Monday, October 12, 2009
Crickets / Music More Bad News for Major Labels
Posted by Miles Raymer on Mon, Oct 12, 2009 at 6:19 PM
Conventional wisdom has it that major labels are propped up by their back catalogs—perennial sellers that provide capital to blow on the current batch of Next Big Things. In a commercial climate where the platinum record has become an endangered species and tent-pole megasmashes have apparently already gone extinct, the majors are more reliant than ever on these older releases, which not so coincidentally tend to appeal to demographics who didn't grow up with file sharing. This reliance could turn out to be a fatal weakness, though because, some of the majors' back-catalog artists may soon be able to reclaim control of their material.
Starting in 2013 the creators of musical works copyrighted between (for now) 1978 and 1984—this includes anyone with a potential stake in ownership, from songwriters to producers—will be able to challenge labels for ownership of their recordings. The issue at hand is whether given songs can be legally defined as "works for hire." The distinction is by and large a contract-law technicality, but it's vital because if a court rules that they're not works for hire, their creators may be able to exercise termination rights designed to protect artists from unfair contracts involving copyright ownership. Though RIAA lobbyists got Congress to define recordings as works for hire across the board in 1999 (by tacking it onto an unrelated bill), the provision pissed off so many prominent artists that it was quickly repealed.
A Techdirt post on the subject notes that these termination rights were designed to "protect artists who signed bad deals." Given that, at the major-label level, it's commonplace for artists (especially new ones) to be saddled with deals that bury them in debt and deny them royalties till they're back in the black, it's no wonder the RIAA tried to get Congress to give it a legal fig leaf to hide behind.
The Butthole Surfers' successful lawsuit to regain control of their records from Touch and Go illustrates the potential consequences of termination for labels, albeit on a much, much smaller scale. Touch and Go lost what had been a steady, reliable income stream at about the same time that overall revenues started to drop. The label has had some successes since then, but many people hold the Butthole Surfers responsible for the shuttering of the label's distribution arm earlier this year.
Now replace "the Butthole Surfers" with "the Eagles, Barbra Streisand, Journey, and the guy who wrote 'Funkytown'"—all of whom have at least made noises about exercising termination rights—and replace "Touch and Go" with "every major label and many large indies," and you start to get the idea. If enough of these lawsuits get filed and the artists win enough of the time, the record industry's going to do something like this:
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"The label has had some successes since then, but many people hold the Butthole Surfers responsible for the shuttering of the label's distribution arm earlier this year."
Huh? That was ten years prior to T&G shutting down its distro biz. The "some successes" since then have included records by "little" bands like TV On The Radio, Ted Leo, and CoCoRosie. Not to argue Miles' central point about the potential of arena-size acts to put the final nail in the coffin of the majors by using every means available to pull their back-catalogue (and resulting revenue stream) from the control of the majors, but using Touch & Go as an example seems to be borderline specious logic. And who are the "many people" who hold the Butthead Surfers responsible for the ten-years-later shuttering of Touch & Go? No one I know in the biz has ever expressed that opinion, much less stated it as a verified point of fact. The Asshole Surfers may have made Corey gunshy about ever doing another handshake deal, but T&G's shutdown had its cause in other far more relevant reasons.
That being said, we'll just have to see how the rest of it shakes out four years from now. But much like everything else in this biz, it might largely depend on who is friends with who at any given time (label deals are all about relationships), and whether artists have enough business sense to actively manage their physical and/or digital finished product. Going to court ain't cheap for artist or label alike. And if you win? You better have a plan.
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(Ditto on record nerd's comment) Touch and Go folding their distribution arm had zero to do with the Butthole Surfers claiming their back catalog, and a lot to do with Merge taking over their own distribution. Touch and Go were making around 30% off the top from every Arcade Fire and Spoon record sold in the States. That funded the label by and large. Not meager lost sales from "Hairway to Steven".
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