Digital Music News recently reported on the lawsuit filed by James Taylor against Warner Bros Records, arising out of a 2007 audit. When it comes to a dispute between artists and labels, I am not shocked by much. But being a child of the 70’s, a period when Warner Bros represented the gold standard of artist-friendly record companies, I am still a little saddened to see that an artist like James Taylor could be treated this way.
The audit in question covered the period between 2004 and 2007 and included sales of such records as “Sweet Baby James,” “Mud Slide Slim and the Blue Horizon,” “Walking Man” and several greatest hits compilations. The amount of underpayment alleged by Taylor is $1,692,726. The number of damage claims in the lawsuit total 52 in all and they comprise such elements as:
1. Over calculating the amount of “non‑royalty bearing units”
2. Underreported sales
3. Excess free goods
4. Improperly applying a mid‑line reduction
5. Violating the contractual restrictions on compilations
6. Charging manufacturing costs as “recording costs”
7. The current hot button issue of treating downloads as sales rather than licenses
8. Not paying for record club sales
9. Not paying for master use licenses
10. Missed interest payments
11. Misapplying royalty rates
What surprises me further is that though these claims total over $1,000,000.00 they are in fact comprised of some relatively small dollar amounts (e.g. misallocated returns: $800.00 charging manufacturing costs as recording costs $3,700.00) as well as the big ticket digital claims.
All in all this is a reminder that underneath the mystique of classic records, this is a still a penny business and one that is becoming more difficult to navigate as the pennies get smaller. . I hope this is not a sign of things to come.