| The major record 
			companies have made plenty of headlines in recent months via their 
			campaign to demonize what they call "illegal downloading." Since 
			June 2003, their umbrella group, the Recording Industry Association 
			of America, has filed 3,500 lawsuits in the United States against 
			users of peer-to-peer file-sharing services such as Kazaa and 
			Grokster. 
			The latest batch of 235 suits came in mid-April and included one 
			against a mother in Rome, Ga., who allegedly "stole" songs by Jewel, 
			Poison and Whitney Houston -- despite the fact that her family 
			hasn't owned a computer in a year. Carma Walls told her hometown 
			newspaper, the Rockmart Journal, that they got rid of the machine 
			after about two months. She admitted she did download some songs 
			during that time, but she didn't realize it was illegal, and she 
			never burned the tunes to CD. The RIAA refuses 
			to comment on specific cases, but it happily issues its blanket 
			statement on downloading: "Not only does piracy rob recording 
			artists and songwriters of their livelihoods -- and threaten the 
			jobs of tens of thousands of less celebrated people in the music 
			industry, from engineers and technicians to warehouse workers and 
			record store clerks -- it also undermines the future of music by 
			depriving the industry of the resources it needs to find and develop 
			new talent." This high-minded 
			language is contradicted by another lawsuit filed on April 27 in 
			U.S. District Court in Manhattan. So far, this suit has received 
			much less publicity, though the trade publication Billboard is 
			already calling it "a case that could seismically alter the way 
			labels and artists share download revenue." Spearheaded by 
			Sony artists the Allman Brothers Band and Rockford's own power-pop 
			heroes Cheap Trick, the class action suit accuses the artists' 
			label, Sony BMG, of consistently shortchanging the musicians on 
			royalties from music sold via Internet services such as Apple's 
			iTunes, which charges consumers 99 cents to download songs such as 
			Cheap Trick's "Surrender" or the Allmans' "Whipping Post." At the 
			heart of the dispute is how that money is divided -- and why the 
			artist gets the smallest cut by far. As an electronic 
			retailer, Apple keeps about 30 cents of every tune it sells. Cheap 
			Trick's manager, Dave Frey, believes the artist and the label should 
			be splitting the remaining 70 cents, especially since the label has 
			almost no manufacturing or distribution costs. But Sony is paying 
			Cheap Trick only about 4.5 cents per song. Sony BMG has 
			declined to comment on the case. Admittedly, 
			calculating an artist's royalty rate can be a Byzantine affair, 
			since it varies from album to album and is subject to numerous 
			deductions as the record company recoups its expenditures. But on 
			average, Frey says Cheap Trick earns about $1.20 from every CD sold 
			of 1979's "At Budokan." With a list price of $11.98, that's a 
			royalty rate of about 10 percent. The 4.5 cents the band makes from 
			a download of the single track "Surrender" represents a royalty rate 
			of less than 5 percent. How is Sony 
			doing the math? Right off the bat, the company is cutting the 
			artist's royalty by 25 percent, citing a provision in every 
			recording contract that allows the label to pay less while coping 
			with the costs of employing "new technology." When Cheap Trick 
			originally signed to the label in 1976, vinyl LPs were the primary 
			music media. As CDs came into vogue, the company "had to retool the 
			plant and take out all of the vinyl-making machines and put in CD 
			burners instead," Frey says. CDs were widely introduced to the 
			market in 1983, and they became the primary medium by 1990; 
			nevertheless, Sony still defines compact discs as "new technology" 
			and pays Cheap Trick the lower royalty, Frey says. Sony recouped 
			its original recording and marketing expenses for the songs on "At 
			Budokan" decades ago, Frey says, and there are obviously fewer 
			expenses in selling "Surrender" as a download than on CD -- "You 
			don't have to put it on a truck, you don't have to take it to a 
			store or any of that stuff." Yet on top of the new-technology 
			deduction, Sony is also subtracting a "container deduction" of 25 
			percent and a "breakage reduction" of 15 percent from every 99-cent 
			download. Even the least 
			computer-savvy consumer knows that there is no "container" for an 
			MP3 file, nor is it possible for anyone to "break" one in transit as 
			a CD might be damaged. And even with all of these deductions, Sony's 
			math doesn't add up: Frey maintains that Cheap Trick should be 
			earning at least a dime per downloaded song, or double what the 
			label is paying the group. The lawsuit grew 
			out of conversations Frey had with his friend, Bert Holman, manager 
			of Sony artists the Allman Brothers. "I was talking to Bert about 
			this and he said, 'Yeah, I just went through our [royalty] 
			statement,' and we were basically finishing each other's sentences. 
			A few nights later, there was this litigator who is an old Allman 
			Brothers' fan who showed up at one of their shows and said, 'You 
			guys have a big point,' and they [the law firm of Labaton, Sucharow 
			& Rudoff and Probstein & Weiner] said that they would take this on 
			and do it pro-bono on behalf of all of the artists at Sony that have 
			a contract that predates 2002." This includes 
			thousands of artists ranging from Miles Davis and Bruce Springsteen 
			to AC/DC and Gloria Estefan. "If we win, anyone who wants to can opt 
			in and get their share of the settlement," Frey says. The suit is 
			seeking $25 million in damages, though that figure may grow if the 
			case is expanded beyond Sony to include other record companies. Frey 
			also manages catalog sales for the Ramones, and he says Warner Bros. 
			is using the same math for download sales by that band that Sony is 
			using for Cheap Trick. Does this mean that the major labels are in 
			collusion on downloads? "Possibly," Frey says. "I think everyone is 
			keeping the exact same line on this: Universal is doing it the same 
			way, and so is EMI." Despite being an 
			ardent advocate for the artists he represents, Frey is aghast at the 
			RIAA's legal campaign against downloading, which makes no 
			distinction between people who download a song to sample it before 
			buying and those who may indeed be "stealing" the music without 
			paying for it. "It really is embarrassing and terrible, and there is 
			just no excuse for that," Frey says. "What, the customer is always 
			wrong?" Yes, according 
			to the RIAA. "Stealing music online is no different from going into 
			a music store and shoplifting," it insists in its boilerplate 
			statement. But by that logic, isn't shortchanging an artist on 
			digital royalties as much of a crime as withholding profits from CDs 
			sold in the store? "I don't know if it's a crime," Frey says. "But 
			we don't feel it's right."     |