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Music The Almighty Buck Your Rights Online

MySpace-Imeem Deal Leaves Indie Artists Unpaid 124

Posted by kdawson from the gladly-pay-you-tuesday dept.
azoblue writes with news that following MySpace's acquisition and shutdown of imeem, independent artists who sold their music through imeem's Snocap music storefronts (on MySpace and other sites) won't be paid what's owed them. More than 110,000 artists are believed to be affected. The crux of the problem is that MySpace acquired only a certain portion of the assets that were imeem — "the domain name and certain technology and trademarks" — and not imeem’s outstanding debts, including the money imeem owed to artists under the Snocap relationship. According to the article, some artists have been owed money for more than a year. "Napster creator Shawn Fanning co-founded Snocap in 2002 to let artists sell their music through an embeddable storefront widget. At one point, the service was marketed as the exclusive way for artists to sell music on MySpace. Imeem bought Snocap last summer. But because MySpace left most aspects of Snocap out of its acquisition of imeem’s assets, all 110,000 or so of those storefronts are gone. The server that hosts them is offline and so is the Snocap website."
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MySpace-Imeem Deal Leaves Indie Artists Unpaid More

MySpace-Imeem Deal Leaves Indie Artists Unpaid

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  • The combination of crappy layouts, shoddy design, counter-intuitive interface, and juvenile audience are all working together to render Myspace irrelevant. I just checked my myspace page, apparently for the first time since May of this year. Nothing's changed...
  • I smell a class action suit brewing.. or at least some kind of mass legal action if these artists are not payed.

    • Re: (Score:1)

      by MrNaz ( 730548 ) *

      Against whom?

      • Against whom?

        Myspace for starters. Go after the principles of imeem, too. Only snocap was blameless in this.

        Fortunately, karma is heading toward myspace like a runaway freight train. My guess is they'll be going by a different name this time next year.

        • Re: (Score:1)

          by MrNaz ( 730548 ) *

          Myspace bought imeems assets, they have nothing at all to do with the liability that was created before they had anything at all to do with Snocap. Why would they be liable for anything at all?

          People these days are litigation crazy. Something, anything goes wrong and they want to sue everyone in sight whether or not they have anything to do with anything.

          • If Imeem is bankrupt, it may not be legal for them to sell assets without compensating or making good on their debts. Any monies that result from the sale of Imeem assets should go towards the debt.

            • True, but the only way this affects, or should affect, Myspace is if they somehow knew there was a plan to screw the artists out of their share. That's difficult to prove. Imeem still had a right to sell assets, even if that right was presumably limited by the requirement to use those funds from the sale to pay off their debts. This isn't like a case of receiving and concealing stolen property, where both parties can be completely bared by the law from making a legal contract - baring proof of some sort of

            • Yes. Unfortunately in this situation, it appears that Imeem sold off their assets as part of bankruptcy proceedings, and all the artists are part of a group collectively known as "unsecured creditors", sometimes known as "the ones who take it up the ass". Banks and probably the major labels would be part of the group of "secured creditors", commonly referred to as "robber barons", and most likely will have already received most/all of any money received from MySpace.

              • Banks and probably the major labels would be part of the group of "secured creditors", commonly referred to as "robber barons", and most likely will have already received most/all of any money received from MySpace.

                Of course, that's "most/all of any money" after the IRS gets through with them. Back taxes are 1st priority in any BK proceeding, and being a secured creditor doesn't mean squat if they owe more to the IRS than they have in assets.

              • Re: (Score:2)

                by dgatwood ( 11270 )

                Secured creditors are creditors who are owed secured debts. A secured debt, by definition, means that the company put up collateral in exchange for obtaining a loan. For that to happen, the company has to have something of value, and for a small, presumably VC-funded company, this is unlikely to be the case beyond maybe a small business loan against the furniture. I guess in the unlikely event that this company owns any real estate, issued secured corporate bonds, or issued certain types of insurance pol

    • paid != payed

      • Re:Class Action (Score:5, Interesting)

        by hedwards ( 940851 ) on Sunday December 13, 2009 @11:25AM (#30422762)
        Actually paid == payed. Payed is an archaic form of paid, which is obsolete in most circumstances. Apparently it's still correct in the nautical use as well as for payed subscriptions. Hell even the spell check in Firefox accepts it as legimit.

        If you're going to be one of those annoying grammar nazi pricks, the least you could do is be right.

        • Re: (Score:2, Funny)

          by Anonymous Coward
          Does it accept "legimit" as well, or is that just an archaic form of legitimate?

        • Hell even the spell check in Firefox accepts it as legimit. If you're going to be one of those annoying grammar nazi pricks, the least you could do is be right.

          I have nothing to say/do here. The joke seems to have cracked itself this time around.

  • That's insolvency (Score:5, Informative)

    by DaveGod ( 703167 ) on Sunday December 13, 2009 @09:31AM (#30422138)

    This is what happens in insolvency. There isn't enough money to pay debts. Occasionally the entire business will be worth enough to someone that they will be willing to take on the liabilities, but most of the time there is no option but to sell off whatever does have some value as assets. Myspace didn't buy imeem, they bought some of their assets.

    The money paid for the assets will go towards paying creditors, though creditors are usually ranked so that a lender with a fixed security (e.g. bank loan) get paid first, then it's the employees, and down it goes. The order is broadly as fair as possible in the circumstances (not to say that it's satisfactory to anybody who doesn't get their money, but the money simply isn't there to do so).

    There’s nothing technically wrong with MySpace Music only acquiring certain assets from imeem

    Nor is there anything morally wrong with it. The fault it wholly with imeem. It failed, it could not pay it's debts. To imply Myspace is at fault here is completely false since their offer was the one that returns the most money to imeem's creditors - it makes more (but still not much) sense to say every single other entity on the planet is more at fault than Myspace, because none of them made a better offer.

    (Not that I like MySpace, and certainly not Newscorp, but that's just how it is)

    • Re:That's insolvency (Score:4, Insightful)

      by drinkypoo ( 153816 ) <drink@hyperlogos.org> on Sunday December 13, 2009 @09:36AM (#30422154) Homepage Journal

      And just to back up your point, artists who want protection from this kind of implosion need to join/form a co-op, in which they are the shareholders. That way, they get part of the payoff when the whole thing goes tits up.

      • Re:That's insolvency (Score:5, Funny)

        by Chelloveck ( 14643 ) on Sunday December 13, 2009 @09:44AM (#30422200)
        Some sort of Recording Industry Association, then?

        • Re: (Score:3, Insightful)

          by drinkypoo ( 153816 )

          Some sort of Recording Industry Association, then?

          You jest, but it's clear that what is needed is a Recording Artists Association; by, of, and for the artists, and not the labels, who are the members of the RIAA.

      • And just to back up your point, artists who want protection from this kind of implosion need to join/form a co-op, in which they are the shareholders.

        That works.

        Also, if someone tells you that they'll sell your work you and send you a fraction of the money, run for the hills. Learn a little business, a little arithmetic. You absolutely can do it yourself and make a living at it. You want to see a smart business model for musicians? Go look at www.residents.com. Some of the most "outside" music you can

      • Actually, yes. This is exactly the sort of thing that the RIAA should be fighting. At the very least, artists should be fighting to get a small cut of what they were originally owed.

        Of course, the RIAA has various political interests (including the failure of online distribution), so this probably won't happen.

        The fact that the RIAA couldn't even prevent the loudness wars shows that they've long since given up on their artists.

    • Re: (Score:2, Insightful)

      by PopeRatzo ( 965947 ) *

      The order is broadly as fair as possible in the circumstances (not to say that it's satisfactory to anybody who doesn't get their money, but the money simply isn't there to do so).

      Do you doubt that the legal fees involved in the sale of imeem to myspace was much greater than the amount owed to the artists? I bet there was "there" to pay the lawyers, right? But the people who actually made the products that were sold? No money for them.

      Remember, the people who bought the music from imeem paid for it. Ime

    • Re:That's insolvency (Score:5, Informative)

      by cowboy76Spain ( 815442 ) on Sunday December 13, 2009 @10:11AM (#30422312)

      First of all, insolvency is when there is not enough liquid assets (moneys or goods easily converted to money) to cover short term obligations. In this case the most usual measure taken is oversight of the bussiness, often by an administrator apointed by a judge, but to try to continue running the bussiness*. The term when there are not assets (even those that need more term to be sold / cashed in) to cover obligations is bankruptcy, and it is when the remaining assets and distributed amongst creditors.

      In this case, I think MySpace can be in trouble by the fact that they sold and rebought the bussiness in so little time. The charge could be fraudulent bankruptcy; setting a different bussiness from your assets in order to get back the assets while leaving the debts for the spin-off (that later gets bankrupt. If this was a Mafia film, think of bar buying liquor in mass in order to resell it cheaply, because when the time to pay for it comes it has been arsoned.

      Of course I am not telling that MySpace has done that, but someone could try to present this to court and get to have a trial about it.

      Also, if there is proof that some deal has been done in bad faith (for example, for both or one party knowing that the deal will rip off the artists while making the companies win a lot of money, a judge could also declare it void).

      In summary, the bussiness and executives have been trying harmful ways to get money from everyone for a lot of time, and there are already laws in place to try to avoid this (of course they don't always succeed), so it may not be as clear cut as you think it is

      .

      (*) I am talking of Spanish Civil Law here, YMMV.

      • Re: (Score:2)

        by DaveGod ( 703167 )

        I wasn't aware that MySpace had previously owned the company? There is nothing in TFA nor on Wiki which has a company history. I'm going to assume you're wrong on this for the time being (otherwise you've picked up on the most significant and interesting part of the story that Wired has completely missed).

        I kept it (over) simply on the whole insolvency/bankruptcy thing because the area is very complicated with lots of options (particularly in US and UK) and it was not important to my point, and in practice

        • Yes, I have revised TFS and TFA and I don't know why I got the idea that MySpace had previously owned imeem (maybe the fact that it was "the exclusive way for artists to sell its music through MySpace", but of course I made an incorrect assumption there). Please ignore my paragraphs two and three.

          Anyway, the deal still may be brought to the courts to find if it can be nullified.

      • The terms "Bankruptcy" and "Insolvency" aren't very good for general discussion because their meaning varies so greatly. In the UK, bankruptcy doesn't apply to corporations [wikipedia.org], and insolvency can mean either a cash flow(short term) problem or a balance sheet(business is tits up) problem [wikipedia.org]. Not to mention differences between Chapter-11 bankruptcy(US) and going into administration/receivership.

      • Revisited: In answer to DaveGod post, I revised TFA and TFS and, indeed, the fact that Myspace had previously owned Imeem is not present there and was an error on my side. Please ignore that from my original post (second and third paragraphs).

        Apart from that, I mantain the rest of the post.

        Sorry for the inconvenience.

    • But whatever funds were used to purchase Imeem don't just get to sit in the pocket of the owners of the company. All of that money is supposed to be used to pay down whatever debts there may be. I'm not sure where the musicians sit in the rank of debts to pay down, but hopefully they rank higher than the shareholders, which as someone pointed out below, rank pretty much dead last.

    • Re: (Score:1, Insightful)

      by Anonymous Coward

      In the US, it's the IRS, bondholders, secured lines, unsecured lines, unless, of course, president Obama decides to steal a billion dollars from bondholders, in which case, they get skipped. See GM.

    • In most states, if Company A acquires most of the assets of Company B (what percentage depends on the specifics of the situation), Company A is liable for the debts of Company B. If Imeem was in bankruptcy this law would not apply, but I haven't seen any mention of bankruptcy in any of the stories.

    • Re: (Score:1, Interesting)

      by Anonymous Coward

      Exactly. This is what happened when the computer book publisher glasshaus (Wrox, Friends Of Ed) went down. They pulled the classy stunt of locking the door on the quarterly payday just to maximize what they owed authors and give the authors minimum forewarning on paying their own bills. And the authors never got a dime after -- the "artists", the term RIAA etc like to fling around to mean the musicians and writers, always get paid last. Which means never in any sort of meltdown. That's how publishing is str

    • Re: (Score:2)

      by jrumney ( 197329 )

      The money paid for the assets will go towards paying creditors, though creditors are usually ranked so that a lender with a fixed security (e.g. bank loan) get paid first, then it's the employees, and down it goes. The order is broadly as fair as possible in the circumstances (not to say that it's satisfactory to anybody who doesn't get their money, but the money simply isn't there to do so).

      Secured creditors are third - after the Government and the accountants and lawyers who handle the winding up.

  • How long until (Score:3, Insightful)

    by Norsefire ( 1494323 ) on Sunday December 13, 2009 @09:32AM (#30422144) Journal
    They blame piracy for their predicament?

  • Meet the new boss (Score:1, Interesting)

    by fragmatic43 ( 1699440 )
    Everyone said it was just the nature of the old media moguls to steal the money from the artists. The new Napsterites were supposed to be purer and they would never do anything bad to the artists. But maybe this was just camouflage for their anarchy. Bummer...

    • Re: (Score:3, Funny)

      by MrNaz ( 730548 ) *

      No, I think it was camouflage for their total inadequacy when it came to running a business.

    • I think it is time for a community run, non-profit clearinghouse and distribution channel with transparent accounting for these artitsts to publish and distribute their music through. These artistic commodities do not belong being controlled by a single commercial entity.

    • Re: (Score:1, Informative)

      by Anonymous Coward

      You realize that MySpace is owned by Rupert Murdoch?

  • Cue up the Lawyers (Score:5, Interesting)

    by salesgeek ( 263995 ) on Sunday December 13, 2009 @09:35AM (#30422150) Homepage

    I've been through asset both buying and selling. It will be hard for MySpace to pull this off as the courts may not see the sale as a pure asset sale. It's one thing when you sell buildings and plant equipment. It's quite another when you sell the essence of the business: the brand, key employees and the customers and vendor relationships (musicians). Unfortunately, because this likely will be a class action, the musicians will be screwed a second time when the lawyers swoop in and get 40-60% of the settlement.

    Time to cue up "That old class action" by Dewey, Cheatham & Howe.

    • Sadly, thanks to the recession, this sort of practice is becoming more commonplace. A similar thing happened a few years ago with K-Mart, and this year with GM. Both brands survived relatively intact, but had most of their debts relieved (and screwed their investors in the process). GM, in particular, seems intent on making its emergence from bankruptcy as destructive and painful as possible (Pontiac, Saab, and Saturn were all viable businesses that got squashed. The attempted sale of Saab in particular

  • In my home country... (Score:1, Interesting)

    by Anonymous Coward

    ...that is, France, I believe this kind of scam is downright illegal, and specialized courts that deal with commerce do frown upon selling assets and leaving the debt to a straw company. They are usually declared de facto bound to one another and treated as one entity. But then again, IANAL. Sounds reasonable though.

    • Re: (Score:1, Flamebait)

      by PopeRatzo ( 965947 ) *

      In my home country...that is, France, I believe this kind of scam is downright illegal, and specialized courts that deal with commerce do frown upon selling assets and leaving the debt to a straw company. They are usually declared de facto bound to one another and treated as one entity

      Yes, but here in America, we're a Free! Country! with a Free! Market! which means that anyone with any money or power is Free! to fuck over anyone who doesn't have power or money.

  • Tie (Score:1)

    by flak89 ( 809703 )
    But these guys who own MySpace are wearing ties, so it's OK if they owe money to artists and do not pay.

  • Better get the RIAA after them! Oh, wait...

  • Imeem might have gotten away with not paying artists for a year because it didn't have the money to pay. Even if the artists sued Imeem, there was no money in Imeem to get.

    But now Imeem has money from the MySpace deal. The artists should get it. A single lawsuit should be an open and shut case.

    But what Imeem got is said to be "less than $1M", whatever that is. If there's 110,000 unpaid artists, that's under $9 to pay each artist. The best way to use the money taken from Imeem would be to pay to set up other

    • But now Imeem has money from the MySpace deal. The artists should get it.

      Unless there are back taxes due and/or secured creditors that are owed money.

  • Perspective of a Poor Starving Indie Dude (Score:5, Interesting)

    by LtCol Burrito ( 1698596 ) on Sunday December 13, 2009 @10:18AM (#30422358) Journal
    OK, so I'm an "indie" artist, and I have a ton of friends who are indie artists as well. We actually just got signed to a minor record label after years of trying to sell our CDs at gigs, carshows, and chick-fil-a grand opentings, etc. Fortunately, we used iTunes to sell our music instead of imeem. I have to tell you that at .99$ a tune we weren't making a whole lot of $$. In fact, all of my indie friends mentioned above pretty much have full time jobs to pay the bills - the music thing for most of us is something we do just because we love to play.

    The point is that I would guess that the imeem accounts are probably just micropayments - maybe in the range of 5-20$. I wouldn't expect any laywer to go after this kind of chump change, not even for a class action suit. I think us poor starving musician types will just have to suck it up as usual while we get hassled by the man.
    • Out of curiosity, how much of the .99$ did you get from iTunes with a minor label?
      • Good question. Fortunately, we posted our tunes there before we got signed, so I'm not sure how much the record companies take.
        • I'm wondering how it compares to magnatune.com (which I subscribe to), I believe they split the revenue 50/50 with the artists. Of course their business model is rather different to iTunes but considering the fixed price system of iTunes I would expect labels to be able to afford to give artists a bigger cut.

    • See, that can't be right because everyone knows that artists make all their money from touring and selling merchandise and it is the RIAA and the labels that get all the money from CD sales. That is why it is evil for the RIAA to go after people who share CD tracks. See, none of that money would have gone to the artists anyway, so no one should have to pay for the CD sales. /sarcasm

      • While your sarcasm is cute, you seemed to have neglected to burden your efforts with a point that follows your reference to the previous post. Perhaps it would be clearer if you could point out what concept in the previous post is referred to by 'See, that' and the subsequent sarcastic display of disbelief.

        • Re: (Score:2)

          by Tim C ( 15259 )

          I'd say it's probably this line:

          We actually just got signed to a minor record label after years of trying to sell our CDs at gigs, carshows, and chick-fil-a grand opentings, etc.

          The inference being that touring and selling CDs & merchandise isn't as good as signing with even a minor record label, at least in this case.

  • What in the hell is an "imeem"? Is it the feminine form of "imam"?

  • I found iMeem an invaluable way to quickly check out new releases I'd read about, or catalog releases by artists. Now that it's gone, what's the best commercial alternative? Who has the best library of streamable music for free or a reasonable monthly fee?

  • Quick, someone tell Rupert Murdoch (Score:5, Insightful)

    by metamatic ( 202216 ) on Sunday December 13, 2009 @05:28PM (#30425248) Homepage Journal

    Given Rupert Murdoch's recent comments about copyright thieves stealing content, I'm sure the owner of MySpace will act quickly to ensure that these musicians get the royalties they are owed.

  • That news is just soooo... unimportant.. I mean what 110 000 unknown artist haven't been paid, thats nothing. You want news? The MPAA is screaming that the movie industry is loosing billions of dollards. I mean thats a lot of money.. who cares if hard working low budget artist dont have money to get food... The bottomless pucket from the movie industry are loosing billions... Thats a lot of money... they could probably feed 10x 110 000 underground artist trying to make a living, but thats no matter... They

  • Here's an email I sent to my bro back in March:

    I've been trying to decipher the SNOCAP contract... ... it's pretty abysmal in quality:

    "All The Other Things A Contract Need To Have.

    Modification: we reserve the right to change all or part of this Agreement. Notice of any such changes will be provided through the Enabling Interface or in the manner detailed in Paragraph 7(h). It is your responsibility to check the Enabling Interface for any notices of modifications to this Agreement. If you do not consent to a

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