THIS IS A MUST READ ARTICLE IF YOU PLAN ON DOING BUISNESS WITH THEM!
http://www.mosesavalon.com/monthly.htm
http://www.mosesavalon.com/monthly.htm
IMPORTANT INFO ABOUT CD BABY....SHADY CONTRACT!
- Thread starter Doberman
- Start date
CD Baby has been called the Mecca of the Do-it-Yourself music industry, and its CEO, Derek Sivers, the Pied Piper of up-and-coming recording artists. But now, the country's most successful independent on-line distributor of CDs may have crossed a line that could get them in hot water with thousands of their clients.
CD Baby functions like Amazon.com for artists not signed to major labels. Artists can use the company's website to sell their CDs and thus are relieved of the burden of warehousing and shipping their inventory themselves and the accompanying problems of monitoring credit card accounts. More importantly, CD Baby takes only $4 for each sale and passes the remaining $5-$8 per unit back to the artist every 30 days.
The deal has always been non-exclusive, allowing artists the right to market their own work in their own way, and keep them free to make a deal with a major label, should opportunity come a-knocking. The model has been hugely successful, particularly among artists who are shut out by the tightly-guarded distribution arteries of the major record labels. CD Baby's recent alliance with Tower Records boosted their profile and its wunderkind CEO, Derek Sivers, who has become a folk hero, gracing several music industry trade magazines with his
Tibetan Zen pony-tail and trustworthy smile.
This month, however, it appears that the dark side of the Force may have seduced the young Jedi. CD Baby launched a new service that emulates the very business model that their philosophy has thus far rebelled against - one where the
artists' music is controlled exclusively by CD Baby without the promise of significant distribution.
THE NEW DEAL WITH APPLE/iTUNES
The new "Digital Distribution" deal offered on the CD Baby site has attracted hundreds of enrollees over night (at $40 a head), due mostly to CD Baby's claim that their clients will have the possibility of being distributed on Apple
Computer's extremely successful iTunes service. Only one month old, iTunes has distributed millions of major label singles already, breathing much-needed life into the desperate lungs of the retail record business. Apple, until now, has been distributing only acts signed to major labels. Several months back they invited representatives of the five major record distributors to a "secret conference" to announce their deal. Derek Sivers was the only invitee that didn't have an entourage of lawyers. He was "chosen," many thought, to be the sole indie pipeline for the iTunes service. It made Apple appear oh-so hip.
Giving a shot at distribution on iTunes is, in the minds of many unsigned artists, almost like competing with the big name artists on MTV, a dream come true for many struggling acts. But is it a real shot, and what rights are CD Baby artists giving up in exchange for this chance? Is CD Baby itself being played for a sucker? Facts that are surfacing as a result of this investigation may reveal that there is another agenda for Apple's choice of Mr. Sivers to be the sole emissary responsible for acquiring content for Apple.
A CONTRACT OF TORTURED CREDIBILITY
According to the eight attorneys who responded to my initial query, the CD Baby contract has several major loopholes that could permanently hinder an artist's ability to navigate beyond the Do-It-Yourself realm to the strata of major label artist; something most of CD Baby's clients presumably want. Many
clauses in the CD Baby contract tie up rights exclusively for a minimum of three years, and some clauses attempt to grab rights to the artist's "underlying compositions" themselves ("songs," for those who don't speak legalese.) This turns
the CD Baby contract into an EXCLUSIVE publishing and distribution deal fused together.
Most major label recording contracts have similar clauses that stick their hands deep into the pockets of artists, but there is usually an advance of some magnitude as part of the exchange. With CD Baby's deal the artist pays for
the exclusive licensing of their music.
Furthermore, the CD Baby contract allows them to sell their exclusive licenses to ANY third party without conferring with their client first. (Let's hope it's to a third party that pays royalties, since their agreement is a " flow-through" deal to their clients.) This in effect makes CD Baby's basic business
model no different that that of a standard major label, except there is no advance to the artist, no promotion campaign, and no MTV video. (And we thought record deals couldn't get much worse.)
Given my experience with the dark side of the music business, I immediately jumped to a cynical conclusion. But several attorneys interviewed for this piece felt that the CD Baby contract's "bad clauses" were more the result of "sloppy drafting" rather than any attempt at subterfuge. Others were less generous. They are backing-off from recommending the CD Baby deal to their clients, saying emphatically that the contract contains "poorly drafted [and] risky language."
After receiving several emails from artists and lawyers and reviewing the contract myself, I contacted Mr. Sivers and went over each of the points at the end of this article. Some changes were made the following day, like the addition of a 30 day-opt-out clause, but the most egregious points remain as of the date of this piece, and conflicting language makes even the 30-day-opt-out clause's validity questionable.
I commended this and recommended to Mr. Sivers that he pay for a proper analysis spearheaded by my company along with several legal experts. Eliminating my usual fees for analysis, I estimated the costs for research and the retaining of two legal experts at $2000. He passed on the offer, citing insufficient
funds and stated to me that he had a trustworthy lawyer. Then he added an odd musing, that since "so few people will sign up for the deal, it doesn't matter if it's not perfect."
CD Baby functions like Amazon.com for artists not signed to major labels. Artists can use the company's website to sell their CDs and thus are relieved of the burden of warehousing and shipping their inventory themselves and the accompanying problems of monitoring credit card accounts. More importantly, CD Baby takes only $4 for each sale and passes the remaining $5-$8 per unit back to the artist every 30 days.
The deal has always been non-exclusive, allowing artists the right to market their own work in their own way, and keep them free to make a deal with a major label, should opportunity come a-knocking. The model has been hugely successful, particularly among artists who are shut out by the tightly-guarded distribution arteries of the major record labels. CD Baby's recent alliance with Tower Records boosted their profile and its wunderkind CEO, Derek Sivers, who has become a folk hero, gracing several music industry trade magazines with his
Tibetan Zen pony-tail and trustworthy smile.
This month, however, it appears that the dark side of the Force may have seduced the young Jedi. CD Baby launched a new service that emulates the very business model that their philosophy has thus far rebelled against - one where the
artists' music is controlled exclusively by CD Baby without the promise of significant distribution.
THE NEW DEAL WITH APPLE/iTUNES
The new "Digital Distribution" deal offered on the CD Baby site has attracted hundreds of enrollees over night (at $40 a head), due mostly to CD Baby's claim that their clients will have the possibility of being distributed on Apple
Computer's extremely successful iTunes service. Only one month old, iTunes has distributed millions of major label singles already, breathing much-needed life into the desperate lungs of the retail record business. Apple, until now, has been distributing only acts signed to major labels. Several months back they invited representatives of the five major record distributors to a "secret conference" to announce their deal. Derek Sivers was the only invitee that didn't have an entourage of lawyers. He was "chosen," many thought, to be the sole indie pipeline for the iTunes service. It made Apple appear oh-so hip.
Giving a shot at distribution on iTunes is, in the minds of many unsigned artists, almost like competing with the big name artists on MTV, a dream come true for many struggling acts. But is it a real shot, and what rights are CD Baby artists giving up in exchange for this chance? Is CD Baby itself being played for a sucker? Facts that are surfacing as a result of this investigation may reveal that there is another agenda for Apple's choice of Mr. Sivers to be the sole emissary responsible for acquiring content for Apple.
A CONTRACT OF TORTURED CREDIBILITY
According to the eight attorneys who responded to my initial query, the CD Baby contract has several major loopholes that could permanently hinder an artist's ability to navigate beyond the Do-It-Yourself realm to the strata of major label artist; something most of CD Baby's clients presumably want. Many
clauses in the CD Baby contract tie up rights exclusively for a minimum of three years, and some clauses attempt to grab rights to the artist's "underlying compositions" themselves ("songs," for those who don't speak legalese.) This turns
the CD Baby contract into an EXCLUSIVE publishing and distribution deal fused together.
Most major label recording contracts have similar clauses that stick their hands deep into the pockets of artists, but there is usually an advance of some magnitude as part of the exchange. With CD Baby's deal the artist pays for
the exclusive licensing of their music.
Furthermore, the CD Baby contract allows them to sell their exclusive licenses to ANY third party without conferring with their client first. (Let's hope it's to a third party that pays royalties, since their agreement is a " flow-through" deal to their clients.) This in effect makes CD Baby's basic business
model no different that that of a standard major label, except there is no advance to the artist, no promotion campaign, and no MTV video. (And we thought record deals couldn't get much worse.)
Given my experience with the dark side of the music business, I immediately jumped to a cynical conclusion. But several attorneys interviewed for this piece felt that the CD Baby contract's "bad clauses" were more the result of "sloppy drafting" rather than any attempt at subterfuge. Others were less generous. They are backing-off from recommending the CD Baby deal to their clients, saying emphatically that the contract contains "poorly drafted [and] risky language."
After receiving several emails from artists and lawyers and reviewing the contract myself, I contacted Mr. Sivers and went over each of the points at the end of this article. Some changes were made the following day, like the addition of a 30 day-opt-out clause, but the most egregious points remain as of the date of this piece, and conflicting language makes even the 30-day-opt-out clause's validity questionable.
I commended this and recommended to Mr. Sivers that he pay for a proper analysis spearheaded by my company along with several legal experts. Eliminating my usual fees for analysis, I estimated the costs for research and the retaining of two legal experts at $2000. He passed on the offer, citing insufficient
funds and stated to me that he had a trustworthy lawyer. Then he added an odd musing, that since "so few people will sign up for the deal, it doesn't matter if it's not perfect."
Thanks
Thanks for the info -- a tremendous wealth of knowledge for those artists out there.
All CDbaby artists are welcome to join www.madmuzik.com --- We'd love to have you.
Peace!
Thanks for the info -- a tremendous wealth of knowledge for those artists out there.
All CDbaby artists are welcome to join www.madmuzik.com --- We'd love to have you.
Peace!
