The Royalty Scam, its bigger than even the experts think...

[acroyear]

The Royalty Scam - New York Times:

A few weeks later, Mr. Birch came to see me at my home. He was hoping to expand his business by hosting music and wanted my advice on how to construct an artist-centered environment where musicians could post original songs without fear of losing control over their work. Following our talks, Mr. Birch told the press that he wanted Bebo to be a site that worked for artists and held their interests first and foremost.

In our discussions, we largely ignored the elephant in the room: the issue of whether he ought to consider paying some kind of royalties to the artists. After all, wasn’t he using their music to draw members — and advertising — to his business? Social-networking sites like Bebo argue that they have no money to distribute — their value is their membership. Well, last week Michael Birch realized the value of his membership. I’m sure he’ll be rewarding those technicians and accountants who helped him achieve this success. Perhaps he should also consider the contribution of his artists.

The musicians who posted their work on Bebo.com are no different from investors in a start-up enterprise. Their investment is the content provided for free while the site has no liquid assets. Now that the business has reaped huge benefits, surely they deserve a dividend.

What’s at stake here is more than just the morality of the market. The huge social networking sites that seek to use music as free content are as much to blame for the malaise currently affecting the industry as the music lover who downloads songs for free. Both the corporations and the kids, it seems, want the use of our music without having to pay for it.

The claim that sites such as MySpace and Bebo are doing us a favor by promoting our work is disingenuous. Radio stations also promote our work, but they pay us a royalty that recognizes our contribution to their business. Why should that not apply to the Internet, too?

That's all good and well. I just want

1. the royalty rate to be reasonable to the size of the audience that actually allows the possibility that an ad-free site or a single user posting a single excerpt (which should already still be subject to fair use) can afford it, rather than locking the market out to just those super companies that treat their online business as a loss-leader full of advertising for their non-internet products.
2. some actual evidence that the artists whose work is being used are actually the ones getting the money.  there is no evidence anybody has shown that any record label is actually itemizing the songs out there, and yes, its an impossible job considering for many users at sites like myspace you don't even know what songs are on their playlist unless you are their "friend".  But the current industry reaction seems to be to either follow historical tradition (give the money away based on radio air play, with 'net popular artists whose material is not on the air getting shafted) or simply to keep the money for themselves, acting like it'll trickle to the artist eventually by the label's financial stability.  RIGHT...

In online distribution, whether through myspace, iTunes, or torrent sites, the label is and remains a hindrance to musicians getting paid for their music.  The most the labels can do is say "well, when you go broke and your album doesn't sell and technically by contract you owe us a million dollars for the advance we gave you...we won't sue your ass for it."

Trouble being, of course, that's already their attitude, so what's new?