A publisher gave us a tip that they were not being paid iTunes Match mechanical royalties from various independent distribution companies. So we began researching this. I sent emails to the companies this publisher mentioned.
My email read:
It has been brought to my attention that (YOUR COMPANY) is not paying publishers the mechanical royalties owed to them from iTunes Match. As written in the iTunes contract under Exhibit J (Cloud Features), Section 6(a), COMPANY (YOUR COMPANY) is responsible for paying these mechanical royalties directly to the publisher from the cloud service (iTunes Match).
As you know, Amazon and Google have opted for the compulsory license and are required to pay publishers directly these (Locker / Cloud) mechanicals, but iTunes chose to negotiate this directly with each distributor. So the responsibility has been on the distributor to pay these mechanicals. By US Copyright law, Locker mechanical royalties are different than streaming (or download) royalties.
Can you explain why you haven’t been paying these mechanicals to the appropriate publishers? Or if you have been, can you put me in touch with a few publishers you’ve paid to confirm this?
Every other distributor responded with a professional answer explaining how they handle iTunes Match mechanical royalties. This report is coming soon.
However this is what Lee Parsons, CEO of Ditto Music responded (and CCed his legal department along with Paul Resnikoff, owner of Digital Music News):
Are you a lawyer now Ari or are you simply blackmailing a hard working company that you know nothing about for the sake of a few web hits?
If you had looked into this properly, with ourselves and the Harry Fox Agency who are helping with this then you would not be issuing such a threat.
I have a great legal team and a wealth of knowledge on this subject that you clearly do not.
I understand you asking me about this. I do not understand you blackmailing me for a comment so that you can get hits on your website.
I won’t be commenting to you and my legal team will be combing your articles with a look to sue for every libellous (sic) comment printed.
Paul. As a supporter, writer and an advertiser on your site. Consider our relationship terminated if i ever hear from this “employee” again.
Founder & CEO
I’m not quite sure what Lee means by blackmailing. Or threatening. It was a private email asking a question for a potential story. I make sure to get my facts straight before publishing anything. If there has been an accusation made against a company I will always contact them to get their side of the story before passing judgement or publishing anything.
My angle was not to attack Ditto (or any distribution company). Just to get the facts. And the truth.
It is a very serious accusation made that distribution companies are not paying out royalties. So we’re looking into it.
But, Lee, these facts are that you personally attacked me for asking a question. And threatened to sue me. And then childishly CCed my boss, to what, get me fired?
This speaks volumes about your service. I’ve heard horrible things about Ditto’s service from many of my readers and haven’t reported on it publicly. But now, I will.
From an email sent by a musician:
Subject: DITTO fyi…Horrible
I bought the 5 singles and 5 albums deal and the CODES they provided me have NEVER worked. If I would have known “saving” by buying submission credits ahead of time was going to cause me this much stress, I would have paid $39 at CDbaby per single. This year, I missed important release deadlines and grammy submissions.
I asked Ditto numerous times to help me and they tried to fix their IT system. It took an eternity and the codes still didn’t work. Finally, I just asked for my money back which was = $148.93 USD (or £89.00 GBP). Everytime I tried to use their codes it would bring the price anywhere from $600 to $1200 to release a single (normally $7).
Every time I contact them about my refund they give me the “We’ve contacted accounting and you should see your money in paypal within 24-48 hours”. And now, they just ignore me.
Just an FYI, this has been going on for almost a year.
And another (from a comment on Ari’s Take digital distribution comparison):
I started working with Ditto last year. I distributed through them 4 albums of Eldorado (rock band from Spain). I had plenty of problems with Ditto and I think it may be worth sharing them:
– When starting the distribution: the songs have bad names in some shops, wrong genre,
some albums appeared duplicated in some shops, the albums appeared in shops that were marked as NOT to be distributed (as Grooveshark)
– Trying to solve these problems: I open different tickets in the customer service of
Ditto. All were answered very politely saying that they will take care of the problem, but then half of them were not solved, not pursued. There were also inconsistencies in the sales reports and I needed to report that repeatedly to have the real money added (all this according to their unmatching data, I don’t know the real figures).
– Once I tried to have the album taken down: after months of this situation, I asked them in 2013, July, 23rd to have all the four albums taken down. They informed me that would take from 4-6 weeks to have them off all the shops. Right now, 4 month and a half after the request, the albums keep being available in most of the shops. I have opened 5 tickets since then with Ditto, sent them the specific url of the different shops where the albums are on sale still. I also exchanged emails with Matt Parsons (co-CEO with his brother Lee Parsons) who asked me to be patient because they will be solving the issue as fast as they could (that was 6 weeks ago, I have
opened a new ticket since then).
During those 4 and a half months, the shops keep selling the songs and I guess Ditto keeps receiving the money. Nothing has being reported or given to the band.
And at the same time, as the albums are not taken down from the shops (not anymore
available on iTunes, that is true) I cannot start distributing them through another aggregator.
And I am currently trapped there unable so far of getting free of all this mess.
This isn’t the first time Digital Music News has been threatened a lawsuit and I’m most certain it won’t be the last.
Threatening a lawsuit does nothing but make you look bad. And get your email printed.