TuneCore’s Jeff Price On Going Direct To iTunes

Jeff Price, CEO of TuneCore, responds to a recent post on Digital Music News.

image from blog.secondmelody.com This posting is not about me trying to drum up business for TuneCore. Rather, a recent music blog ran a factually incorrect and incomplete story about how artists can “go direct” with digital stores like iTunes. It’s frustrating to see wrong information being stated as fact as misinformation can hurt artists. I thought it important to provide a more complete story.

To begin, the article implies that a "submit an application for iTunes” link recently became available.  This is not the case. This link has been live and available since the day iTunes launched.  One of the reasons I started TuneCore is that many digital stores will not do deals directly with most artists, requiring them to go through a middleman. This is not because the digital stores do not like or value artists, it is because of the support, logistics and liability issues that exist around being a digital store. 

For example, many of these contracts run over twenty pages and require a physical copy to be signed and mailed back. In the event the digital stores allowed all artists to sign up directly, they would need to physically snail mail out millions of paper contracts and wait for an original signed copy back (a scanned PDF emailed does not suffice). In addition, the signer of the agreement must be over 18 years and have an attorney on their end read it over to avoid any possible legal issues. As many of the companies that run digital stores are publicly traded, they would very much need this procedure followed.

Term Issues

In addition to then having to file millions of contracts, each one would have a different expiration date around the Term - this means that there must be a schedule kept as to when each of these contracts expires. Prior to expiration, they would need to "renew,” and while there could be an auto-renew trigger in the agreements that may address this, the Term still needs to be kept track of in the event the digital store would like to discontinue the relationship.

On top of the Term issue, there is also the amendment issue: for example, since launching, the digital stores have added new provisions, territories and options to each agreement. For each new amendment (i.e. complete my album, DRM free, expansion into another territory, longer preview clip streams, and so on) additional paperwork must be sent out. This paperwork would then need to be physically signed and snail mailed back and attached to the appropriate agreement it is associated with.

Each contract also has a confidentiality clause: in the event any of the contract holders posted any information from the agreements, the digital store would contact the contract holder about a potential material breach of contract (not to mention they now need to police this as well).

Add to this that each time a digital store would like to do a promotion around a free giveaway, a feature, etc., they will also need to reach out to each entity separately and get even more paperwork signed off on and sent back.

Music Issues

On top of the legal issues, with each agreement would also come the additional artist support and issues about how to get music, metadata and art to the digital store.  For example, what is AAC, what is an MP3, how do I get my file to be 44.1 khz, I only have my music as an MP3 how do I make it a lossless AAC, WMA, WAV etc file?  I don’t have a fast net connection and cannot upload.  My net cut out during upload. What is a UPC, what is a song identifier, do I need an ISRC, how do I get them?  How do I make a 600 x 600 300 dpi image? In some cases the digital stores switch formats and have asked for the music to be resent to them in a new codec (for example, please re-deliver your songs to us as 256kb, 44.1 khz, MP3s as opposed to a .Wav)

Then move onto other issues - I uploaded the wrong track, I need to take the release down, I need to change the name of the song, I misspelled the title, I need to add Japan but remove the UK.  I fired my manager but he has the account details and access, please change it to me and so on.

Legal Issues

Then there are the legal issues - many artists do not know the intimacies of copyright law - some infringe on copyright without knowing they are, others infringe well aware they are breaking the law, still others have fraud schemes.  If these artist are going direct, the digital store becomes more directly legally liable to be sued, whereas if the digital store gets the music via a larger "middleman", that middleman has to warrant and represent the music is free and clear of claims.  In the event the music is infringing on copyright, the middleman takes the liability hit and legal challenge. The middleman also typically has “deeper pockets” and is able to settle the claim.

Now add on top of this the millions of emails and phone calls from each contract holder trying to get feature placement. As a reference point, imagine millions of artists calling Rolling Stone magazine directly to get an album review as opposed to a smaller group of publicists.

And that's just to get the music in.

Now there are the issues around getting the money out - you need a bank account that can take direct deposit (not that big of a deal for many of us, but there are some that do not have this).  Most of the digital stores do not mail out checks, they do electronic direct deposit as they do not have the infrastructure to physically mail out checks and paperwork to the existing entities they work with. Then there are the challenges of wrong bank account info and bounced EFTs.  How does this money make it out?  The stores need to reach the customer and cannot due to a fictitious email, wrong phone number, transfer of rights and death of the copyright holder or address unknown. 

Incomplete Story

Holding onto the money from the sale of the music creates financial and legal liability.  If it remains uncollected, after a period of time, income tax most likely will have to be paid on it by the digital store.

Then there is the customer support around the monthly statements - i.e. “I know I sold a song in January, but it's not showing it, why?”   Because January sales are reported in March.  “Why did I make less/more than what I expected?” Due to the music selling in Japan at a different rate, being sent to your U.S. bank account and your bank doing a Yen to Dollar conversion.  “How come a % of my money is not being paid to me from Australian sales?” Because there is a tariff imposed by the Australian government due to international trade treaties.  “Why am I losing 25% of my sales income from songs sold in Japan?” Because you have not filed a form required by the Japanese government to eliminate this fee. And this list too goes on and on.

As to why someone would choose to run an incomplete story as fact I can only speculate – either they really did not know (in which case they really did not do any investigation and should run the article with a disclaimer) or they may be trying to run sensational news stories in an attempt to drive chatter, eyeballs and ultimately ad dollars into their pockets.  There is nothing wrong with this, provided the blog states it is an opinion piece. The challenge is when someone creates an "official" sounding name and states something as fact knowing it's not to make money via web traffic and get the sort of financial exit TechCrunch did.

But more importantly, artists should be provided with as much clear and accurate information as possible to allow them to pursue their goals.  This misinformation only hurts.

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