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SONY CLOSE TO SETTLING THE FIRST BIG DIGITAL ROYALTY DISPUTE
As much previously reported, many artists with pre-internet record contracts are being paid royalties on download sales as if they were record sales. But, some acts reckon download revenue - which is, after all, secured by signing one-off licensing deals with download platforms, and which is generated with much less risk than the manufacture and sale of CDs - should be treated as 'licensing income'. This is an important distinction, because artists usually earn a much bigger cut of licensing revenue versus record sale monies, often 20-35% more.
The biggest legal dispute on this issue to date, of course, was between early Eminem collaborators FBT Productions, who have a stake in the hip hop star's early recordings, and Universal Music, which distributes those recordings via its Interscope/Aftermath division. The producers sued for a bigger cut of digital royalties through the American courts and won on appeal. A court hearing is upcoming to decide how much Universal should pay FBT, both now and in terms of future digital royalties.
Universal insists that the ruling in the FBT case relates only to the specific wording of their contract, but many artists and music lawyers in the US do not agree. Rob Zombie, Chuck D and the estate of Rick James are among those now suing Universal for a bigger cut of the download loot, citing the FBT judgement, while the other majors, EMI, Warner and Sony, have been targeted by similar litigation from Kenny Rogers, Sister Sledge and Toto respectively.
But Sony actually has more experience on this issue than its rivals, because it was subject to a much earlier digital royalties dispute led by The Allman Brothers, Cheap Trick and The Youngbloods, who sued the major way back in 2006. Sony initially succeeded in fighting off that legal attack, the first lawsuit being dismissed on various technicalities. But, as previously reported, in 2009 another judge overturned that initial dismissal, giving the green light for the claimants to pursue their case anew.
But then everything went quiet, and it looked like Sony had successfully kicked the case into the long grass, perhaps because the old rockers being given the OK to proceed in 2009 coincided with the first stage of the FBT litigation, where Universal won. But no, it turns out talks between Sony and legal reps for the Allman Brothers et al have been ongoing ever since, during which time, of course, the appeals courts have found in favour of the Eminem collaborators (in 2009 the Allman Bros' lawyers were distancing themselves from that case, but presumably more recently they've been citing it quite frequently to Sony's legal monkeys).
After Toto announced they were pulling Sony into the latest round of digital royalty squabbling last month, we heard rumours that a secret multi-million deal was close to be finalised between the major and its first digital royalty foes. And last week that was confirmed as the claimants filed details of that deal to the court for judicial approval.
If approved, the deal will see Sony set aside $7.95 million to compensate affected artists, and commit to increase those artists' cut of digital income by 3%. According to Billboard, about $2.5 million of the upfront money would go to the lawyers. Quite how the rest would be divvied up isn't currently clear, because this is a class action, so a whole bunch of artists with pre-internet contracts with Sony Music would be entitled to benefit (whether that would include Toto isn't clear either). It is likely those artists who are big digital sellers would see the lion's share of the initial settlement, though all would get the 3% increase in digital royalties moving forward.
More important than all that, though, is that this agreement is seemingly a major label basically admitting that there is indeed a case to say that all digital royalties on pre-internet record contracts should be higher than is currently being paid. Universal, of course, maintains that that principle is not generic, and in their case only applies under the FBT Productions contract (which was much more recent than most of the other recording agreements under dispute here).
Sony conceding on this point won't help its competitors. Meanwhile, arguably, Sony bosses have contained the problem to an extent by agreeing to pay outs considerably less than the Allman Brothers' legal team were originally pitching for. Paying 3% more on download sales than CD sales makes the digital pay out considerably less than what most artists could have expected to receive from conventional 'licensing deal' arrangements.
If the Allman agreement is approved by the courts, any Sony artist deemed to be within the 'class' can claim the extra digital royalty. If they reckon they are due more, they'd have to opt out of the class action ruling and then pursue their own litigation. Many might reckon an automatic 3% increase is better than going to the time, hassle and expense of pursuing their own lawsuits.
Whether Universal and Warner can negotiate similar out of court deals with their heritage artists remain to be seen. It will likely depend a lot on what settlement the courts force on the former in the FBT case. If the Eminem producers cash in big time, other Universal acts are likely to push for similar deals.
CHANNEL ISLANDS TO CHALLENGE VAT LOOPHOLE MOVE IN COURTS THIS WEEK
As much, much, much, much previously reported, so called Low Value Consignment Relief meant that companies could sell products under £18 (or more recently £15) by mail-order from outside the EU into the UK without charging Value Added Tax. The tax dodge was originally set up because the quantity of such sales was so low, and the cost of administering the collection of the VAT was relatively high, meaning the tax man would likely end off losing money overall.
But as the mail-order industry came of age in the late 1990s, aided by the rise of the web, some companies spotted that if they based online stores selling low-cost goods offshore they could use the tax relief system to gain competitive advantage, because they could sell their products 15-20% cheaper without affecting their profit margins. To achieve this they needed an offshore location that was logistically convenient for the UK, and the Channel Islands fitted the bill.
The likes of Play.com led the way, but others followed, including the big boys of UK entertainment retail who also based their operations in Jersey and Guernsey to compete with the newcomers to the mail-order market. Which was good news for all those guys, but left the independent retailers who couldn't afford a Channel Islands base at a major disadvantage, and many reckon the VAT dodge contributed to the collapse of the independent entertainment retail sector.
As the independent retailers started to complain, both the British government and politicians on the Channel Islands promised to do something about the increased use of the tax break, but did little, and subsequently played down its impact. Meanwhile the UK Inland Revenue washed its hands of the problem, and those Jersey and Guernsey located companies benefiting insisted they were based in the middle of the English Channel because they liked the sea breeze.
But those campaigning against the VAT dodge got more organised - forming the campaigning body RAVAS - and discovered the rampant use of LVCR breached European tax laws. The current coalition government then pledged to act, and last year announced that the relief system would be axed for the Channel Islands next month. The announcement caused many of those companies whose mail-order operations are based on Jersey or Guernsey to privately or publicly plan a move, either onto the UK mainland where logistical overheads are cheaper, or into other nearby non-EU countries where the tax relief will still apply (possibly Switzerland).
The latter point - that LVCR is only being removed from the Channel Islands - will be key to the arguments presented by reps for the Jersey and Guernsey governments in the London courts this week. They will claim the UK government's move on this issue is illegal and discriminatory, and that it won't help UK retailers or increase British tax revenues because the mail-order businesses currently on the Channel Islands will move to other countries outside the EU. They will also claim that the move will result in a 50%+ increase in unemployment on the islands.
Of course the fact that so many mail-order firms who previously insisted they weren't based on the Channel Islands for tax reasons are now leaving proves that they were specifically set up there to exploit the tax break. While the fact that Channel Island political chiefs previously played down the significance of the VAT dodge industry there, but are now predicting doom and gloom if it departs, damages the Islands' credibility somewhat. RAVAS campaigners, meanwhile, have pointed out that some key political players on the Channel Islands have personal interests in companies related to the tax dodging mail-order industry.
Those campaigners also hope that the ruling in this court case will set a precedent that would allow LVCR to be withdrawn from any other countries where its use is widely used by mail-order companies selling primarily into the UK, thus deterring Play.com etc to relocate to such places, and countering those who say that the closure of the Channel Islands loophole is simply going to move the problem elsewhere. RAVAS will take an active role in this week's judicial review, which is also likely to result in criticism of the UK's Inland Revenue over its past inaction on this issue, despite the government tax collector fighting to save the loophole closure in this week's court battle.
Confirming that RAVAS will make a submission to the hearing, the group's spokesman Richard Allen told CMU: "Although we had effectively ended our campaign it was clear that powerful commercial interests were involved in the Channel Islands challenge to the UK's LVCR legislation. We felt that we could not remain silent if those commercial interests were going to be closely involved with the move. The LVCR trade is a complex area of law and commerce, and clearly HMRC need assistance from businesses that not only understand how it works but whom also understand at first hand the insidious distortionary effects of this VAT abuse. The long term and blatant abuse has destroyed many UK businesses that other than for the lack of a 20% trading advantage would have been viable healthy operations giving people jobs and generating tax revenue in the UK".
He continued: "Whilst we of course have sympathy for the effect on employment in the Channel Islands that the closure of this industry will have, it is for the people of the Islands to strongly question their elected representatives as to how they could possibly allow an industry that was based on the abuse of tax to become so important to the Islands' economy. Not only did a report commissioned by the Jersey Government in 2005 outline that LVCR was the only reason that the fulfilment industry existed on the Islands but it also warned that the tax exemption that was being exploited was controlled by the UK and could be removed at any time. Now companies are closing up shop they cannot claim their trade was not entirely reliant on LVCR".
KAN-Z SETTLE WITH SYL JOHNSON
Johnson accused the two hip hoppers of sampling his song without asking for permission, after West unsuccessfully tried to secure the rights to sample the song for a track on his 'My Beautiful Dark Twisted Fantasy' long player.
Had the case got to court tedious technicalities relating to how federal and state copyright systems in the US interconnect would have been the main subject of debate, because the original release of 'Different Strokes' preceded the launch of the federal system in 1972, and Kan-Z's lawyers were expected to say that, as a result, it didn't get copyright protection. Johnson was trying to fight the case under Illinois State Law.
But, according to TMZ, none of this will have to happen, because the lawsuit was dismissed last week after both sides reached some sort of settlement. So that's nice.
JIMMY ELLIS 1938-2012
The Trammps originally came together in Philadelphia during the late 1960s, but first came to wider attention in the US in 1972 when their cover of 1930s song 'Zing! Went The Strings Of My Heart' charted. Arguably one of the first disco bands, further success on America's R&B charts followed, though it was the 1976 release 'Disco Inferno' that was to be their biggest hit.
The record was popular in the UK straight away, but came to wider attention in America and elsewhere when it was included on the soundtrack to 1977 movie 'Saturday Night Fever'. A re-release in the US the following year saw them enter the main Billboard charts with the record, which continues to be played three decades on.
Although they peaked in the 70s, The Trammps have remained a popular act, and have continued to tour on and off with differing line ups over the years (with, on occasion, differing versions of the group touring concurrently, as sometimes happens with pop acts from their era). Ellis himself toured with the group on and off until 2008, and regrouped with the outfit's original line-up when 'Disco Inferno' was inducted into the Dance Music Hall Of Fame in 2005.
According to a spokesman, Ellis died on Thursday at a nursing home in South Carolina. CNN reports that a memorial service is being planned for Friday in Charlotte, North Carolina.
WU-TANG'S GZA TAKES 'QUANTUM LEAP' WITH PHYSICS-BASED LP
Says GZA: "I recently met with quantum physicists who deepened my interest in the cosmos and gave me further inspiration for this next album. I want to take my listeners on a journey through deep space and deconstruct the idea of science fiction".
And delving deeper: "I will take a quantum leap and discuss the universe while taking us on a journey through deep space. Travelling at lightspeed from the galactic centre of one galaxy to the farthest corners of another. I hope my listeners will enjoy this cosmic adventure within a world of colossal planets, gas giants, meteorites, comets, and asteroids in the most extreme conditions". And those solar flares, one mustn't omit solar flares.
'Dark Matter' is slated for release later this year, by which point we may all have been melted by solar flares anyway. And wouldn't that be ironic?
MCFLY TO PUBLISH MEMOIRS
Billed in PR speak as "a frank, funny and original insight into the lives of one of the UK's best-loved bands", readers are promised the chance to "get to know the men behind McFly in a way they never thought they would".
Many readers, and the Attitude Magazine-purchasing public in particular, are pretty well acquainted with all of McFly already. But wait... that's not all, because the book will also "shine a light on what it takes to make it to the top and stay there for nine years, all told in McFly's unique and inimitable style".
PEACE PLOT SINGLE, TOUR
To indulge in the 'buzz', why not preview the track beneath this list of Peace's very imminent tour dates:
13 Mar: Brighton, The Haunt
FESTIVAL LINE-UP UPDATE
BESTIVAL, Robin Hill Country, Isle of Wight, 6-9 Sep: Acts including Bat For Lashes, SBTRKT, Roots Manuva, Porcelain Raft, Toy, Iceage, Dirty Beaches, Chairlift, Grimes and Kindness serve as the latest supplement to Bestival's bustling 2012 bill, joining prior confirmations New Order, Orbital, The xx, Sigur Ros, Justice, Two Door Cinema Club and so very many more at the wildlife-themed weekender. www.bestival.net
CREAMFIELDS, Daresbury Estate, Halton, Cheshire, 24-26 Aug: Creamfields completes its electronic-specific programme with one final flourish, adding Afrojack, Goodgreef Xtra Hard, Kutski and Alex Kidd to a vast roster that also hosts Deadmau5, David Guetta, Avicii, Skrillex, Calvin Harris, Benga & Youngman and Axwell. www.creamfields.com
GHOSTFEST, Leeds University Students Union, Leeds, 30 Jun - 1 Jul: Noisesome new conscriptions TRC, Heights, Feed The Rhino, Bury Tomorrow, Prowler and All Teeth ally with an ever-expanding army of Ghostfest troops, as also include Emmure, All Shall Perish, Comeback Kid, Defeater, The Haarp Machine, Silent Screams, Departures, Polar and Continents. www.impericon.com/uk/ghostfest.html
NOZSTOCK, Bromyard, Herefordshire, 27-29 Jul: Dreadzone, The Proclaimers, and Andy C & MC GQ feature at the fore of Nozstock's first billing additions this year, with the eclectic likes of Skinny Lister, Tomb Crew, The Four Owls, Son Of Dave, Juan Zelada and Camo & Krooked following suit. www.nozstock.com
RHYTHM FESTIVALS, Old Warden Park, Biggleswade, Bedfordshire, 24-26 Aug: Rhythm & Blues, one of three events taking place beneath the Rhythm Festivals banner, has disclosed its full three-day roster. Brand new bookings include Geno Washington & Yo-Yo Blues, Buick 6, the all-star Blues Band, Chantel McGregor and The Oli Brown Band. www.rhythmfestival.com
KISS TO LAUNCH THEIR OWN MINI-GOLF COURSE
The Kiss By Monster Mini Golf site will not only have a glow-in-the-dark mini golf course, but an arcade, party rooms and wedding chapel. Says Kiss man Paul Stanley: "This is miniature golf Kiss style and another part of our Kiss world. We've big plans for this".
While Gene Simmons says: "This venue is perfect for Las Vegas. Where else can you go play a round of Kiss By Monster Mini Golf and then renew your wedding vows in an official Kiss Hotter Than Hell Wedding Chapel? Only in Vegas".
FENDER ANNOUNCES IPO
Originally launched by Leo Fender in 1946, the Fender company was a division of CBS for 20 odd years, before being bought by the late William Schultz and current board member William Mendello in 1985, making it an independent privately owned company. New investors have been brought in over the years, and according to Bloomberg San Francisco-based Weston Presidio Capital is currently the biggest single shareholder.
The guitar firm saw sales grow by 13% last year, and in its IPO documents the company says that its brand is still "closely associated with the birth of rock n roll and has a strong legacy in music and in popular culture", adding that post the share sale management intend to "extend our reach to a broader global consumer base".
NORWAY EXPORT'S UK REP RELOCATING TO BERLIN
Vebner opened the first MEN office abroad, in London, in 2008. The trade office then opened another base in Berlin in 2010, and although Vebner is currently primarily UK-based, he has spent 20% of his time working in the German capital for the last year. He will replace Siri Narverud Moen in running the Berlin office from September, while a new UK rep is still to be appointed.
Confirming his move, Vebner told CMU: "It has been a privilege to open MEN's first office abroad, and I can look back on four fantastic, exciting and enterprising years in the UK. It has been incredibly inspiring to work with so many talented Norwegian and British colleagues along the way. It will be very important to me to keep the close connection with the industry, and I am looking forward to working towards the German-speaking market with the same energy and enthusiasm as when I started here in London".
6MUSIC ANNOUNCES NEW WEEKEND LINE-UP
Elsewhere Liz Kershaw will lose an hour of her early afternoon slot, 'The Craig Charles Funk And Soul Show' will run an hour earlier, Tom Robinson will get a new Saturday night programme, and Jon Holmes will take over what optimists like myself continue to call the Adam & Joe slot, from 10am-1pm.
In other 6music changes, Stuart Maconie's 'Freakzone' will move to an 8pm Sunday evening slot, while it's been confirmed that the station's early breakfast show, fronted by Chris Hawkins, will be relocated to the BBC's new Northern HQ in Salford.
THE VOICE TO GO HEAD TO HEAD WITH BGT
And while you might think that in the Sky Plus/iPlayer age such scheduling clashes shouldn't matter anymore, remember this is also the 'second screening age', and shows like this are increasingly capitalising on an audience who have only a lukewarm interest in the actual show, but a big interest in bitching about it on Facebook or Twitter - making first airings important again.
The Beeb claims that it finalised the launch date for its new show first, and ITV then deliberately brought this year's 'BGT' monstrosity forward to compete, though the commercial broadcaster says its talent franchise is having to run a month earlier this year because Euro 2012 and the Queen's Diamond Jubilee will steal some Saturday nights from the series in the early summer. And ITV, for its part, reckons the BBC is at fault here, deliberately scheduling its expensive talent show acquisition to compete with ITV's big earner.
There is still some room for manoeuvre because the schedules for the weekend of 24 Mar will be properly confirmed early this week, though unless one side or the other is willing to postpone launch or move to a Sunday slot - and that seems very unlikely - the two big talent shows of the spring are likely to go head to head. Which means if you, like me, intend to watch neither, probably best to steer clear of the social networks that night.
SPEARS UP FOR X-FACTOR ROLE, BARLOW STRUGGLING TO FIT IT IN
Rumour has it that producers were talking to Whitney Houston about a judging role before her sudden death last month, and that Janet Jackson - another possible - expressed interest but couldn't do it because of existing clashing commitments. So now the favourite to join incumbents Simon Cowell and LA Reid behind the judging desk is one Britney Spears. A source told The Hollywood Reporter that Spears' agent (and fiancé as of last December) Jason Trawick is currently locked in negotiations, but a deal could be struck as early as this week.
Elsewhere in 'X-Factor' judge news, word has it Gary Barlow may not be able to return to the UK version of the show this year, despite wanting to, because of all the celebrating of the Queen's 60 years of rule that he's committed to. Co-writing a song, making a TV show and organising a big gig on the Mall all to celebrate the Diamond Jubilee will make the Take That geezer very busy just as the X-2012 auditions are getting underway.
But Cowell is apparently doing everything he can to accommodate Barlow - which may or may not include persuading the Queen to move her Jubilee celebrations. If it hadn't been for Queen Victoria, they wouldn't be due for another fifteen years anyway. Damn Queen Victoria and her messing with Simon Cowell's telly franchises.
MEL C AND JASON DONOVAN JOIN JESUS SEARCH
Auditions will begin today for a new Lloyd Webber-fronted ITV show, which is presumably based on the idea that the tedious composer being given a fifth TV talent show to plug his multi-million pound West End revivals business is clearly the first sign of the apocalypse, so we might as well speed up the second coming and find Christ via the same format.
The new Jesus will reach the masses via a tour of Britain's arenas. Free bread and fishes with every ticket presumably.
DAPPY LIKES CLASSICAL MUSIC AND CLASSIC ROCK
So, yes, Dappy has become a fan of classical music. And classic rock. Anything with 'classic' in the name really, including the biscuit presumably. The one time N-Dubber and now Brian May collaborator told The Sun: "I listen to everything [these days] but I've been listening to lots of classical CDs recently. And I love 80s rock. I want Slash on my next album".
Pop rapper with classic rock collaborators and classical passions? Give the boy a Sonisphere headline slot I say. Or maybe a BBC Prom.