| iTunes pandora's box opens as bands sue Sony Music |
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| by Stan Beer | |
| Sunday, 30 April 2006 | |
  
The bands in question, Cheap Trick and The Allman Brothers, claim their label Sony Music, a division of Sony BMG, has applied old technology shipping standards to digital downloads. According to the bands, Sony Music is deducting significant expenses for such things as packaging and breakage, which applies to the physical recordings such as CDs, but are meaningless in the context of digital downloads. 
Sony gets 70c for each song sold online and, according to the bands,
deducts 20% of the revenue for packaging and 15% for breakages, which
amounts to 24.5c per download. At present the bands receive 4.5c per
download but claim they should receive 30c.If the two 1970s bands succeed in forcing Sony Music to pay up, it could open up a pandora's box for the music recording industry and a potential bonanza for recording artists. According to Apple, which dominates the legal digital music downloads market, its iTunes service passed the 1 billion songs downloaded mark a couple of months ago. If Sony loses the legal suit, it will set a precedent and other music recording companies could be forced to pay up hundreds of millions to their signed artists in past royalties assessed under the new formula. It could also shift the financial balance of the recording industry away from the music companies towards artists. Although digital downloads are still a relatively small part of the overall music market, it is rapidly gaining traction and, the way iPod and MP3 sales are going, could well replace CDs as the dominant method of obtaining recorded music by the end of the decade.{moscomment} |
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