Politech mailing list archives
FC: Courtney Love, the RIAA, and how to lie with statistics
From: Declan McCullagh <declan () well com>
Date: Thu, 15 Jun 2000 10:56:20 -0400
Date: Wed, 14 Jun 2000 15:15:23 -0400 (EDT) From: Lenny Foner <foner () media mit edu> To: declan () well com Subject: The RIAA and how to lie with statistics CC: foner () media mit edu I'd like to call your attention to the RIAA-funded "study" below that claims to make the case that Napster is killing local CD sales---without anywhere pointing out that if it claims the declines started in 1997, it was -long- before Napster could have been a plausible explanation. In other words, it's trying to say that effects precede causes. Instead, if we accept the data as given (namely that CD stores nearest the "most-wired" colleges experienced the declines first and most strongly, and that it started in 1997), wouldn't it seem more reasonable to conclude that students there were the most likely to BUY CD'S ONLINE and therefore not show up at the local stores at all? Surely the RIAA, better than almost anyone else, could have found the data and correlated these two events. And surely the WSJ could have done the same. Instead, the WSJ seem to have swallowed the RIAA's argument hook, line, and sinker. If someone has some historical data for online CD sales and can compare that curve with the one cited in the study below (which I'd read if I could find a pointer to it---the WSJ is mum about where one might actually find the original sources), it would be very interesting. And, if the correlation holds up, it would probably be a good idea to make sure that the press widely broadcasts this little bit of the RIAA attempting to mislead Congress and the courts when it knew better--- yet again. - - - Begin - - - [Do a search on www.wjs.com for "Napster" and you'll find this; of course, you'll have to be a paying subscriber to do so.] June 13, 2000 Music CD Sales Suffer in Stores Near 'Wired' Colleges, Study Says By MARTIN PEERS and LEE GOMES Staff Reporters of THE WALL STREET JOURNAL Music CD sales in stores near colleges with fast Internet connections have bucked national trends and fallen since 1997, according to a music-industry study meant to support the claim that the Napster Internet service is hurting music sales. The research was done in connection with a brief filed Monday by the Recording Industry Association of America over the lawsuit it has filed against Napster Inc., San Mateo, Calif., alleging copyright infringement. Napster distributes free software that makes it easy to find and download MP3 music files, nearly all of which are pirated versions of copyright songs. Napster says it respects copyright laws. The study was conducted by SoundScan, a company that tracks retail record stores. It found that overall CD sales to the general public have risen by 18% between the first quarters of 1997 and 2000, and that sales at all stores within a mile of any college held steady during the period. But according to the study, sales at stores within a mile of the colleges rated as the "Top 40 Wired Colleges" by an Internet publication declined 13% during the period. Another part of the SoundScan study looked at record stores near colleges that banned Napster because it was overloading their networks, and found similar results.
[snip --Declan]
Date: Wed, 14 Jun 2000 15:16:00 -0400 (EDT) From: Lenny Foner <foner () media mit edu> To: declan () well com Subject: Courtney Love---it's the labels that are the thieves, not Napster CC: foner () media mit edu - - - Begin forwarded message - - - Date: Wed, 14 Jun 2000 14:45:36 -0400 (EDT) From: Lenny Foner <foner () media mit edu> To: politech () vorlon mit edu Subject: Courtney Love---it's the labels that are the thieves, not Napster [This is particularly well-timed to release after yesterday's sham RIAA "study". I'll bet that's why Salon did so.] See http://www.salon.com/tech/feature/2000/06/14/love/index.html In particular, pay attention to the math section at the beginning (or why artists make nothing). I've quoted a little bit of the article at the end of this message. Also, see the section about halfway through, in which Courtney explains why she doesn't like Napster---because she's afraid that the labels will co-opt it before artists have a chance to take advantage of Internet distribution to get out from under control of the major labels. Finally, check out this article published in Maximumrocknroll's "Some of Your Friends Are Already This Fucked" major label issue (with a cover photo of a guy with a gun in his mouth), written by Steve Albini. It has more math, and also a close look at how nascent bands get suckered into signing an innocent memo (which never expires) that forces them to make a deal with the studio, or disband---no matter how unfavorable that deal turns out to be---and how that is rock-solid standard practice in the industry. http://www.google.com/search?q=cache:www.indiemusicsite.com/ims/corner/albini.html+Steve+Albini+Baffler&hl=en Notice that it's no longer available except in Google's cache. Some might find this suspicious. I've kept a copy in case it manages to expire from Google's cache. Some might call this prudent. - - - Excert from Courtney - - - [Editor's note: This is an unedited transcript of Courtney Love's speech to the Digital Hollywood online entertainment conference, given in New York on May 16.] - - - - - - - - - - - - - By Courtney Love June 14, 2000 | Today I want to talk about piracy and music. What is piracy? Piracy is the act of stealing an artist's work without any intention of paying for it. I'm not talking about Napster-type software. I'm talking about major label recording contracts. I want to start with a story about rock bands and record companies, and do some recording-contract math: This story is about a bidding-war band that gets a huge deal with a 20 percent royalty rate and a million-dollar advance. (No bidding-war band ever got a 20 percent royalty, but whatever.) This is my "funny" math based on some reality and I just want to qualify it by saying I'm positive it's better math than what Edgar Bronfman Jr. [the president and CEO of Seagram, which owns Polygram] would provide. What happens to that million dollars? They spend half a million to record their album. That leaves the band with $500,000. They pay $100,000 to their manager for 20 percent commission. They pay $25,000 each to their lawyer and business manager. That leaves $350,000 for the four band members to split. After $170,000 in taxes, there's $180,000 left. That comes out to $45,000 per person. That's $45,000 to live on for a year until the record gets released. The record is a big hit and sells a million copies. (How a bidding-war band sells a million copies of its debut record is another rant entirely, but it's based on any basic civics-class knowledge that any of us have about cartels. Put simply, the antitrust laws in this country are basically a joke, protecting us just enough to not have to re-name our park service the Phillip Morris National Park Service.) So, this band releases two singles and makes two videos. The two videos cost a million dollars to make and 50 percent of the video production costs are recouped out of the band's royalties. The band gets $200,000 in tour support, which is 100 percent recoupable. The record company spends $300,000 on independent radio promotion. You have to pay independent promotion to get your song on the radio; independent promotion is a system where the record companies use middlemen so they can pretend not to know that radio stations -- the unified broadcast system -- are getting paid to play their records. All of those independent promotion costs are charged to the band. Since the original million-dollar advance is also recoupable, the band owes $2 million to the record company. If all of the million records are sold at full price with no discounts or record clubs, the band earns $2 million in royalties, since their 20 percent royalty works out to $2 a record. Two million dollars in royalties minus $2 million in recoupable expenses equals ... zero! How much does the record company make? They grossed $11 million. It costs $500,000 to manufacture the CDs and they advanced the band $1 million. Plus there were $1 million in video costs, $300,000 in radio promotion and $200,000 in tour support. The company also paid $750,000 in music publishing royalties. They spent $2.2 million on marketing. That's mostly retail advertising, but marketing also pays for those huge posters of Marilyn Manson in Times Square and the street scouts who drive around in vans handing out black Korn T-shirts and backwards baseball caps. Not to mention trips to Scores and cash for tips for all and sundry. Add it up and the record company has spent about $4.4 million. So their profit is $6.6 million; the band may as well be working at a 7-Eleven. Of course, they had fun. Hearing yourself on the radio, selling records, getting new fans and being on TV is great, but now the band doesn't have enough money to pay the rent and nobody has any credit. Worst of all, after all this, the band owns none of its work ... they can pay the mortgage forever but they'll never own the house. Like I said: Sharecropping. Our media says, "Boo hoo, poor pop stars, they had a nice ride. Fuck them for speaking up"; but I say this dialogue is imperative. And cynical media people, who are more fascinated with celebrity than most celebrities, need to reacquaint themselves with their value systems. When you look at the legal line on a CD, it says copyright 1976 Atlantic Records or copyright 1996 RCA Records. When you look at a book, though, it'll say something like copyright 1999 Susan Faludi, or David Foster Wallace. Authors own their books and license them to publishers. When the contract runs out, writers gets their books back. But record companies own our copyrights forever. The system's set up so almost nobody gets paid. Recording Industry Association of America (RIAA) Last November, a Congressional aide named Mitch Glazier, with the support of the RIAA, added a "technical amendment" to a bill that defined recorded music as "works for hire" under the 1978 Copyright Act. He did this after all the hearings on the bill were over. By the time artists found out about the change, it was too late. The bill was on its way to the White House for the president's signature. That subtle change in copyright law will add billions of dollars to record company bank accounts over the next few years -- billions of dollars that rightfully should have been paid to artists. A "work for hire" is now owned in perpetuity by the record company. Under the 1978 Copyright Act, artists could reclaim the copyrights on their work after 35 years. If you wrote and recorded "Everybody Hurts," you at least got it back to as a family legacy after 35 years. But now, because of this corrupt little pisher, "Everybody Hurts" never gets returned to your family, and can now be sold to the highest bidder. Over the years record companies have tried to put "work for hire" provisions in their contracts, and Mr. Glazier claims that the "work for hire" only "codified" a standard industry practice. But copyright laws didn't identify sound recordings as being eligible to be called "works for hire," so those contracts didn't mean anything. Until now. Writing and recording "Hey Jude" is now the same thing as writing an English textbook, writing standardized tests, translating a novel from one language to another or making a map. These are the types of things addressed in the "work for hire" act. And writing a standardized test is a work for hire. Not making a record. So an assistant substantially altered a major law when he only had the authority to make spelling corrections. That's not what I learned about how government works in my high school civics class. Three months later, the RIAA hired Mr. Glazier to become its top lobbyist at a salary that was obviously much greater than the one he had as the spelling corrector guy. [ . . . Lots, lots more . . . ] - - - End exceprt - - - - - - End forwarded message - - -
Date: Wed, 14 Jun 2000 15:15:48 -0400 (EDT) From: Lenny Foner <foner () media mit edu> To: declan () well com Subject: More on RIAA "study" CC: foner () media mit edu - - - Begin forwarded message - - - Date: Tue, 13 Jun 2000 16:13:33 -0400 From: Bradley Rhodes <rhodes () media mit edu> CNet ran with this story three weeks ago, though they don't buy the RIAA's slant to it. The CNet article points out online sales as a more likely reason for the drop, and has anecdotal "evidence" opposite to the WSJ version. http://news.cnet.com/news/0-1005-200-1945948.html?tag=st The cynic in me would say the WSJ only ran today so it could coincide with the request to grant a preliminary injunction against Napster, but I'm not being cynical today, so I won't say it ;-) - - - End forwarded message - - -
Date: Wed, 14 Jun 2000 15:20:06 -0400 (EDT)
From: Lenny Foner <foner () media mit edu>
To: declan () well com
Subject: a slight rephrase
CC: foner () media mit edu
When I said:
[This is particularly well-timed to release after yesterday's sham
RIAA "study". I'll bet that's why Salon did so.]
...what I -really- meant was, after yesterday's -WSJ coverage- of the
sham study---the study itself was released weeks ago, of course.
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- FC: Courtney Love, the RIAA, and how to lie with statistics Declan McCullagh (Jun 15)