It's hard to know where begin with this incredible rant from Tim Quirk — member of Too Much Joy and current Vice President of Music Programming for Rhapsody America. (Full disclosure: Tim is also on FMC's advisory board.)
Back in the early 1990s, Too Much Joy signed with Warner Brothers Records and released a few discs on then-WB subsidiary, Giant. While TMJ had (and still has) a rabid cult following, they were hardly one of Warner's superstar acts. Which means, according to conventional major-label math, that they never "recouped." In fact, TMJ currently has a negative balance of $395,277.18.
Tim's post has nothing to do with the fact that his band never made money for the label (although he does provide an illuminating footnote that explains how WB likely broke even on TMJ, despite their lack of recoupment). No, Tim is more annoyed at the fact that the label does not seem to be accounting for digital royalties for records they produced for Warner. Although he's not naive enough to expect a royalty check anytime soon, he does have the sense that TMJ's recoupables should be decreasing somewhat due to TMJ's albums being available on digital services like Rhapsody, for whom he works. Remember, we're not talking about a band that never had any fans.
Since the band had been seeing thousands of dollars in digital royalties each year from [indie digital distributor] IODA for the four indie albums we control ourselves, I figured five years' worth of digital income from our far more popular major label albums would at least make a small dent in the figure. Our IODA royalties during that time had totaled about $12,000 — not a princely sum, but enough to suggest that the total haul over the same period from our major label material should be at least that much, if not two to five times more. Even with the band receiving only a percentage of the major label take, getting our unrecouped balance below $375,000 seemed reasonable, and knocking it closer to -$350,000 wasn't out of the question.
Yet according to an accounting statement from WB, the amount TMJ jas earned digitally is a whopping $62.47. Because Tim works at Rhapsody, he knows exactly how much his company pays to the record labels, and for which artists. So the statement — which he has spent a considerable amount of time trying to get his hands on — didn't seem like the paragon of accuracy. Good thing Tim had a man on the inside!
The business affairs guy (who I am calling "the business affairs guy" rather than naming because he did me a favor by finally getting the digital royalties added to my statement, and I am grateful for that and don't want this to sound like I'm attacking him personally, even though it's about to seem like I am) said that it was complicated connecting Warner's digital royalty payments to their existing accounting mechanisms, and that since my band was unrecouped they had "to take care of R.E.M. and the Red Hot Chili Peppers first."
That kind of pissed me off. On the one hand, yeah, my band's unrecouped and is unlikely ever to reach the point where Warner actually has to cut us a royalty check. On the other hand, though, they are contractually obligated to report what revenue they receive in our name, and, having helped build a database that tracks how much Rhapsody owes whom for what music gets played, I'm well aware of what is and isn't complicated about doing so. It's not something you have to build over and over again for each artist. It's something you build once. It takes a while, and it can be expensive, and sometimes you make honest mistakes, but it's not rocket science. Hell, it's not even algebra! It's just simple math.
Tim isn't advancing a massive conspiracy here. Actually, he says the real reason is probably far more dull: they simply don't care about unrecouped bands.
As I flipped through its ten pages (seriously, it took ten pages to detail the $62.47 of income), I realized that Warner wasn't being evil, just careless and unconcerned — an impression I confirmed a few days later when I spoke to a guy in their Royalties and Licensing department I am going to call Danny.
I asked Danny why there were no royalties at all listed from iTunes, and he said, "Huh. There are no domestic downloads on here at all. Only streams. And it has international downloads, but no international streams. I have no idea why." I asked Danny why the statement only seemed to list tracks from two of the three albums Warner had released — an entire album was missing. He said they could only report back what the digital services had provided to them, and the services must not have reported any activity for those other songs. When I suggested that seemed unlikely — that having every track from two albums listed by over a dozen different services, but zero tracks from a third album listed by any seemed more like an error on Warner's side, he said he'd look into it. As I asked more questions (Why do we get paid 50% of the income from all the tracks on one album, but only 35.7143% of the income from all the tracks on another? Why did 29 plays of a track on the late, lamented MusicMatch earn a total of 63 cents when 1,016 plays of the exact same track on MySpace earned only 23 cents?) he eventually got to the heart of the matter: "We don't normally do this for unrecouped bands," he said. "But, I was told you'd asked."
Danny may even be right. But there's another possibility — one I don't necessarily subscribe to, but one that could be avoided entirely by humoring pests like me. There's a theory that labels and publishers deliberately avoid creating the transparent accounting systems today's technology enables. Because accurately accounting to my silly little band would mean accurately accounting to the less silly bands that are recouped, and paying them more money as a result.
Now that's an interesting theory. Again, Tim isn't claiming that it's fact, but it does make you wonder why the industry hasn't adopted greater transparency in order to ensure that artists are compensated (or receive accurate, timely statements). We're pretty sure that Tim's tale is not unique, which is why we continue to stress the importance of clear, understandable accounting methods across platforms. Anecdotal (and actual) evidence suggests that artists weren't always the biggest priority in Music Industry 1.0. But by speaking up about these kinds of structural problems, stories like Tim's will hopefully become comic-tragic tales of "how things used to be," and not just business as usual.