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Artists to music labels: Where's our Napster money?

Napster and Kazaa were forced to pay record companies $370 million, but some artists wonder when the money will trickle down to them.

So what happened to all the settlement money that Napster and Kazaa were forced to pay the record labels?

That's the question some music artists are asking, according to a story that appeared Wednesday in The New York Post.

The Post quoted two talent managers who said that artists have yet to see their cut of the Napster-Kazaa settlements. This isn't pocket change we're talking here. Napster paid $270 million to settle its copyright infringement case and Kazaa forked over $100 million. Some on the talent side suspect the top four record companies of foot dragging or playing "hide and seek" with the cash.

If nothing else, the controversy illuminates the degree of distrust that exists between artists and the labels. As CD sales continue to shrink, look for more squabbling between them.

"The labels are always going to try to hide the money or use some self-serving formula when they finally get around to paying the artists."
--Jay Rosenthal, counsel for Recording Artists Coalition

But for its part, Warner Music Group says it isn't playing games.

Warner's share from Napster was $110 million, according to documents it filed with the government last April. Warner said at the time that "we will be sharing (the money) with our artists and songwriters."

In June, Warner received an additional $52 million related to the legal cases, according to the documents. The label issued this statement on Thursday: "WMG is sharing the Napster settlement with its recording artists and songwriters and at this stage nearly all settlement monies have been disbursed."

Representatives from EMI and Universal Music Group say they also intend to share the settlement with artists. Sony BMG Music Entertainment was a financial backer of Napster and ended up paying big money to the other three music companies. Sony BMG did, however, receive a share of the Kazaa settlement.

Jay Rosenthal, legal counsel for the Recording Artists Coalition, a group representing the interests of music artists said that the labels have told him that they are trying to decide how to divvy up the money and have been sending payments for a while. He's skeptical to say the least.

"If anything has been paid so far, it has been minimal," Rosenthal said. "The labels are always going to try to hide the money or use some self-serving formula when they finally get around to paying the artists."

But a source within the music industry said that the talent managers aren't looking at the realities.

First, who could deny that the Napster and Kazaa cases, which lasted years, didn't run up massive legal bills, the source asked. Also consider the "inordinate amount of time" it takes to collect the money and figure out which artist's music was infringed, the source said. He added that the labels must split the money between scores of performers.

"The lawyers get their cut first," said the source. "Then the money has to be split among hundreds of different artists at each of the labels."

After all is said in done, according to the source, the process takes a long time and "nobody gets rich from this."

Rosenthal said he has heard all this before.

"The (labels) are certainly going to claim that the legal costs have eaten up the proceeds," Rosenthal said. "But I don't believe that is the case."