Music labels (and copyright maximists) often claim they need copyright to benefit the musicians, but their actions more often contradict that. Unlike the U.S., Canada replaced its compulsory license system (where anyone can pay a set amount to use a song) with a permissions based system meaning the copyright holder has to give permission for each use of their music.  Record labels have reportedly been releasing musicians’ music, such as on compilation discs, without permission nor paying any royalties tracing back to the late 1980s.  The labels have even kept a “pending list” of all the musicians they have not paid.  The list includes more than 300,000 songs from major names like Bruce Springsteen and Beyonce.  Jazz musician Chet Baker is leading a lawsuit against the labels claiming at least $50 million is owed to him.

The labels could face liability of $6 billion using the same infringement fines the label seeks from file-sharers ($20,000 per infringement multiplied by 300,000 songs).

David Basskin, the President and CEO of the Canadian Musical Reproduction Rights Agency Ltd., said in an affidavit that “the record labels have devoted insufficient resources to identifying and paying the owners of musical works on the Pending Lists” adding it would be “an unproductive use of their time.”

There are several other examples of record labels and collection agencies collecting money that never makes it to musicians from creative book-keeping, multiplatinum albums make no money, violating contracts to release music without permission, or just holding onto money because they can.

The reason record labels are so desperate to save CD sales is because that’s their main source of income – and the revenue only works when record labels have full control over distribution. When they have full control, they can charge whatever they want, like $20 for 12 songs,  and treat musicians as they always have – badly. Technology has dropped the cost of making and distribution music so cheap that musicians can control their own destinies – they don’t need labels anymore. Labels served a valuable purpose when there was no alternative. They provided the expensive recording, distribution, and marketing required to make a band successful.

With a computer and a website, almost anyone can make a go at being a musician. This means more music – more people making money from their music (whether through merchandise, live performances, or other inventive business models) and more music to listen to and enjoy.  The labels have lost control over the marketplace and this is a good thing as it will allow the marketplace to grow. Don’t believe me? Look at the U.K.