Dave Winer: “I hate the record companies. What a bunch of jerks. Most of the music I have on CD I bought twice. Once on vinyl. Once on CD. Oh yeah, remember cassettes? I bought those too.”
The “standard” record contracts offered to all new artists include a 10% deduction for music on CD, justified as returns from retailers, due to breakage. It’s a holdover from the pre-vinyl schellac 78RPM days, when there actually was about 10% breakage in shipping, but the record companies have managed to hold on to it. Stores were allowed to return records to the companies, and the artists, as always, bore the brunt of the financial impact. Actual breakage these days is far less.
Interestingly, the return deduction only applies to US retailers, because in Europe, once the retailers buy a CD, they can’t return it (at least as I understand the laws there). But the record companies keep the money anyway. My band never sold a single CD in the US. We lived in Europe, and were released in Europe, Australia and Japan. I want my 10% back!
There was also a clause in our contract, signed in 1994, claiming 10% deduction in royalties for CD sales due to promotion of a “new medium”. That’s 20% off of our royalties not off of gross sales… And all moneys spent producing and promoting our music was recoupable from our royalties. I understand that only the most powerful artists are able to get these clauses removed from their contracts.
The best royalty we were able to negociate was 9%, even after having been picked as one of Melody Maker‘s bands of the year for 1993. Go figure.
Don’t feel guilty Dave!