How Google, YouTube Hosed Artists

October 30, 2006

114

Mark Cuban has been as compelling to follow in the tech world as he has been during the NBA season, and his latest find from a trusted source in digital media illustrated the continued struggle artists have with the organizations that ostensibly represent their interests.

Cuban’s find, from a media-related mailing list, described the view of the YouTube acquisition by Google from the perspective of “an experienced veteran in the digital media business.” Though unnamed, Cuban said he trusts the source, who gave him permission to repost the source’s commentary about the deal on Cuban’s Blog Maverick.

I’ve been a music fan for a long time, and have counted a few musicians among my friends over the years. No one you would have ever heard of, but they were people who treated me well. What little I learned about the music industry over a period of time in the early 1990s was enough to show me how astonishingly one-sided a typical recording contract could be.

Cuban’s repost merits reading. This section caught my attention, and reminded me of numerous nights spent in clubs with some really good musicians who deserved more than a dozen people showing up for a Tuesday night gig in a dark no-name club (spacing added for clarity):

The media companies had their typical challenges. Specifically, how to get money from Youtube without being required to give any to the talent (musicians and actors)? If monies were received as part of a license to Youtube then they would contractually obligated to share a substantial portion of the proceeds with others.

For example most record label contracts call for artists to get 50% of all license deals. It was decided the media companies would receive an equity position as an investor in Youtube which Google would buy from them.

This shelters all the up front monies from any royalty demands by allowing them to classify it as gains from an investment position. A few savvy agents might complain about receiving nothing and get a token amount, but most will be unaware of what transpired.
A typical recording contract typically ran 20 to 30 pages a decade ago, although there were some reports that Sony’s deals could hit 70 to 80 pages. I’d like to see someone like Lars Ulrich step up and express some serious outrage about this sweetheart arrangement that impacts artists just as they thought Napster did, to the tune of millions of dollars.

I’m not going to hold my breath waiting.

—

Add to Del.icio.us | Digg | Reddit | Furl