The Numbers Inside The Latest Royalties Lawsuit Against Universal
-- More artists have filed a class action lawsuit against Universal Music Group over a dispute about royalty calculations. According to the New York Times, Rob Zombie, White Zombie, Whitesnake and Dave Mason filed a class action lawsuit against New York in a District Court in San Francisco.
The lawsuit is based on the same royalty accounting for digital downloads that spurred a lawsuit by Eminem's producers. Eminem's producers won that lawsuit. These lawsuits contend digital sales should be treated as licensing revenue rather than traditional music sales. Accordingly, the artists want the 50% of revenue they say their contracts afford them for licensing revenue instead of the standard artist royalty rate given for recorded music sales. Later contracts more clearly spelled out that artists receive a royalty from download sales. Earlier contracts were not worded in anticipation of digital formats.
A Universal spokesman gave the following statement to the Times: "This complaint suffers from serious flaws and weaknesses, not the least of which is that the claims asserted are not appropriate for class treatment. We will vigorously defend against it."
So how much money is at play in this lawsuit? Although these artists sold most of their music before iTunes launched in 2003, they've sold quite a bit in the digital age. Note that these are just unit sales numbers.
For example, Rob Zombie's "Hellbilly Deluxe," released in 1998, has sold 34,000 digital albums and 1.26 million digital tracks in the U.S, according to Nielsen SoundScan. His 2003 album "Past, Present and Future" has sold 11,000 digital albums and 2.4 million digital tracks ("Dragula" and "More Human Than Human" are the two best-selling tracks).
White Zombie has sold less in digital formats. The band's 1992 album "La Sexorcisto - Devil Music Vol. 1" has sold 21,000 digital albums and 396,000 digital tracks, according to Nielsen SoundScan. The band's 1995 album "Astro Creep-2000" has sold 11,000 digital albums and 526,000 digital tracks. The two albums have sold about 5.1 million units in the U.S. since their releases, and nearly all sales have come from CD and cassette formats.
As for Whitesnake, its hit 1984 album "Slide It In" has sold 3,000 digital albums and 167,000 tracks in the digital age. The 1989 album "Slip of the Tongue" has done about half of those figures. The band has two greatest hits collections, which sold a combined 2.3 million digital tracks.
Those are just U.S. unit sales numbers that don't include ringtones or sales in other markets. And those are just two artists who have released music through Universal labels. ( New York Times' Media Decoder blog)
Apple's Cloud Service: What About the Publishers?
-- What's Apple's delay in getting its cloud music service to market? Well, first of all, it's not a race. Apple was not the first to the MP3 player market, but the iPod was far better than its competitors - and arguably has not been matched yet. And judging from the critiques of Amazon's and Google's cloud music services, consumers prefer a storage service that is licensed. Nothing bums out music fans like taking five days to upload their collections.
But as for the negotiations, MediaMemo's Peter Kafka says Apple is now working on signing up music publishers. "[I]'m told that the company doesn't have any theological hurdles to clear with the publishers," he writes. "It simply started talking to the music labels first, and has only recently started negotiating with the publishers." ( MediaMemo)
TuneCore Gets Gillian
-- Digital distributor TuneCore has named Malcolm Gillian executive vice president of brand and business development. Gillian was the senior vice president of branded entertainment at Relevent Partners, a full service experiential marketing agency. There he focused on developing music, entertainment and content platforms for brands such as Heineken, Marriott Renaissance, Diageo and Nike.
What Do Deep Discounts Do for the Bottom Line?
-- Book publishers and music companies alike are wondering what free and inexpensive sales will do to their more expensive, frontline titles. In the book world, Amazon has been vociferous about its Kindle reader and book sales. But publishers are worried about an invasion of low-priced books that rush to the top of the Kindle charts.
For example, since April Amazon has sold 105 Kindle books for every 100 print books, according to a press release issued Thursday. It has sold three times as many Kindle books so far in 2011 as it did last year. And since April 1, Amazon UK customers are buying twice as many Kindle books as print books.
What it means for revenue is up in the air. MediaMemo points to a tweet by film critic Roger Ebert that hints Kindle sales might be quite low: "As a former Amazon Associate, I can tell you that a great many sales of Kindle Books are for the 99¢ complete Dickens, etc." However, in its press release Amazon does point out that its book segment is growing at the fastest rate in 10 years in "both units and dollars."
A similar tug of war is going on with music sales, and revenue could be holding up fairly well. CD sales are down, of course, and CD prices are falling, too - a double whammy (but at least CD shelf space still exists and appears to be leveling out). And one might think digital revenues may also be challenged by lower price-per-unit. After all, promotions with low-priced new releases and catalog titles are easy to spot at popular digital retailers.
But one major label insider tells Billboard that the average price per digital unit (both tracks and albums) has risen recently. The average track price is up because more tracks have been raised to $1.29 (track sales are still going up, by the way). The average digital album price is going up because sales of deluxe digital albums have been strong. The end result is nearly a wash -- the drop in a CD's average price is almost made up for by the increase in digital unit prices.
When you consider all the free and cheap music that's available online - just like in the book world - that rise in digital prices is pretty important. Free promotional tracks and digital albums priced at $1 or $2 do not appear to be eroding the value or cannibalizing other sales. (Press release, MediaMemo)
Deep Discounts: One Success Story …
-- Here's another example of an author using price as a promotional weapon (just as it's often done in music): mocoNews tells the story of author Barbara Freethy and her strategy to sell her new books by slashing prices on the digital versions of her out-of-print books. Her re-released book "Don't Say a Word" hit #2 on Barnes & Noble's NOOK bestseller list Friday. "Summer Secrets," priced at $2.99, reached #78 on Amazon's Kindle bestsellers list Friday.
In fact, there is a web site called Backlist eBooks http://backlistebooks.com/ that sells "nearly 200 books by more than 50 authors" - all formerly out-of-print titles that have been reissued by their authors. The service charges both an annual fee and a one-time fee to participating authors. In return they get to leverage Backlist eBooks' marketing reach and reach out to an avid, price-conscious segment of book buyers. ( mocoNews)