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Major Labels Caught Stealing $100m a Year
Record Clubs Get a Smack Upside the Head by Federal Judge
By Moses Avalon
(more articles from this author)
2003-05-01
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Artists and songwriters trying to track "lost sales" might want to look carefully in flea markets. This past month saw several busts at neighborhood swap meets. Vendors, using fake names and addresses, join record clubs, (the buy one CD and get 10 CDs for a buck companies) and take the 10 "premium" CDs and resell them at flea markets. Think this is small potatoes? This month a New Jersey scam was busted and confessed to redistributing almost 50,000 units in this manner. Most were from BMG and Columbia House Music Club (owned by Sony Music), the very same companies that lost a second important defeat in a class action suit by songwriters. (Ory v. Columbia House Music Club, Case No. CV 02-02342 SJO. Los Angeles)

On April 22, 2003, the U.S. District Court based in Los Angeles, dealt a serious blow to BMG and Sony, deciding that the two major-label-owned "record clubs" had no leg to stand on to get the case thrown out of court, and would have to attempt to prove to a jury that they just "forgot" or were really going to pay songwriters "when they got around to it."†

The court found that the record clubs failed to pay for mechanical licenses on the premium records given away. (Roughly 6-8 cents per song, per copy sold.) Songwriters' lawyers estimate that the record clubs ripped off their clients to the tune of about $100 million dollars a year.

All this makes you wonder why the RIAA (who is funded by companies who own both major publishing houses and record clubs) scream bloody hell over Kazaa and Napster, and yet ignore this? Could it be to distract us from the fact that their constituents were actively involved in collusion that was costing artists and songwriters far more than the file-sharing services? Or were they just jealous that file sharing services were ripping off their artists better than the majors were.

Glass houses, people. Glass houses.

A trial has been set for January 13, 2004. Stay tuned. This is one to follow.


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