http://www.latimes.com/business/la-fi-linkin3may03,0,3238855.story?coll=la-home-business
Linkin Park Seeks Release From Its Warner Contract
The rap-rock band's demand comes at a delicate time for the label, just before its IPO.
By Charles Duhigg
Times Staff Writer

May 3, 2005

After releasing five albums encouraging angry revolt, the multiplatinum rap-metal band Linkin Park took a page from its own songbook Monday, demanding to be released from its contract with Warner Music Group, which is preparing to go public.

In a statement issued by the group's management company, The Firm, the band said it had become "increasingly concerned" that Warner Music's "diminished resources will leave it unable to compete in today's global music marketplace."

Warner Music, whose stable of talent includes Madonna, Metallica and Green Day, responded in its own statement saying Linkin Park's complaint was nothing more than an attempt to wrest more money out of the company as it readies to file for an initial public offering.

"While Linkin Park's talent is without question, the band's management is using fictitious numbers and making baseless charges and inflammatory threats in what is clearly a negotiating tactic," the Warner Music statement said.

Linkin Park has released five albums with Warner, one of them with the artist Jay-Z, selling 17.9 million copies, according to Nielsen SoundScan. The band still owes Warner four albums under its contract, whose terms have not been disclosed.

Warner Music, whose artists currently occupy the first, third and eighth positions on Billboard magazine's bestseller list, is expected to sell shares shortly, raising as much as $782 million. But in its statement, Linkin Park seized on the company's plan to earmark only $7 million of the proceeds for corporate purposes.

Warner Chief Executive Edgar Bronfman Jr. led the private investor group that last year purchased Warner Music from Time Warner Inc. for $2.6 billion. He and his fellow owners stand to gain more than $200 million in special dividends and fees if the IPO is completed.

"The new owners … will be reaping a windfall," the band's statement said. "Linkin Park, their biggest act, will get nothing."

This latest dust-up comes at a delicate time for the label, which is in the middle of its "quiet period" in advance of a public offering.

"Investors want IPOs that don't have any dirty laundry," said David Menlow of IPO Financial Network.

The war of words began three weeks ago when the band's lawyers sent Warner executives letters asserting that Linkin Park has consistently accounted for more than 10% of the company's sales, suggesting the band is worth $550 million. Warner countered that the band accounts for less than 3% of sales.

A source familiar with Warner said Linkin Park's lawyers demanded $60 million and royalties of 50%. Warner responded with $15 million and royalties of 50%.

Linkin Park's gambit has been tried before with some success. Last year Madonna's Maverick Records sued Warner for $200 million to end its contract. The parties reportedly settled for $10 million to $20 million and Madonna continues to work with the company.

Warner IPO, I'd love to see that go in the tank. However it would be interesting to see what the say in their stock prospectus about "piracy". I bet that, like Sony, their revenue is up not down as so many RIAA Press Releases claim.

I belive Linkin park can still make albums outside their contract and market succefully.

Anyways, I don't know who in Warner made that counterproposal of $15 + 50% royalties, but just for saying that, every band member should be entitled to punch that prick in the mouth. If anyone who lives near Warner is reading this, you have my blessing to do it yourself.

Just a question that occurs to me--legally, could a group like Linkin Park release new songs on the internet, even though they may be under contract? If they don't record them in WB's studios, or use any of their money or personnel--could they sort of circumvent their contract (which they obviously think unfair) by putting their music out there for free? Or would this somehow be illegal? A breach of contract?

"Just a question that occurs to me--legally, could a group like Linkin Park release new songs on the internet, even though they may be under contract?"

Nope, WMG has exclusive rights. Otherwise LP could go and release music elsewhere and that would mean the contract is worth nothing.

"could they sort of circumvent their contract (which they obviously think unfair)"

They didn't say they think the contract is unfair. They said they are concerned that WMG will not be able to live up to their contractual obligations. From the press release:

"Linkin Park has become increasingly concerned that WMG's diminished resources will leave it unable to compete in today's global music marketplace, resulting in a failure to live up to WMG's fiduciary responsibility to market and promote Linkin Park."

mroop--What I mean is, say they recorded a new track on their own equipment. Instead of giving it to WB, why couldn't they just post it on the internet for free downloading--and use it as a springboard for live concerts, etc.? This would mean no profits from CDs, but that wasn't ever much. They would owe the record company nothing (no packaging, no promotional expenses, no pppppayola . I have no idea what exclusive rights in a recording contract would mean, but surely it doesn't mean they can't do ANYTHING else.

"I have no idea what exclusive rights in a recording contract would mean, but surely it doesn't mean they can't do ANYTHING else."

Yeah it does. They don't need record company money to record tracks. The members who want them probably all have studios in their houses now already. Think of it this way - what good is a record contract if you don't have the exclusive rights to release the band's music? If you didn't have the rights then they could just give away all their good songs and give the record company the crap ones as a way to force the company to release them from their contract.

heed the advice of mroop, dmusicites.. for if you seek a WB Contract, you are entering a vortex of legal slavery... you do the work, they get the money.