Grant Robertson looks at the impact of digital downloads and agrees with Weird Al that the artists are getting a raw deal.
The artist (Grant uses the Allman Brothers as an example) gets $0.31 cents per song sold on a CD, but only $0.045 for each digital download. The format is crippled, the record label saves money in production and distribution, and the artist takes an 85% pay cut. That sure doesn't seem right, does it?
The Allman Brothers and Cheap Trick have already sued Sony BMG over allegations that the bands are being underpaid for digital downloads. Among other things, it seems that these labels are deducting 15% of the total sales for "breakage" and another 20% for packaging.
We should encourage digital distribution: more access and lower costs for everyone. As I've said before, "Digital music has the potential to (in Fred von Lohmann's words) 'grow the pie' for everyone - we'll have more innovation, more money for both content creators (and publishers) and technology companies, and happier consumers - and yet the RIAA and others keep managing to find ways to hold it back."
The labels are definitely spoiled by the high margins they had when controlling the distribution channels. In the past, one had no choice but to go through a record label, but that's not necessarily the case anymore. Instead of reacting and trying to add value in the new model (in marketing and so on), they seem to be holding on to the gatekeeper role. The labels are missing an opportunity, and their stubbornness will only lead to their demise in the long run.
The artists and consumers seem to be (generally) on the same page, and eventually we're going to figure out a way to remove the middle man.