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June 03, 2005
Licensed Music May Backfire on Recording Company
Posted by Ernest Miller
Furdlog is on a roll today. Among other things, he notes the clever legal argument that the publishing company that has the rights to publish musician Tom Waits' music is making in a lawsuit against Warner Music Group. According to a Reuters wirestory on Yahoo! News, Waits' publishing company is suing WMG for not paying enough royalties on downloaded music (Publisher sues Warner Music over Waits tunes).
According to the suit, under the terms of the two contracts, Waits was entitled to royalties of either 25% or 50% from revenues derived from third-party licenses. Third Story maintains that digital music downloads constitute a form of third-party license, and that Waits is entitled to payment at that level.
You see, when you download music from a service like
iTunes, or similar, you don't actually "own" the music. You only "license" the music.
In 2003-04 royalty statements to Third Story, WMG computed royalties from Waits' digital download sales at the same (and much lower) rate as royalties from the sale of physical product. Under the terms of the '70s Asylum contracts regarding album sales, Waits would be entitled to either 9% or 13% of the 67 cents received by WMG from each 99-cent download.
I'm a big fan of ownership (
Rental Nation Deja Vu). Too bad the recording companies don't believe in it.
Of course, they'll just ensure that all future contracts close this possible loophole.
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Ernest Miller pursues research and writing on cyberlaw, intellectual property, and First Amendment issues. Mr. Miller attended the U.S. Naval Academy before attending Yale Law School, where he was president and co-founder of the Law and Technology Society, and founded the technology law and policy news site LawMeme. He is a fellow of the Information Society Project at Yale Law School.
Ernest Miller's blog postings can also be found @
