[vlmagee]

You know, I hate to be on the other side of the fence on this and I am NOT saying that Warner Bros is a wonderful and reasonable company (I wouldn't know and they may be one of the worst, although Rhino was great when Thane was there). But from the artists' perspective not just the record company there are many issues here.

First, with the internet, file sharing, and the impossibility of protecting music files, there is a real business model issue. The artists are affected, not just the record companies. As we know from Sir John, a You Tube video can be captured digitally. Or, for someone who doesn't want to play with such software, it can be recorded through the soundcard using almost any music player. So, for every video using a recorded song, people can get a good to fair full recording of the song. If they play the music on their PC or on a portable player, a modest sound quality is usually adequate (few of us buy high-end headsets to wear while biking, jogging or working out).

How many people are doing this and not buying CDs or even mp3 downloads? I don't know the answer to that, but it isn't zero. Record sales are down significantly and even adding in MP3 sales, total revenues are down.

The separate issue of how much goes to the record company, and how much to the artist, complicates things, but with tradiational record companies artists get an advance which is against future record sales. As the sales are made, the company keeps the artists' share (recording portion, not the songwriter part which always goes to the songwriter or publisher) until all the money advanced is recovered. (This process is known as recoupement). Picking random numbers, if the artist is given a 100k advance, requiring sales of 25,000 to break even, then the advance isn't earned until that many have sold. If sales go down then it takes longer. If the record never sells that number, then it is added to the sales of future records. The point is that the money is out of pocket to the record company. (It includes both the cash paid to the artist and the cost of recording, production and promotion, in return for a commitment from the artist to do certain things).

So, however much we may dislike how Warners has handled the Lightfoot catalog (letting many albums go out of print, for example), the fact that they ask You Tube to pay something for the privilege of playing their music without restriction is not unreasonable, especially since every video with music may reduce actual sales. We can't assume that the videos will create enough new fans who will buy the music, rather than just listen, or listen and capture to cover any losses due to free capture. We can hope that more people buy, but as long as total revenues are going down, it's hard to make that case.

Bottom line, if the record business reaches the point that the artist and the company that pays to record and release the music (when it isn't done by the artist himself) can't make money, then it will be harder for musicians to make a living. Even highly respected indie artists are seeing a drop in sales which are usually not made up for by downloads.

I am not sure what the answer is, but the issue is very complex. Personally, I predict that Warners and You Tube will eventually sign a new agreement. Let's hope it is sooner rather than later.