for the concert were already on sale, less than an hour after Ticketmaster opened for sale and priced at up to 200% of the face value.

Look, I respect a good hustle as much as the next person. But, as a music fan, I am frustrated and annoyed by this scenario: so-called savvy entrepreneurs purchasing tickets from the official ticket vendors, then re-selling the tickets with the appropriate price mark-up (which sounds eerily similar to the cybersquatters from the early 2000).The purpose of Stubhub is “provide fans a safe, convenient place to get tickets . . . .and an easy way to sell their tickets when they can’t go (to the event). Stubhub was not meant to serve as a de facto gray market for scalpers—yet in my situation, and in countless others, that is precisely what it is used to do.

While technology and innovative new business models continue to provide opportunities for connecting fans to music, the question becomes: how can we ensure that these new tools are used in a way to promote fairness? What are our “code of ethics” or best practices with respect to the Internet? Where do we draw the line between capitalism and theft? Who will be responsible for ensuring “fairness” in the internet marketplace? Who will protect the innocents?

I have been thinking about these questions in several contexts over the past few months, most significantly with respect to former Megaupload users. The Electronic Frontier Foundation (EFF) is representing customers who stored legitimate, non-infringing content on the cloud-storage service, but were left with no access to their data after the Department of Justice shut Megaupload down in January. On its face, their stories are not much different from mine: individuals using technology for its intended purpose, only to be penalized for the actions of those who do not.  Thus far, the solution has been to rely on the law to protect and punish, but even that does not seem to provide an effective solution because when Congress attempts to protect, we cry foul.

So what are we to do?  Ideally, I think the only way curb this “bad behavior” is to hold ourselves and each other accountable. But in order to do that, we need to find a common understanding of what is “right” and “wrong.” It occurs to me that there remains a fundamental misunderstanding of what the Internet is or should be, how it should be used and for what purpose. Most importantly, our moral and economic compass remains in flux. If left unaddressed, this misunderstanding or failure of the meeting of minds will continue to manifest itself  and reflect in disagreements on the appropriate action to take. Laws are simply a consensus of social rules with actionable consequences. So before we can take any action we need to take a hard look at what’s going on and see if we can’t pull out some general  consensus on how we feel about it.

(And I’m off my soapbox.)

We’ve been able to pay to digitally download sound recordings through legitimate services for over a decade now, and these services have grown pretty rapidly in terms of both scale and profitability. So much so, that iTunes (so far the most successful of the digital distribution platforms) has sold more than 10 billion songs since its inception, and has passed on over $12 billion in revenues to record labels. That’s an enormous amount of money.

Because of the scale, profitability, and rapid growth of this method of distribution, you’d expect that many of the legal issues surrounding artist compensation and royalties for digitally distributed sound files would have been hammered out by now. As it happens, though, a recent class action suit filed by Rob Zombie, David Coverdale, Dave Mason, and the estate of Rick James against Universal Music Group indicates that there’s still the potential for major upheaval when it comes to apportioning royalties. These all-star plaintiffs allege in James v. UMG Recordings that UMG has run a “scheme” to improperly withhold royalties from artists by defining digitally distributed sound recordings as “sales” and not “licenses.”

In record contracts, UMG and other labels set aside different royalty percentages for the “sale” of music versus the “licensing” of music. For a “sale,” artists are typically paid between 10 and 20 percent of revenues, reflecting the costs associated with manufacturing, shipping, and selling physical copies of recorded media at retail locations. However, for “licensing” a track, the royalty rates are far more favorable to the artists, as there are fewer costs associated with the profitable exploitation of the work through licensing; typically the label only has to negotiate a few terms with the licensee, and then sits back and collects the royalties that roll in. As a result, an artist’s percentage of revenues typically runs closer to 50 percent for revenues earned through the “licensing” of recordings.

This means a lot of money rides on whether or not a particular use of a sound recording is defined as a “sale” or a “license.” This is especially a problem in the case of older artists whose record contracts were drafted without specific provisions covering digital distribution royalties. As the more cynical among us would expect, current industry practice has record labels defining the revenues from digital distribution platforms in these cases to be “sales,” allowing the labels to collect the lions’ share of royalties for this new (and very profitable) market. The plaintiffs allege that the digital distribution of their sound recordings via digital music services like iTunes, and through “mastertones” (cell phone ringtones, etc.) is actually done through “licenses”, and not “sales,” and that as a result the labels have been underpaying them.

This claim relies heavily on the Ninth Circuit’s decision in F.B.T. Productions, LLC v. Aftermath Records, and the Supreme Court’s refusal to grant certiorari on that case last March. We wrote on this case last year here, but here’s an abridged version of the important particulars: In September 2010, the Ninth Circuit decided in F.B.T. Productions that agreements that allowed “distributors, cellular phone carriers, and other third-parties to. . .  produce and sell permanent downloads and mastertones [of sound recordings] in exchange for periodic payments based on volume of downloads, without any transfer in title of. . . copyrights to recordings were ‘licenses.’” In this way, the Ninth Circuit indicated that distribution of physical products were “sales” of copies (with the associated costs for “packaging” and “shipping” and “breakage”), while any digital downloads, cell phone ringtones or waiting tones, or other similar services were to be construed as “licenses.”

This ruling also makes sense with how we “buy” content online in other areas. Certain online content distributors (such as Steam, which distributes video games, and Amazon’s Kindle eBook store) note in their terms of use that you are only paying for a “license” to download and use a file, not for actual ownership of a copy of the file. In fact, in some cases these “licensors” have rescinded the license, as happened when Amazon (somewhat ironically) removed George Orwell’s 1984 from its store and all of it’s customers associated Kindle devices.

UMG and other labels are obviously not thrilled with the result of F.B.T. Productions, as they had previously defined these uses as “sales” and collected their 80-90% royalties on everything from sound recording downloads through iTunes and Rhapsody to Verizon, Sprint, AT&T, and T-Mobile ringtones. . . uses that now, under F.B.T. Productions, might be considered to be licenses. If James v. UMG Recordings succeeds, not only will labels make less money off of future digital distributions, but they might well owe a lot of artists a substantial amount of back royalties.

In this way, compared to F.B.T. Productions, the James v. UMG Recordings suit is the real game-changer. The scope of its claims and the sheer number of artists involved in the proposed class mean there is potentially a HUGE amount of money involved. In F.B.T Productions, the amount in question was somewhere between $17-20 million. Conservative calculations put together by the Future of Music Coalition indicate that, if F.B.T. Productions were to apply to all eligible contracts, labels could owe artists as much as $2.15 billion in royalties from iTunes sales alone!

For their part, the labels are claiming that the decision in F.B.T. Productions is a unique situation, as in that case the language in question was part of a unique contract, rather than the standard form contracts employed by the bigger labels. The plaintiffs in James are essentially looking to determine whether or not F.B.T. Productions applies to the standard form contracts that are used by labels in the vast majority of cases.

The artists who stand to gain the most from this suit are those older “catalog artists” whose music sells consistently and whose contracts were drafted before these digital distribution mechanisms became popular. Most modern artists include provisions in their contracts that expressly deal with digital distribution methods. However, for those artists that are affected, this is huge news; many of them are living on a fixed income, and would benefit immensely from the new income rates yet might not be able to bring suit on their own.

The plaintiffs know this, and by filing the suit as a class action, they are acting as representatives for the interests of artists who may not be able to afford to bring suit to recover their royalties owed under F.B.T. Productions on their own. Plus, by suing as a class action, they are able to bring a lot more money into play, both in terms of their own ability to pay legal costs (helping them survive the long pretrial battle) and also maximizing the amount of potential money available for a judgment or settlement.

As a result, this case is big news in the music industry. If the plaintiffs are able to force a favorable outcome (either by settlement or, less likely, through litigation) it could provoke a rash of similar suits against other labels, resulting in a fairly substantial redistribution of wealth in the industry. The really interesting part is that, with the current battered state of record labels, this “redistribution” of royalties could be disastrous, especially with copyright termination issues right around the corner!

As a final point, it is interesting to note that in James, in F.B.T. Productions, and in the course of day-to-day business, the labels are absolutely adamant that digital distribution results in sales and not licenses. But, at the same time, EMI is claiming in a suit against ReDigi (a site that allows users to sell “used” MP3s) that digitally distributed sound recordings are NOT sales but licenses, so as to prevent the site from raising the first-sale doctrine as a defense to EMI’s suit. We wrote about the ReDigi suit here, if you’re interested.

We’ll see if they’re allowed to have it both ways.

Todd McFarlane and Neil Gaiman finally ended their decade-long ordeal. Todd McFarlane, the creator of Spawn and collaborator Neil Gaiman had been disputing copyright ownership over a few characters from the Spawn drama.  Spawn was a graphic novel series created in 1992 and centered on Al Simmons, a dead soldier who makes a pact with Satan in an attempt to reunite with his wife.

After ten years of litigation, a Wisconsin federal judge confirmed a settlement between the parties. The settlement declared Neil Gaiman the copyright co-owner of five comic book issues in dispute.  (Two Spawn book issues: #9, #26, and the first three Angela issues.)  The judge relied on evidence that when Todd McFarlane left Marvel to start his own studio, Image, it was “[f]ounded on the principle of creators’ rights rather than the work-for-hire system at Marvel.”  While at Image, McFarlane and Gaiman entered into an oral agreement for Gaiman’s work on Spawn.  Gaiman produced Spawn issue #9, which introduced new key characters including Angela and Medieval Spawn.  Gaiman claimed that he was asked to write a spin-off mini-series for Angela after the success of Spawn #9.  He also declared that a partial script he created was published in Spawn #26.  He also maintains that McFarlane attempted to circumvent their deal by recreating the disputed characters under different names.

Some faxes are the remaining shreds of written evidence supporting this claim.  According to Gaiman, they agreed to trade the rights to these new characters in exchange for the rights to Miracleman, a character created by Gaiman but owned by McFarlane through auction.  While the transfer was inked to for performance on July 31^st of 1997, court records show that McFarlane filed for trademark applications and an “intent to use” Miracleman just three months later.  This prompted the lawsuit filed in 2002 that has just come to an end after a decade.

Looking back, there was a jury trial, two major decisions at the federal court level and an unsuccessful appeal to the 7th Circuit.  At trial, a jury found Gaiman to be a co-creator of the disputed.  Now, the parties have agreed to enter a final judgment in favor of Gaiman declaring him joint fifty-percent owner of the copyrights in Spawn # 9 & 26, and Angela # 1-3.  The parties have also agreed to dismiss all other pending claims and bear their own attorney’s fees and costs.

The second case will sound eerily familiar.  Robert Kirkman, the creator of The Walking Dead, is being sued by his childhood friend and collaborator Tony Moore. It is still unclear whether this marks the beginning of a long and drawn out dispute or if Robert Kirkman and Tony Moore will use superhero powers to look into the future and realize they should settle.

The Walking Dead is premised on a police officer attempting to protect his family in a post-apocalyptic world overrun by deadly walking corpses.  Less than ten years after its creation, it has been converted into a golden-globe nominated television series.  It’s mid-season premiere four days ago broke basic cable records with 8.1 million total viewers.  Despite this success, Tony Moore had a bad taste in his mouth.  His suit claims that he has not received his share of the newfound success and that Kirkman “duped” him into assigning his rights away to the lucrative franchise.

In 2003, Moore and Kirkman co-created the series while working at Image.  Moore served as the artist for issues #1-6.  In 2005, Moore claims that Kirkman notified him of a potentially big TV deal.  Apparently, the deal required Moore to assign his rights to Kirkman; Moore agreed.  Now, Moore claims he was fraudulently induced and that he has been denied access to profit statements for The Walking Dead.  Kirkman claims that the Moore suit is “frivolous” and that both parties had proper legal representation when the deals were made.  He also alleges that Moore continues to receive payment for the work he performed on the first six issues.

Both these cases involve onetime friends turned foes.  More importantly, they both lacked a meeting of the minds.  As authors assert greater equity in contractual relationships, it becomes vital to lay down the rights and expectations of both parties in advance.  A prior relationship with a business partner is no excuse for the lack of documentation.  Otherwise, the cases we reviewed could become your future.

It is difficult to determine how this will play out.  One thing is certain; Kirkman is not giving in without a fight.  He plans to dispute this claim vigorously and will seek attorney’s fees in a counter claim.

Let’s start by taking a look at Grooveshark. Universal Music Group (UMG) filed a complaint in Manhattan District Court on November 18, 2011 against Escape Media and five of its executives alleging that Grooveshark engaged in a plethora of infringing conduct. According to the complaint, “Escape publically touts the fact that it has a catalog of 15 million sound recordings… by top commercial artists such as Bob Marley, Elton John, Jay-Z, the Black Eyed Peas, and Lady Gaga.”

According to UMG, “Escape does not have a license or other authorization [for the use of] the vast majority of the sound recordings contained on the site.” Most problematically for Grooveshark is the fact that allegedly, senior officers “personally uploaded thousands of infringing files and have instructed their employees to do the same.” Now here’s the interesting part – the 45 page complaint cites as an exhibit an anonymous blog post from digitalmusicnews.com that if true, is indicative of some of the most unscrupulous behavior I’ve ever heard of: that Grooveshark employees are assigned a weekly quota of songs to upload as well as incentives for surpassing it.  I just have one question for Escape/Grooveshark: What were you thinking?! If these allegations turn out to be true, their “its better to ask for forgiveness than permission” mantra will surely be frowned upon by the court.

Now, Megaupload. Ah, where to begin? In case you haven’t heard by now, the Department of Justice (DOJ) seized the Megaupload domain and about $50 million in assets, dubbing the two corporations and seven individuals charged in the indictment part of a “Mega Conspiracy.” The Mega Conspiracy – Megaupload Limited and Vestor Limited, along with Finn Batato, Julius Bencko, Sven Echternach, Mathias Ortmann, Andrus Nomm, and Bram van der Kolk – was charged by the DOJ with engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering, and two counts of criminal copyright infringement. Oh, sweet vindication. All I can say is that it’s about time these people get what they deserve (if the allegations are true, of course). It’s been ridiculously cumbersome for copyright owners to tread in the waters of user generated content safe harbors provided by the Digital Millennium Copyright Act (DMCA). Even now its bitter sweet because the damage has been done: The DOJ estimated that the Mega Conspiracy has reaped benefits in excess of $175 million from their criminal activity while causing more than a half a billion dollars in losses to copyright owners.

The system is broken! Isn’t it time to revaluate our treatment of copyrights when it takes this level of infringement to result in indictments and actionable lawsuits? I’m just going to say it – I think the DMCA (while entirely well-intentioned) has crippled copyright owners. Granted, part of the claims against Megaupload includes ignoring DMCA takedown notices, but should it really take infringement on scales as large as this to get noticed? I’m not suggesting that we should be targeting consumers/end-users of copyrighted content for streaming a few songs, or even downloading a few albums. In fact, I think that will just add to the problem. And I, too, believe that SOPA/PIPA is overbroad. But we need a SOPA/PIPA – one that is responsibly drafted – to cure the problem of widespread infringement and mass of unauthorized dissemination of copyrighted works.

On his last day at Warner Music Group, Chairman Edgar Bronfman Jr. had some strong words for Universal Music Group: “It does strike me as hubris… particularly for Universal to think its going to be easy to buy EMI and, in fact, frankly that they can buy EMI at all.”

Tuesday, January 31^st, may have marked Edgar Bronfman’s final day as chairman of Warner Music Group, but that didn’t stop him from making one more promise regarding the label’s future plans on his way out.  In an interview with Peter Kafka at the “D: Dive into Media Conference,” Bronfman had some choice words regarding Universal Music Group’s scheduled purchase of EMI’s recorded music division.  Not only did he publicly call Universal’s plan  “dangerous,” “problematic,” and a deal that “has got to be stopped,” Bronfman showed no hesitation in promising that, even after he steps down, Warner Music Group will be fighting the Universal-EMI merger “tooth and nail.”

To recap—Back in November, Citigroup, Inc., the owner of EMI, agreed to two deals that would split the historic British music company into two entities, each to be sold to separate buyers. A consortium led by Sony agreed to buy EMI’s music publishing division for $2.2 billion, while Universal would acquire EMI’s recorded music wing for a cool  $1.9 billion. Although the deals are complete as to the parties, they are nowhere near finalized due to the regulatory hoops through which EMI, Sony, and Universal must jump. The parties will need the approval of both the FTC and the European Commission to move forward with the deal, and due to the FCC’s recent scathing analysis of the AT&T/T-Mobile merger, the bar for passing regulatory hurdles on major mergers in the U.S. has just been set a little higher. In total, the regulatory investigation of the Universal-EMI sale is expected to last anywhere from ten to twenty months. It will be in this time period that Bronfman vows Warner will lobby against the deal.

At its core, Bronfman’s promised crusade against the Universal-EMI merger is based on market control. He claims that the Universal-EMI combination will create a “super-major,” that has the ability not only to decide the future of recorded music, but also all other kinds of digital industries. According to Bronfman, the EMI acquisition will put Universal’s market share above 40% (Reuters reports 36%), which in turn will drive down the economics of artists’ deals.

Although Bronfman’s reasons for opposing the Universal purchase are valid (and shared by others in the industry), there is a personal dimension to this battle that should have many questioning the motives for his uncharacteristically public disdain of Universal’s end of the deal. For the past decade or so, Warner Music has tried on multiple occasions to purchase EMI. In fact, just before the Universal-EMI deal settled in November of last year, Bronfman led Warner to the front of the pack of interested buyers yet again, but failed to close the deal. So, is the public denouncement of the Universal deal just the bitter observations of a sore loser? Bronfman assures us otherwise. In distinguishing Warner and Universal’s attempts to purchase EMI, Bronfman points again to market control. He claims that a Warner-EMI merger would not even add up to the current market percentage already controlled by Universal alone. While there is truth to these numbers, the way in which Bronfman criticized Universal, while leaving Sony (who will also be getting a boost in the market share) relatively unmentioned, certainly shows his subjectivity on the issue.

Bottom line, all that Bronfman’s statements mean going forward is that Warner will be in touch with both the FTC and the European Commission as the two agencies inspect the regulatory soundness of the Universal-EMI-Sony deal. This lobbying effort, however, does not come as a surprise to the music industry as it is standard for competitors to petition in these instances. Thus, although Bronfman voiced a whole list of predictable problems with the deal, the fact that he did so in a public forum with little self-restraint as to word choice is what makes this interview so controversial. In short, it’s not about what he said, but all about how he said it.

Elvis Presley "Magic Moments"

On January 18, 2012 in Golan v. Holder the Supreme Court upheld amendments made to the “Copyright in Restored Works” section of the U.S. Code in response to the Uruguay Round Agreements Act § 514 as per the U.S. membership in the Berne Convention. Article 18 of Berne requires countries to protect the works of other member states unless the works’ copyright term has expired in either the country where protection is claimed or the country of origin. While the U.S. upon becoming a Berne member state in 1989, notably 103 years after its formation, initially offered minimal compliance with Article 18, in 1994 when the World Trade Organization’s “Agreement on Trade Related Aspects of Intellectual Property Rights” provided a more secure forum for enforcement, Congress felt compelled to implement the amendment at issue in Golan.

Under 17 U.S.C. § 104A(h)(6)(c) copyright protection will now be granted to works protected in their country of origin, but not originally in the U.S. because either; the U.S. did not protect works from the country of origin at the time of publication; the U.S. did not protect sound recordings fixed before 1972; or the author had not complied with certain statutory formalities. Additional requirements under 17 U.S.C. § 104A(h)(6)(D) provide that the copyright-holder must have been a national or resident of an eligible country and the work cannot have been published in the U.S. within 30 days of its initial publication. The statute effectively places foreign works previously in the U.S. public domain and qualifying for restoration, as per Justice Ginsburg’s majority opinion, “prospectively… on equal footing with their U.S. counterparts.” While as Justice Breyer’s dissenting opinion notes, expert witness testimony suggested this will affect millions of works and cost millions of dollars to those using the works; his acknowledgement that “this is a dilemma of the Government’s own making,” seemingly had a major effect on the outcome of the case.

By denying for over 100 years to join a framework of international copyright, often refusing to acknowledge any international rights whatsoever and now faced with a seemingly uncontrollable estimated $16 Billion in costs of internet piracy to the movie and music industry per year; it may finally be apparent the U.S. must change its philosophy or endure a creative wasteland. Both sides acknowledge that a central economic motive of the Copyright Clause of the U.S. Constitution as Justice Ginsburg noted in Eldred v. Ashcroft is to “advance public welfare through the talents of authors and inventors.” In his dissent in Golan v. Holder Justice Breyer queries as to how this aim can be met when the statute in question seemingly “restricts dissemination… without providing any additional incentive for the production of new material. ” Acknowledging the industry experts quoted by the majority whom argue that extra profits earned by enhanced international copyright protection for U.S. artists can lead to production of new works, Breyer responds that “simply making the industry richer does not mean that the industry… will distribute works not previously distributed.”

While Justice Breyer may have a point, the music industry has continued to search for a new business model since the spawning of the digital age and as Nyasha Foy notes in Back in Black? it may still be on life support. The days of Dowling v. U.S. where bootleg Elvis Presley records can be confiscated and provide physical evidence of infringement are extinguished. While relying on reciprocity regarding royalties from other countries may be a limited venture, as the $16 billion estimate suggests, piracy is a huge factor and must be addressed with an international force or those industries still trying to adjust will have even less to offer to new artists. The music industry has long survived by merging new, more relevant artists with those publishing dollars and sales it gains from the works of the masters in all genres. While companies may not use all of the resources gained by the enforcement of the amendment to foster new and creative artists and works, it is for certain that if Congress, now with the Supreme Court standing behind it, does not attempt to mend international copyright relations, piracy will continue to strangle those new talents.

A Little History

Before answering the question, it is important to consider the history regarding sound recordings and the work made for hire doctrine. In 1999, Congress included sound recordings as a tenth category to the work made for hire provision. (See Intellectual Property and Communications Omnibus Reform Act). However, soon after, pro-artists groups caused enough ruckus to make Congress rethink its decision, which lead to the repeal of the Act via the Work Made For Hire and Copyright Corrections Act of 2000. In the 2000 repeal, Congress, when removing sound recordings as a distinct category, said the work made for hire doctrine should return to the state it was in before the 1999 Act. The issue is with that is NO ONE KNOWS WHAT THAT MEANS! Whether sound recordings are works made for hire was ambiguous before the 1999 Act. Now, after the repeal, the issue is still ambiguous. I should take the opportunity to note that Congress did not include this “return to its original meaning” language unintentionally. It pretty much punted and threw the responsibility on the courts to decide the question.

What Does Alesha Think?

Now, when considering the history of the issue surrounding sounding recordings being works made for hire, one must keep in mind one critical thing: either sound recordings were always works made for hire or they were never works made for hire. Now, disregarding Congress’ actions and looking at the situation for what it is, it is my opinion that sound recordings are works made for hire because they fall within an already existing category of the provision- collective works. Think about it . . . the Copyright Office defines a collective work as “a work, such as a periodical issue, anthology, or encyclopedia, in which a number of contributions, constituting separate and independent works in themselves, are assembled into a collective whole.” The idea is that many sound recordings, individually, are collective works because when artists, musicians, and background singers all put in their “piece” of the final recording, they all contribute separate and independent works (i.e. the underlying musical composition and the background music) that the labels’ engineers and producers edit and assemble into a collective whole- the sound recording. Likewise, many albums fall within the meaning of collective works as well. Simply put- each sound recording is a separate and independent work that is assembled into a collective whole- the album. It is often the record labels that select, arrange, and assemble the masters for the final album.

We Shall See . . .

That is simply my take on the issue of whether sound recordings are works made for hire. Obviously, as of now, there is no definite answer until the courts decide, and even then there still may not be a definite answer. In any event, over the next few years, we will see a lot of litigation about who owns sound recordings in any given case. I’ve given my opinion on the outcome of these cases, but what do you think? Are sound recordings works made for hire? Why or why not?

January 28-31, 2012 marked this year’s Annual MIDEM (“Marché International du Disque et de l’Edition Musicale”) Festival in Cannes, France. At this three-day, internationally renowned trade festival, artists, label representatives and industry professionals gathered, shared ideas, networked, and apparently lobbied their complaints and some responses to those complaints.  This is precisely what a few, big names from independent music labels did at MIDEM and the result was a list of 10 bullet-points which outline and detail a plan to increase the Indie music sector’s rights and reputation.

On January 29, 2012, a special “closed-door” debate was held in a conference room at the MIDEM festival and the topics discussed were numerous issues within the independent music world such as copyright protections, and label recognition.  This three hour debate was considered “crucial” by industry reps. and attracted independent label CEOs and presidents as well as over eighty label executives from Germany, Italy, America, France, Switzerland, and Belgium. While this particular summit of creative minds was chaired by the chairman of Sweden’s SOM, Jonas Sjostrom, yet another independent label executive meeting is expected to be held in New York City in June 2012 in order to further the Manifesto that had begun at MIDEM. While similar meetings have occurred in the past, the industry hopes to achieve notoriety and progress now that they have their objectives written down.

As for the Manifesto itself, the actual 10 points were not publicly available, but the MIDEM website states that it covers the issues of having only 4 major record labels, piracy and copyright within the indie music arena, and government support for indie music in the same way there is for indie films. While some European countries already provide government funding for indie music through tax payers (i.e.: Sweden), the goal is to have many more countries participate in this practice and keep the independent labels afloat.  Essentially, this Manifesto was a first step towards giving a small group a big, legal voice.  They are advocating their beliefs in their creative works and are entitled to just as much protection as major record labels.  On that point, the indie labels are concerned by the fact that there are only 4 of these major labels; they argue that plurality is key to creative success and that the power should not be in the hands of just a few.

However their legal journey plays out, this is certainly the first step for Indie music labels. Now that they have set out a manifesto of their rights and their concerns and seem fully intent on following through with it, let us see what happens between now and June when the group reconvenes in the Big Apple.  I’m hoping for all-out legal debates on piracy issues harming indie artists.  It’s about time someone stood up for the little guy – and this Manifesto has the potential to do just that.  While major label record companies have lawyers upon lawyers on retainer to protect and defend their artists and royalties, indie artists and execs are merely seeking out governmental support and the support of its community.  It certainly is an exciting time in the music industry all around.

As if piracy wasn’t enough to deal with, the music industry could be faced with the likelihood of artists rejecting record deals in lieu of obtaining funding through crowdfunding platforms like Kickstarter. Crowdfunding has been described as a marriage of social networking and philanthropy. It is the collective cooperation, by people who pool their money and other resources together towards the success of specific endeavor—for example, a crowd (of individuals) contributing money in support of studio time to complete an album. Crowdfunding offers the chance to use the power of social media to enable new business funding. According to pleasefund.us, more than 60 crowdfunding sites were started in 2011.

Marketed as “a new form of commerce and patronage,” Kickstarter is a funding platform that allows individuals with creative projects (music, film, art, etc.) to post their projects, while enlisting fans to pledge money to help develop those projects. For example, if a musician needs funding to record an album, he or she would need to submit a project for review by Kickstarter and start raising money. Kickstarter projects must reach their funding goals before their respective deadlines; otherwise no money is exchanged. The average Kickstarter project raises under $10,000 and the average pledge is around $71. 2011 was a big year for Kickstarter and its creative entrepreneurs: over $99 million was pledged and over 11,000 projects reached their funding goals. Music was among the largest creative categories with $19 million pledged.

One of the main benefits of using crowdfunding sites like Kickstarter is that creators keep 100% ownership and control over their work. In essence, Kickstarter gives artists creative and financial freedom that would be unlikely if an artist signed to a label.  For example, most label artists (even independents) relinquish a degree of creative control over their projects in exchange for a recording advance. Kickstarter would provide an artist the opportunity to forgo the creative prohibitions by raising money with no strings attached. In short, Kickstarter changes the music industry business model. Even as independent artists become more common and successful in the music industry, Kickstarter and its progeny could provide a new wrinkle in the ever-changing music industry dynamic.