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Ringtone royalties

Lisa Napoli Oct 30, 2006

Ringtone royalties

Lisa Napoli Oct 30, 2006


MARK AUSTIN THOMAS: If you want to download a song it will cost you about 99 cents. If you want your song as a ringtone on your cell phone it will cost you double. Everybody knows that this arrangement is making money for the phone and music companies and the iTunes of the world. But what about the artists? How much are they making? Marketplace’s Lisa Napoli says that some are saying not enough.

[ Song: Grandma Got Run Over by a Reindeer . . . ]

LISA NAPOLI: You might think this song is a silly little ditty, but it has been very, very good to Elmo Shropshire.

It’s sold 10 million copies since he first recorded it in 1979, and in the age of digital music and downloadable ringtones, the reindeer has new life as a cash cow.

ELMO SHROPSHIRE: Last year for the first time when we got our royalty statements there were digital royalties on there. We had something like 140,000 or 150,000 downloads for Grandma Got Run over by a Reindeer, and I thought this is fantastic.

Until Shropshire took a closer look.

He figured he’d get paid half of the $3 or so for each ringtone download. That’s what his contract with Sony specified. Instead he was getting 8 cents each.

SHROPSHIRE: Sony started treating this as if they were selling an actual CD, and as I scrutinized the royalty statement a little more, they were deducting 30 percent for packaging and another 30 percent for returns and breakage and I thought, ‘Just a minute now.’

Gerry Weiner is Elmo Shropshire’s lawyer. He says Sony’s treating digital music sales the same way it treats hard copy sales, and that’s against the contract.

So now Weiner has filed a class action suit against Sony on behalf of Elmo Shropshire and other clients like Cheap Trick and the Allman Brothers.

GERRY WEINER: They’re mostly classic records. They’re records that have recouped their costs dozens and dozens of times over. At this time its pure profit for everybody.

Weiner says as much as 90 percent of that profit is going to the record companies.

Industry observers like Grant Robertson of the Digital Music Weblog say it’s a problem

GRANT ROBERTSON: I think anyone in business would like to make those margins the record companies are making on these sales. There’s a lot of money left over there and the question is where does that go?

The fuzzy math is what’s kept some artists from allowing their catalogues to be made available online. The Beatles, Led Zepplin, RadioHead and Garth Brooks have been some of the resistors.

For its part, Sony won’t comment on the litigation, but Gerry Weiner says there more to the fight he’s waging than the players involved in this suit.

WEINER: It’s obviously the future is what we’re talking about here. And it’s what down the road artists are going to be paid on the sales.

Right now about six percent of all music sold is digital, and the one thing everyone in the industry does agree on is that number will just keep growing.

In Los Angeles, I’m Lisa Napoli for Marketplace.

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