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Courtney Love does the math

The controversial singer takes on record label profits, Napster and "sucka VCs."

Editor's note: This is an unedited transcript of Courtney Love's speech to the Digital Hollywood online entertainment conference, given in New York on May 16, 2000.

By Courtney Love

June 14, 2000 | Today I want to talk about piracy and music. What is piracy? Piracy is the act of stealing an artist's work without any intention of paying for it. I'm not talking about Napster-type software.

I'm talking about major label recording contracts.

I want to start with a story about rock bands and record companies, and do some recording-contract math:

This story is about a bidding-war band that gets a huge deal with a 20 percent royalty rate and a million-dollar advance. (No bidding-war band ever got a 20 percent royalty, but whatever.) This is my "funny" math based on some reality and I just want to qualify it by saying I'm positive it's better math than what Edgar Bronfman Jr. [the president and CEO of Seagram, which owns Polygram] would provide.

What happens to that million dollars?

They spend half a million to record their album. That leaves the band with $500,000. They pay $100,000 to their manager for 20 percent commission. They pay $25,000 each to their lawyer and business manager.

That leaves $350,000 for the four band members to split. After $170,000 in taxes, there's $180,000 left. That comes out to $45,000 per person.

That's $45,000 to live on for a year until the record gets released.

The record is a big hit and sells a million copies. (How a bidding-war band sells a million copies of its debut record is another rant entirely, but it's based on any basic civics-class knowledge that any of us have about cartels. Put simply, the antitrust laws in this country are basically a joke, protecting us just enough to not have to re-name our park service the Phillip Morris National Park Service.)

So, this band releases two singles and makes two videos. The two videos cost a million dollars to make and 50 percent of the video production costs are recouped out of the band's royalties.

The band gets $200,000 in tour support, which is 100 percent recoupable.

The record company spends $300,000 on independent radio promotion. You have to pay independent promotion to get your song on the radio; independent promotion is a system where the record companies use middlemen so they can pretend not to know that radio stations -- the unified broadcast system -- are getting paid to play their records.

All of those independent promotion costs are charged to the band.

Since the original million-dollar advance is also recoupable, the band owes $2 million to the record company.

If all of the million records are sold at full price with no discounts or record clubs, the band earns $2 million in royalties, since their 20 percent royalty works out to $2 a record.

Two million dollars in royalties minus $2 million in recoupable expenses equals ... zero!
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How much does the record company make?

They grossed $11 million.

It costs $500,000 to manufacture the CDs and they advanced the band $1 million. Plus there were $1 million in video costs, $300,000 in radio promotion and $200,000 in tour support.

The company also paid $750,000 in music publishing royalties.

They spent $2.2 million on marketing. That's mostly retail advertising, but marketing also pays for those huge posters of Marilyn Manson in Times Square and the street scouts who drive around in vans handing out black Korn T-shirts and backwards baseball caps. Not to mention trips to Scores and cash for tips for all and sundry.

Add it up and the record company has spent about $4.4 million.

So their profit is $6.6 million; the band may as well be working at a 7-Eleven.

Of course, they had fun. Hearing yourself on the radio, selling records, getting new fans and being on TV is great, but now the band doesn't have enough money to pay the rent and nobody has any credit.

Worst of all, after all this, the band owns none of its work ... they can pay the mortgage forever but they'll never own the house. Like I said: Sharecropping. Our media says, "Boo hoo, poor pop stars, they had a nice ride. Fuck them for speaking up"; but I say this dialogue is imperative. And cynical media people, who are more fascinated with celebrity than most celebrities, need to reacquaint themselves with their value systems.

When you look at the legal line on a CD, it says copyright 1976 Atlantic Records or copyright 1996 RCA Records. When you look at a book, though, it'll say something like copyright 1999 Susan Faludi, or David Foster Wallace. Authors own their books and license them to publishers. When the contract runs out, writers gets their books back. But record companies own our copyrights forever.

The system's set up so almost nobody gets paid.

Recording Industry Association of America (RIAA)

Last November, a Congressional aide named Mitch Glazier, with the support of the RIAA, added a "technical amendment" to a bill that defined recorded music as "works for hire" under the 1978 Copyright Act.

He did this after all the hearings on the bill were over. By the time artists found out about the change, it was too late. The bill was on its way to the White House for the president's signature.

That subtle change in copyright law will add billions of dollars to record company bank accounts over the next few years -- billions of dollars that rightfully should have been paid to artists. A "work for hire" is now owned in perpetuity by the record company.

Under the 1978 Copyright Act, artists could reclaim the copyrights on their work after 35 years. If you wrote and recorded "Everybody Hurts," you at least got it back to as a family legacy after 35 years. But now, because of this corrupt little pisher, "Everybody Hurts" never gets returned to your family, and can now be sold to the highest bidder.

Over the years record companies have tried to put "work for hire" provisions in their contracts, and Mr. Glazier claims that the "work for hire" only "codified" a standard industry practice. But copyright laws didn't identify sound recordings as being eligible to be called "works for hire," so those contracts didn't mean anything. Until now.

Writing and recording "Hey Jude" is now the same thing as writing an English textbook, writing standardized tests, translating a novel from one language to another or making a map. These are the types of things addressed in the "work for hire" act. And writing a standardized test is a work for hire. Not making a record.

So an assistant substantially altered a major law when he only had the authority to make spelling corrections. That's not what I learned about how government works in my high school civics class.

Three months later, the RIAA hired Mr. Glazier to become its top lobbyist at a salary that was obviously much greater than the one he had as the spelling corrector guy.

The RIAA tries to argue that this change was necessary because of a provision in the bill that musicians supported. That provision prevents anyone from registering a famous person's name as a Web address without that person's permission. That's great. I own my name, and should be able to do what I want with my name.

But the bill also created an exception that allows a company to take a person's name for a Web address if they create a work for hire. Which means a record company would be allowed to own your Web site when you record your "work for hire" album. Like I said: Sharecropping.

Although I've never met any one at a record company who "believed in the Internet," they've all been trying to cover their asses by securing everyone's digital rights. Not that they know what to do with them. Go to a major label-owned band site. Give me a dollar for every time you see an annoying "under construction" sign. I used to pester Geffen (when it was a label) to do a better job. I was totally ignored for two years, until I got my band name back. The Goo Goo Dolls are struggling to gain control of their domain name from Warner Bros., who claim they own the name because they set up a shitty promotional Web site for the band.

Orrin Hatch, songwriter and Republican senator from Utah, seems to be the only person in Washington with a progressive view of copyright law. One lobbyist says that there's no one in the House with a similar view and that "this would have never happened if Sonny Bono was still alive."

By the way, which bill do you think the recording industry used for this amendment?

The Record Company Redefinition Act? No. The Music Copyright Act? No. The Work for Hire Authorship Act? No.

How about the Satellite Home Viewing Act of 1999?

Stealing our copyright reversions in the dead of night while no one was looking, and with no hearings held, is piracy.
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It's piracy when the RIAA lobbies to change the bankruptcy law to make it more difficult for musicians to declare bankruptcy. Some musicians have declared bankruptcy to free themselves from truly evil contracts. TLC declared bankruptcy after they received less than 2 percent of the $175 million earned by their CD sales. That was about 40 times less than the profit that was divided among their management, production and record companies.

Toni Braxton also declared bankruptcy in 1998. She sold $188 million worth of CDs, but she was broke because of a terrible recording contract that paid her less than 35 cents per album. Bankruptcy can be an artist's only defense against a truly horrible deal and the RIAA wants to take it away.

Artists want to believe that we can make lots of money if we're successful. But there are hundreds of stories about artists in their 60s and 70s who are broke because they never made a dime from their hit records. And real success is still a long shot for a new artist today. Of the 32,000 new releases each year, only 250 sell more than 10,000 copies. And less than 30 go platinum.

The four major record corporations fund the RIAA. These companies are rich and obviously well-represented. Recording artists and musicians don't really have the money to compete. The 273,000 working musicians in America make about $30,000 a year. Only 15 percent of American Federation of Musicians members work steadily in music.

But the music industry is a $40 billion-a-year business. One-third of that revenue comes from the United States. The annual sales of cassettes, CDs and video are larger than the gross national product of 80 countries. Americans have more CD players, radios and VCRs than we have bathtubs.

Story after story gets told about artists -- some of them in their 60s and 70s, some of them authors of huge successful songs that we all enjoy, use and sing -- living in total poverty, never having been paid anything. Not even having access to a union or to basic health care. Artists who have generated billions of dollars for an industry die broke and un-cared for.

And they're not actors or participators. They're the rightful owners, originators and performers of original compositions.

This is piracy.
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There are 4 more pages if you're interested. The industry has only gotten worse since this was published.