RIAA Admits 70 Cent Price is 'In the Range'

NewYorkCountryLawyer writes "In its professed battle to protect the 'confidentiality' of its 70-cents-per-download wholesale price, the RIAA has now publicly filed papers in UMG v. Lindor in which it admits that the 70-cents-per-download price claimed by the defendant is 'in the range'.(pdf) From the article: 'The pricing data really may not be all that secret. Late in 2005, former New York Attorney General (and current Governor) Eliot Spitzer launched an investigation into price fixing by the record labels, alleging collusion between the major labels in their dealings with the online music industry. Gabriel believes that making the pricing information public would 'implicate [sic] very real antitrust concerns' as the labels are not supposed to share contract information with one another ... Beckerman argues in a letter to the judge that the only reason the labels want to keep this information confidential is to 'serve their strategic objectives for other cases,' which he says does not rise to the legal threshold necessary for a protective order. The proposed order would force the labels to turn over contracts with their 12 largest customers. Most details--such as the identities of the parties--would be kept confidential, but pricing information and volume would not.'"

it's the opposite of trustworthy....

Gabriel believes that making the pricing information public would 'implicate [sic] very real antitrust concerns'

Well, if there's one thing record labels have an abundancy of, it's anti-trust.

Pricing Comparison

If you take a step back and put this into perspective you are able to really get a clear picture of how much money this companies are making on a per track basis. If they are charging .70 to music retailers then consider the following: .99 = iTunes (cheaper if CD is purchased) .93 = CD of 15 songs priced at $16 I recently came across an article suggesting that artists on average get paid around .25 per song. This computes into an estimated profit of roughly .45 per song. Of course compute that into a couple of million songs sold for one major artist and you're looking at $900,000 in profit for the record company. Not to shabby for one major artist. The point being I still see plenty of reports of artists selling this many records on a regular basis. I would find it difficult to do much complaining about profit loss when I am bringing in something like that from one person. All the smaller artists you have can cover costs.

Re:Pricing Comparison

No matter how many more songs there are on a disc, an album is nearly always defined as containing 10 songs in a recording contract. And payment is based on that figure to the artist, which means the labels do a good deal better on CD sales than online downloads, though that doesn't account for materials costs I suspose.

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One CD for the rootkit...

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$0.45 per song sounds high, but if you think about all that they take care of (advertising, risk of producing your album (which if it's your first could be a total loser bringing in no money), etc.), it doesn't sound too rediculous.

I can't recall where I g

Re:Pricing Comparison

$0.45 per song sounds high, but if you think about all that they take care of (advertising, risk of producing your album (which if it's your first could be a total loser bringing in no money), etc.), it doesn't sound too rediculous.

As I understand it, the production and advertising costs are usually recouped from the artists before they get a cut. In other words, those costs come out of the artists' $0.25, not out of the label's $0.45.

Artists pay for everything

Quite true, and many more costs besides. The artists have to bear the entire cost of creating and selling the album, before they get any royalties.

Fair enough, you say? Perhaps - except they don't get to keep it. That album, that they conceived, wrote, performed, recorded, marketed and paid for in full, is no longer theirs. Copyright for the album is owned by the LABEL, and NOT the artist. That really sucks.

Time to link to Steve Vai's words of experience [vai.com] too, on this and the many other nefarious clauses that appear in a standard label contract.

Re:Artists pay for everything

Not only that, but the record companies often cook the books - which means that the artists have to hire outside auditors at their own expense to try and recoupe royalties from the sales that the record company claims never happened, but also from inflated promotional expenses that come out of the artists cut. Then they usually settle with the record companies for pennies on the dollar. That's the record companies for you - they are supposedly looking out for the artists interest whle at the same time engaging in this sort of practice.

The top 5 record companies are all far larger than any of their other competitors. That these companies cooperate in any way - like by forming the RIAA - ought to be a huge anti-trust violation.

Re:Pricing Comparison

I spend a lot of time in the music industry. Half of those costs are pretty much obsolete now. I mean, I can't remember the last time I saw a commercial for a band that wasn't paid for by a concert promoter (Mix CDs with a theme don't count). And in radio, there's "no payola". And recording costs are falling pretty quickly. You're not at the point where anyone can record in their garage, but costs are rather down. Almost any group of college kids can record a decent demo nowadays (yeah, I'm stuck listening to about a dozen this week) that every year sounds more and more professional. When we book bands, we deal with their agents, or our agents deal with their agents.

Most of what the RIAA groups do could be replaced by VCs who specialize in music, and with managers/agents. If the RIAA wasn't being a monopolizing, price-fixing force, it might have happened already.

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Not that I support the way labels do business, but of course those expenses are taken from the artist's cut. Do you propose that the record labels promote/produce/etc. for free? Any fee they do charge comes out of the "artist's cut". And if the label sp

Re:Pricing Comparison

The article you "came across" was dead wrong. From every dollar, the most an artist will get is 20 cents and that's only the top few percent of recording artists.

Do you know how much money MOST recording artists will make from every dollar in record sales? Less than 8 cents, and that's only after all the expenses of the recording, distribution and marketing are paid for. In fact, nearly 1/3 of all recording artists who make records that sell more than 1000 copies (to get past the cases where only family members buy the records), will make exactly NOTHING from record sales. You can't just accept the very highest percentage that the top-paid artists will receive as representative, but look at what the recording industry does as a whole. After all, it's not only the top percent of artists that bring in the greatest portion of the entertainment industry's profits.

And the back-catalog, that enormous cash-cow of the big record companies, generally pay nearly nothing to the original artists. The composer might make a few cents on the dollar, but only if they didn't relinquish their publishing, which is much more common for new bands than you would think.

There are better ways for artists to make a living, and for their work to be distributed to consumers. Many have already found them, thank you very much.

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I'm not quite sure how it works, but the composer always makes money on airplay, I think it's called "Mechanical Royalties". There's an article here: http://entertainment.howstuffworks.com/music-roya l ties6.htm [howstuffworks.com]

but I have no idea if it's accurate.

Re:Pricing Comparison

I recently came across an article suggesting that artists on average get paid around .25 per song.

The article you "came across" was dead wrong. From every dollar, the most an artist will get is 20 cents and that's only the top few percent of recording artists.

You misunderstand. The article said, ".25 per song" -- not per dollar, not per copy.
Just 25 cents total, once and for all.

All of MP3 profit margins

All of MP3 charges about a dime a song. That's paying there server costs and making them a profit. Let's add on 20 cents for an artist profit.

That means a profitable bussiness that had no promotional and production costs for the artist could operate at 3

Damages

If they only make $0.70 wouldn't that imply that for the damages of 1.5 trillion from AllOfMP3.com would only be justified if AllOfMP3.com had uploaded over 2 trillion copies of songs to their users?

Personally, I suspect that is the reason they wouldn't want their prices known; it destroys the RIAA's ability to sue for massive damages.

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Well, nothing can really justify the claim that AllOfMP3.com is responsible for $1.65 trillion in damages. But I do agree that in general by making their profits more public they will have a tougher time making outrageous claims of losses to piracy.

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Out of curiosity, how is AllOfMP3 responsible? They operated within the laws of their country and paid the appropriate fees.

If the RIAA want their pound of flesh, would they not be better off going after the Russian licensing agency?

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Out of curiosity, how is AllOfMP3 responsible? They operated within the laws of their country and paid the appropriate fees.

They aren't

If the RIAA want their pound of flesh, would they not be better off going after the Russian licensing agency?

Yes. But sin

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Not that I'd expect allOfMP3.com to cough up $.70 per download, either. It would put them out of business just as fast.

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No doubt ...

If they calculated the damages at $0.70 per download AllOfMP3.com would (likely) be facing damages of $100,000,000 or more which would probably put the company out of buisness. A smart (and well connected) company might consider buying the bank

Different types of Damages

There is a difference between actual damages and statutory damages. Actual damages are an attempt to compensate the victim. Statutory damages are an attempt to include punitive damage in statute law.
Whether or not this is wise law-making is debatable. I suspect that it would be better to force the victim to sue directly for punitive damages, thus leaving the matter to a judge to determine of the punishment fits the offense.

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There is a difference between actual damages and statutory damages. Actual damages are an attempt to compensate the victim. Statutory damages are an attempt to include punitive damage in statute law.

They can also be used in cases where the actual economic

Actual, Statutory, and Punitive Damages

<blockquote>There is a difference between actual damages and statutory damages. Actual damages are an attempt to compensate the victim. Statutory damages are an attempt to include punitive damage in statute law.
Whether or not this is wise law-making is debatable. I suspect that it would be better to force the victim to sue directly for punitive damages, thus leaving the matter to a judge to determine of the punishment fits the offense.
</blockquote>

This is not quite correct.

Actual damages are damages proven in court, and are intended to compensate the victim.
Punitive (also "Exemplary") damages are damages intended to "punish" or "make an example" of the victim (largely as a general and specific deterrent), beyond what compensates the victim.
Statutory damages are amounts set in statute law in the absence of proven amounts of actual damages (or when the proven amounts are lower); in some cases they are largely compensatory in purpose, and included on the presumption that the kind of harms the statute seeks to provide a remedy for are prohibitively difficult to prove and quantify, and that substituting a default damage amount is a way to provide a reasonable remedy. In other instances, their intent is somewhat punitive in nature, though they are particularly ineffective in that regard as they tend to be superceded by actual damages rather than on top of actual damages.

<blockquote>Whether or not this is wise law-making is debatable. I suspect that it would be better to force the victim to sue directly for punitive damages, thus leaving the matter to a judge to determine of the punishment fits the offense.
</blockquote>

Since the courts have held that punitive damages may only be awarded in a limited proportion to the actual damages proven, this would eliminate the principle role of statutory damages, which is to obviate the need to prove specific actual damages to receive some remedy for certain offenses.

Certainly, there is an argument that substantive due process analysis of the type that constrains <i>punitive</i> damage awards ought also be applied to statutory damage awards beyond what can be reasonably seen as compensatory, and/or that statutory damage amounts in law serving as a rebuttable presumption of actual damages rather than providing an amount that is available in all cases regardless of circumstances.

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There is a difference between actual damages and statutory damages. Actual damages are an attempt to compensate the victim. Statutory damages are an attempt to include punitive damage in statute law. Whether or not this is wise law-making is debatable. I s

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If damages were given to the gov't, can you imagine what the laws and rulings we'd end up seeing? It's already bad enough that cops "camp out" on the highways to zap us for going 5 mph over the speed limit in order to generate revenue ...

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I've often wondered why punitive damages are given to the plaintiff,

Because their lawyers get a third and lawyers write the laws.

Re:Damages

I suspect that is the reason they wouldn't want their prices known; it destroys the RIAA's ability to sue for massive damages.

The damages requested are quite reasonable. Yeah, it's only about a quarter million in actual losses, but the adminstrative expenses run to a trillion and half, especially given that the administrative offices are located in the Cayman Islands.

KFG

Re:Damages

Well, yeah. Do you know what a latte costs in the Caymans?! $1.5 Trillion's a little on the light side, I'd say!

Re:Damages

Do you know what a latte costs in the Caymans?!

Yeah, I understand it's pretty expensive there. I had a record company executive try to explain it to me once, but he used a lot of financial jargon, like "exchange rate" and "hooker," so I really didn't catch it all.

Then he walked away singing Titties and beer, titties and beer, titties and beer. . ."

And all this time I've been laboring under the impression that record company executives weren't particularly fond of Zappa.

KFG

Re:Damages

AllOfMp3:s greatest strength is (in my own opinion) a solution for everyone to choose whatever the music they want in whatever format they want. (Yes, I've tried it..) For example: As I choose Vorbis when ripping my own CD:s and there's poorly of those iTunes-like stores out there offering this format, some people choose allofmp3 just for the opportunity. Plus, you pay only for how many kbps you want the track in. Conclusion: how possibly can anyone claim 0.70 USD for a lossy formatted track where you can't even choose exactly how you want it?

Re:Damages

Conclusion: how possibly can anyone claim 0.70 USD for a lossy formatted track where you can't even choose exactly how you want it?

Let's be honest here, the only people that truly cares about these particular details are the nerd-types, and while we are at it, let's be honest enough to say that we are a minority. I would bet that if you approached ten people that you normally wouldn't associate with (or they wouldn't normally associate with you) and ask them what a "lossless" or "lossy" format is, nine or ten of them will say "huh?". In short, most people don't really care about that.

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Let's be honest here, the only people that truly cares about these particular details are the nerd-types, and while we are at it, let's be honest enough to say that we are a minority. I would bet that if you approached ten people that you normally wouldn't

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It'll also tell Apple exactly how much everybody else is paying. Since they're the #1 online music seller, I'm pretty sure they wouldn't be to happy to find out they're paying more than the rest. This information would give Apple HUGE leverage if it tur

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If they only make $0.70 wouldn't that imply that for the damages of 1.5 trillion from AllOfMP3.com would only be justified if AllOfMP3.com had uploaded over 2 trillion copies of songs to their users? That would mean if there are 6 billion people in the would that everyone would have had to of downloaded 333 songs. This is not about actual damages and all about putting allofmp3 out of business.

$150,000 per song is just the maximum amount defined under statute. I suspect requesting the maximum from AllofMP3 has alot more to do with getting into newspapers (and thus reminding us all that the RIAA is watching you) then getting the money. The rewar

AllofMp3

and registered a U.S. domain root. (.com)

.com is not a US domain root, it is an international root mainly used for commerce. The US domain root is .us That's not to say the root servers aren't in the US, only that .com is international and not country specific.

Falcon

I don't see how people can...

...afford a per-song cost in that range. I think I got spoiled by eMusic recently by getting songs for 22 cents/song. And there was no whole album penalty for anything. I even got long tracks-as-album (60 minute songs) for the same price. Only downsides to

Undercutters

They make 30 cents a song? Ill do it for 5 cents a song. Where do I sign up?

Pain And Suffering

Even at the $0.70 per song mark, you have to consider damages for the pain and suffering of those poor, poor record executives. I mean, honestly: Think about the hours and hours that they spent in their mansions, lying awake on their double-king canopy beds, surrounded by sleeping hookers... and unable to sleep because of the massive injustice being done to their industry.

Or something like that.

In all honesty, it's a hard thing to nail down. If I work in a donut factory, there is SOMEONE, even if that person isn't me, who knows how much that donut costs to make, including materials, equipment, labor, shipping, and pesticides. When it comes to things like music, art, etc., how DO you quantify the cost of the artists' talents, the labels' marketing efforts, the RIAA's... something... etc. Even the most talented singer in the world is useless without distribution... and marketing and distribution channels can sometimes (Britney?) overcome a shallow pool of talent.

That being said, anything that comes out of the multi-mawed beast known as the RIAA is met with instant skepticism. When you spend years upon years intimidating people who may or may not have committed a crime, and many of those that are nominally guilty are in the "OMG, You ate a peanut out of the grocery store bin!" variety, it's hard to find any foothold of remorse in the market. So $0.70 wholesale price might be in the "ballpark." But I don't give a damn.

Re:Pain And Suffering

The basic structure of the modern music industry was that Music Labels would promote and distribute and Artist's work in exchange for the lion's share of the physical Album's revinue while the artist would still collect the revinue from merchandise, touring and radio play; this (at the time) was a remarkably fair dead because it was expensive to promote and distribute an Artist's work in the pre-internet era.

The internet has changed everything ...

The cost to distribute music is no longer significant and a (hard-working) individual can promote themself to a reasonably successful level with very little work; you probably won't sell out stadiums, but you can make a decent living for the rest of your life as an Artist which (from all the Artists I have met) is the dream. Now, Labels exploit artists they do not help them.

The "Cost" of an Artist's work is a lifetime of developing a skillset that very few people have; it is priceless. The price of an Artist's work per song with how little it costs to distribute the song should be (roughly) the ammount of money the artist is getting.

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Now, Labels exploit artists they do not help them.

This depends on the artist. There are an awful lot of pop-idiots, like Britney Spears and Justin Timberlake, who, without the mass-market power of their record labels and publicists would be improverished

Re:Pain And Suffering

Detective: Look, there's Lars now, sitting by his pool.
Kyle: What's the matter with him?
Detective: This month he was hoping to have a gold plated shark tank bar installed right next to the pool, but thanks to people downloading his music for free he must now wait a few months before he can afford it.
*Lars crying next to his pool*
Detective: Come, there's more. Here's Britney Spears' private jet...notice anything? Britney used to have a Gulfstream 4, now she's had to sell it and get a Gulfstream 3 because people like you chose to download her music for free.
*Britney sighs, depressed*
Detective: The Gulfstream 3 doesn't even have a remote control for its surround sound dvd system. Still think downloading music for free is no big deal?
Kyle: We...didn't realize what we were doing...
Detective: That is the folly of man. Now look in this window. Here you see the loving family of Master P. Next week is his son's birthday and all he's ever wanted is an island in French Polynesia.
Kyle: So he's going to get it, right?
Detective: *closes eyes and puts hands on forehead* I see an island without an owner. If thing's keep going the way they are, the child will not get his tropical paradise.
Stan: We're sorry, we'll never download music for free again!
Detective: Man must learn to think of these horrible outcomes before he acts selfishly, or else...I fear...recording artists will be forever doomed to a life of only semi-luxury.

Correct me if I'm wrong

Gabriel believes that making the pricing information public would 'implicate [sic] very real antitrust concerns'

But doesn't this basically mean "if we told everyone the price then people would know it was illegal!"

RIAA to MAFIAA

RIAA's name should be changed to MAFIAA. MAFIAA: Music and Film Industry Association of America

I wonder...

What does 50 cent think of this knowledge? Maybe he'll sue for the back-owed 20 cent difference? ... sorry, I had to.

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^ works for Verizon...

Re:There's that free market stuff again.

An unregulated market quickly becomes a cartel. Only regulated markets remain free.

You have that backwards. The music distribution business is highly regulated by copyright law. That has allowed the RIAA cartel to exist. Without the regulation, Napster would have finished the cartel long ago.

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And without regulation, Napster would've replaced one cartel with another long ago.

Along with Beareshare, Limewire, Kazza, AllofMP3, Yahoo, Google... It would no longer be a monopoly run by a cartel.

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Who cares? Of the stories I've seen from him so far, to me they've been fairly interesting. And personally, I like talking about interesting cases even if I'm not a lawyer.

Re: Only Lawyers may even think about law!!!

Of course, only Lawyers may even think about law. Or at least that seems the logical extension of what you are suggesting by telling Slashdot that it should withhold any judgement on the RIAA until there is a firmly grounded case law on the matter. Well, that isn't going to happen anytime soon, or perhaps ever. Copyright law is nebulous and has been for a long time.

Of course Slashdot is not a lawyer, but it is silly to propose that only lawyers and judges can have a valid interest in, and discussion of, legal matters that affect all citizens. In fact many laws are actually written by people who aren't necessarily lawyers. These people who dare insert themselves in the legal arena without the requirement of having a law degree are called "legislators."

While it is true that the UMG_v_Lindor case gets a lot of mentions in Slashdot, it is also the case that it is one of the **only** cases out of the 20,000 or so RIAA lawsuits that is going to trial and where a tough litigator is trying to force the RIAA to back up its claims with more than just the thread of ruinously expensive legal action. It also doesn't hurt that the "Recording Industry vs. the People" blog site provides a rare blow by blow account of a legal action in progress which makes for an exciting, albeit slow, tale of one litigator standing up to a veritable army of corporate lawyers with nearly unlimited funds. The blog is an important way of trying to balance the playing field against an opponent with deep pockets and who will play every trick in or out of the book, full well knowing that they will probably avoid any accountability for their own actions.

Only Lawyers may even think about law!!! (WOOT)

Of course, only Lawyers may even think about law.

Personally, as a lawyer-in-training, I fully endorse, support, and approve of this idea!! Can we legislate that? :) WOO HOO I'ma be rich mama! I'ma be rich!!

More seriously:

Of course Slashdot is not a lawyer, but it is silly to propose that only lawyers and judges can have a valid interest in, and discussion of, legal matters that affect all citizens. In fact many laws are actually written by people who aren't necessarily lawyers. These people who dare insert themselves in the legal arena without the requirement of having a law degree are called "legislators."

It's also called "public debate," you know that funny thing that the 4th branch of gov't (aka the press) is supposed to engender. But in the modern clutter of divissive politics and the "nobody knows what to do but experts so STFU NEWB" culture that is evolving, we're running for trouble.

A great example of a wonderful U.S. legislator was Benjamin Franklin - He was also the U.S.'s key scientist and one of her great publishers of news and raw data. Technologist should adopt Franklin as their Patron of Thought - because the man delivered for engineering, science, philosophy, theology, and political science. The same brain that can brilliantly explain and master the formation of distributive processing and Wide Area Networks could do a great deal of good for this nation by injecting simple practical knowledge of what the internet, and the future hold in store for law and the U.S.

-GiH