52 Ways to Screw an Artist, by Warner Bros. Records

Over at Digital Music News they have a great dissection of how James Taylor had so many problems getting the royalties due him even after an audit.

Sadly, this is a story that dates back to 1969, when a young James Taylor signed a deal with Warner Bros. Records. That was the beginning of a breakout career that included numerous hit songs and tens of millions of album sales.  But it also marked the beginning of a duplicitous financial relationship, one that seemed designed to systematically cheat this artist over a period of several decades.

This week, Taylor and his attorneys decided to file suit against Warner Bros., in part to capture higher royalties from digital downloads.  Taylor, like many other legacy artists, wants to treat downloads like licenses instead of sales, and receive drastically higher payouts in the process.  But the paperwork is also airing lots of old, dirty laundry.

According to the allegations in the filing, these are the various ways in which Warner Bros. Records has screwed James Taylor.  Keep in mind: this list of grievances only dates back to 2004…
(1) In 2007, James Taylor initiated an audit of his royalty payments dating back to 2004.  In that three-year span, Taylor and his accounting firm, Gelfand, Rennert & Feldman, LLC, found underpayments totaling$1,692,726.

(2) The various parties sifted through the audit, and ultimately compromised on an amount totaling $764,056 (some of the topline amount appears to include recategorizations of digital sales as licenses, which would result in higher payments).

(3) Warner Bros. subsequently paid only $97,857 of that balance.

(4) Several days ago (September 13th), Warner decided to dispute the remaining $666,199.  Of that, the label claimed to owe just$147,278.

(5) Of the $147,278, Warner has paid $0 so far, meaning less than $100,000 of the $764,056 agreed upon amount has been paid.

(6) During the audit, Taylor’s accounting firm found that Warner Music had grossly exceeded the number of ‘non-royalty bearing’ units in the amount of $47,869.  This probably refers to free and promotional copies, or phantom units designed to protect Warner Music from paying actual royalties.

(7) Also during the audit, Taylor found that Warner Bros. had misallocated customer returns into various royalty and non-royalty bearing buckets.  The result was an $800 shortfall.

(8) On the release Mudslide Slim, Warner Music applied a royalty rate of 10% and 11%, instead of the 11.5% agreed-upon rate.  The shortfall was $869.

(9)  Warner Bros. Records sold the cassette version of Taylor’s Greatest Hits at an unauthorized budget price.  Damages for that action were not specified.

(10) Warner underreported sales of Taylor’s Walking Man CD by 50 percent, resulting is a royalty shortfall of $7,142.

(11) The audit also found that Warner Bros. did not pay Taylor for ‘excess free goods‘ associated with the BMG and Columbia House record clubs.  The shortfall?  $43,420.

Author: Mike Stahl

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