make?

Or DMX, who compared the music business to legalized slavery.

I just wanted to add that a couple of years ago, some US Congressman (sadly, I don't remember who it was) said that the music business was like a bank that owned a mortgage on a house and after the mortgage was paid off, the bank still owned the house. I thought that was probably the most perceptive view of how the music business works that I have ever heard.

Re:just how much will each artist make?

Zero.

the RIAA isn't affilated with any artist. Just the lawyers athorized by their labels.

So the RIAA lawyers, and the riaa org. gets their cut, then the label's lawyers and the labels.

The artists themselves aren't worthy enough to recieve any moeny after those people take their cut.

it's really not that surprising. If the rumours are true for every download on itunes an artist recieves less than Apple's share. It's time for a music revolution.

None. This just offsets Record Industry costs

does anybody know just how many and just how much of this money will actually go to the artists?

"While the award may seem like a vast pot of money, it will merely offset the millions we have invested - and will continue to invest - in fighting illegal pirate operations around the world" - EMI Music vice chairman David Munns [macworld.co.uk]

Re:None. This just offsets Record Industry costs

Which casts a huge megalith of doubt on their intentions. No profit driven enterprise would spend more on litigation than they expect to get in return - which is why, for example, car companies don't issue recalls for lemons if they expect to be able to settle for far less than a recall will cost.

So that leaves one wondering - what do they really want? And there's only one answer left.

Power and control.

Re:just how much will each artist make?

If the artists actually owned their music, they would see some decent money. After being pressured by the label, being told that there are a thousand more waiting in the wings to sign on the dotted line, lest they pass up the "chance of a lifetime", they'll sign anything, including the part about the label owning the copyright to their songs.

This is why you don't see a lot of mainstream artists endorsing the trading of their music. It usually isn't theirs to trade anymore.

Re:just how much will each artist make?

In the book "This Business of Music", by M. William Krasilovsky, there is a very poignant flowchart/diagram. In this diagram, it shows in a nutshell how music goes from the artist to the consumer/fan. The bottleneck within this diagram was, not surprisingly, the distribution channels - where the music goes from the manufacturer to the stores/wholesellers. The major distribution chains, at least within the US, are essentially owned and operated by the major music companies. That is the real reason the RIAA and record companies are so concerned, because a large portion of the markup between the artist to the consumer falls in the distribution chain. Therefore, whoever controls the distribution of music essentially controls the elasticity of supply/demand and, therefore, can potentially move pricing. In addition, and to paraphrase from memory, when Radio was first developed, the music industry was concerned that allowing people to listen to music for free would destroy the music publishing industry (i.e. the printing and selling of sheet music). Then, the creation of the recordable, blank cassette tape was supposed to destroy the music industry. And so on...There is no argument that either the RIAA or the recording industry can use that will disprove the simple fact that they are ultimately only concerned for their own pocketbooks, not those of the artists themselves.

Next in line to pay up

Now lets see how much they'll pay to all the people whose PCs have been crippled by all the malware kazaa dumps on their computers.

FTFA: We have won another battle in an ongoing war," said John Kennedy, chairman and CEO of the International Federation of the Phonographic Industries (IFPI). "We move forward with a spring in our step."

All they have to do now is get all those undead [betanews.com] offenders to pay up.

the cost of music

$100,000,000.00 / 20,000,000,000 Songs = $0.005

seems rather hypocritical that the RIAA won't allow AllofMP3 to sell songs for $0.05 when they are selling them for 10 times less..

Re:the cost of music

With $100M, it seems like they could find someone who speaks Russian and forge that business relationship. And don't piss and moan about the corrupt Russian government and the shady legal company holding the royalties, what do you think the the US Congress and the RIAA look like to those in other countries?

But....

Why does the money go to "the record industry", and not these "hungry artists"?

Proper Settlement

The record industry claimants should get a 20% discount on future Kazaa downloads.

Like the rest of us ever get a real settlement from record indutry abuses.

20 Billion Tracks?

Wow, 3+ tracks for every person on the planet?

How do they know those are all illegal? My CD collection is in my attic. My p2p software is on my desktop. I DL tracks from CDs I own all the time, because it's easier than finding the CD.

Did that get counted as an illegal download?

Well...

In other news, use of Bittorrent and eDonkey networks is up.

"We have won another battle in an ongoing war [...] We move forward with a spring in our step."

I have to hand it to these guys, they can sure convince themselves of what they want to believe in.

Proud to be a Canuck

Finally, we Canadians win some recognition where it is due. >.>

Frankly, I'm too lazy to download music. If I really want a CD, I'll buy it, or bug my friend's to see if they have it, and maybe do a music swap. Which of course includes ripping it to my computer.

And the artists get...

And the hungry artists who were "damaged" by this get a $1 off coupon for their next recording session advance.

Kazaa would be better off throwing in the towel, a keyword search is too broad to block only protected works and will result in the service being mostly unusable for either legit or non legit uses.

OMG this is totally awesome

Now instead of having a large range of MP3s to choose from I can choose from a limited range of music that is encumbered with DRM. Where do I send my money?...allofmp3.com I guess. I wonder if the music industry will eventually get it?

And the next Utility is

Ok seriously, dose the record industry think going after kazaa well stop internet downloads. First ff, kazaa is pain anyway, seriously screwing up network traffic. There are already much better solutions out there to acquire music. Any time some web site or program gets taking down, another always seams to come in to take its place. The RIAA needs to get a clue and say, we can't beat it, lets find a way to use it. And they are also to dumb to realize its already helping them as it is. I have so many friends who download a cd before they buy it. If its crap, hay pay for it, if it's good then they get it.

But what program do you think are next on the list to take over from kazaa and be the next target of the RIAA/MPAA.

What kind of Download Service will they Become?

That's just as interesting a subject as their change of heart. Ideally there would be:

1) the option to purchase individual tracks cheap, like iTunes
2) with as little DRM as possible (preferably none)
3) the option to buy full albums that cost less than the physical version (say, Five Bucks)
4) the full albums would have the goodies like lyrics
5) there would be bonus materials not available in stores (just like with CDs that killed the LP)
6) Peer review of the tracks and/or albums would be permitted *by those who have bought them*, so we could know if the music was good or TeH sUcK.

Anyway, just some thoughts.

All New DRMed service coming soon?

Cool - will the 'new Kazaa'...

- have anywhere near the range of the old one?
- ship us DRMed files that aren't compatible with all our devices?
- cost less, the same or more than iTunes?
- be adware sponsored to keep costs of music down?

Unless there are favourable answers to all these questions (and more, no doubt), what possible incentive is there going to be to use this service.

I'd happily pay $50 a month (or whatever, some reasonable monthly fee / bandwidth even) to download whatever mp3s I wanted from Kazaa that anyone wanted to share. I'd happily let my downloads be tracked so it could go into a big database somewhere so royalties could be paid to artists and labels.

20 billion downloads?

That's not a war, that's a massacre.

Ka-what?

Kazaa...? Oh, I remember. It was big back in the nineties, right?

What, it still exists?! No way.

Behind the Times

"We have won another battle in an ongoing war," said John Kennedy, chairman and CEO of the International Federation of the Phonographic Industries (IFPI). "We move forward with a spring in our step."

The International Federation of the Phonographic Industries? Ok guys, it's the 21st Century, so you may want to update the name a little. Although, I have to admit, the new USB turntable I installed on my multi-media PC is smokin'!

I wonder if they ever get confused with the International Federation of the Pornographic Industries?

Just Like Napster.......

...and countless others that then disappear without trace and become replaced by other filesharing networks and software. Brilliant. Minds like golfish some people... Minds like golfish some people... Minds like golfish some people... Minds like golfish some people... Minds like golfish some people...

"The market is now fragmenting. Unless you are an ardent downloader it is becoming harder to know where to go," he said.

Yer, I know. Everyone struggled when Napster ceased to be.

Please, pretty please, once and for all

What the scariest thing is with this type of settlement is that no one,absolutely no one seems to really know - or care - about what will happen to such a huge pile of money, and further that it probably will only go to enrich those who have major chart successes, their lawyers, or the IFPI itself (claiming it needs more $$ to fight piracy), rather than those copyright holders whose music was actually downloaded.

Of course, as with a major news organization such as the BBC, no need to wax philosophic on the actual real-world meaning and consequences of such actions, and the possible windfall (or lack thereof) to those who created the content in question. Rethorical question if you ask me.

Sort of like the "War On Terror(TM)"... By now everyone forgot why we are fighting it, as we are too involved in the day-to-day fighting to remember what it was supposed to be about.

Carry on lads, carry on....

Z.

Finally, they embrace technology!

And with Kazaa's refocusing into a pay service, it clearly shows that the RIAA is finally realizing the power that peer to peer networks have and will be able to mold it into a high quality distribution method. Plus there's already a high installed userbase to give this new service a strong kickstart.

What's that? Look at Napster? Didn't they get sued to oblivian?

THAT'S a pay service now too?! We're doomed...

Canada Number 2?

TFReport cites Canada as the second worst 'offender' in music downloads worldwide.
Perhaps that is due to our Blank Media levy [wikipedia.org] that makes downloading essentially legal in this country.
Now whether those billions of tracks were subsequently uploaded is another question entirely (this is not covered by the levy), but i suppose that doesn't help the RIAA:

"Them there Canucks did 23 Braaziiiilion downloads. Invade Canada!!"

RIAA wins! No one else does...

"Hungry artists across the globe rejoice" isn't even in the article- probably because it's just wrong. And while I do not support illegal filesharing, I do have to agree with earlier posters that the starving artists won't see a dime of this settlement. In fact, I'd be suprised if any artists, even the 'big names', get some of the settlement. The artist's contract only gets them money under certain conditions- and I'll bet that 'settlements from lawsuits' are not one of those conditions. No, this is a victory for the RIAA, but not particularly helpful to anyone else.