Record companies do provide great creativity in one area-the way they avoid paying artist royalties. When CDs, the most profitable new technology ever invented-for the labels-came on stream, all artists, even superstars, were required to subsidize its development with a ten percent royalty reduction on each CD sold, and this went on for several years, long after it was clear that CDs were the greatest industry cash cow ever.
Now, according to Billboard, the same record companies have decided that their Internet marketing efforts will require a 25 percent royalty reduction to support "new technologies." This is so blatant itís laughable. Internet marketing, cheap or expensive, has the potential to allow the record company to sell directly to the consumer, bypassing the wholesalers and retailers who currently take about 40 percent of the price you pay. In other words, a "new technology" which essentially doubles their revenues-with no savings to the consumer, and no raise for the musicians and singers who do all the work-isnít enough for the record labels. The artists should subsidize it.
[from Rock & Rap Confidential/1999]
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