SO WHAT’S a record label to do? And this is even as it battles another major problem that has hurt the company bottom line: piracy.

In 2000, sales of Philippine records hit over P1 billion. But the succeeding years saw annual record sales go down to roughly P900 million as many consumers opted to buy P25 pirated CDs instead of paying P250 to as much as P600 each for the legitimate versions. Some industry insiders estimate that audio CD pirates have been raking in as much as P1 billion a year. By contrast, hundreds of record bars and some record companies have been forced to close down.

Piracy has even forced the record industry to lower its standards in judging which CD should be gold and which should be platinum. Previously, a gold record meant at least 20,000 units sold, while a platinum one had to sell twice that.

To keep financially viable, the recording industry has thus expanded its revenue streams. Some major labels, for example, have branched out to managing artists (much like what the major broadcast networks have done). This means their investment on the development of the artists they signed on would not only net them earnings in terms of record sales, but also a substantial commission from live performances or gigs.

A popular band can earn a low P60,000 to a high of P375,000 in just one gig, and managers usually pocket between 10 percent to 30 percent of these earnings. Fonacier says that gigs are so lucrative that for most artists nowadays, recording an album has become just a way to beef up their resumè so that they can snag more live performances not only in the Philippines portfolio but overseas as well.

Aside from managing talents, recording companies have also begun earning extra revenue from opportunities in new and popular forms of entertainment. Acting as music publishers, some recording companies offer the songs they own to videoke firms like Magic Sing. The arrangement usually doesn’t bring in big bucks, say industry insiders, but added income is added income. Besides, it helps popularize the songs, thereby helping promote the albums.

In more recent years, though, the music industry has stumbled upon a major income generator: the cell phone. With just about everyone and his mother owning a cell phone, it did not take long before telecommunications companies began developing all sorts of peripheral “services” for the gadgets – all of which came with a price tag. One of these services was the ringtone, which for some reason caught the imagination of Pinoys. Soon enough, recording companies were selling songs as ringtones, which fans have been downloading for an average of P5 a pop.

There are currently no data available on just how much recording firms – and some very lucky composers – are raking in from the ringtone business. There is no doubt, however, that serious money is involved; according to Araneta, one of her composer-friends managed to buy a brand-new car after one of his songs became among the most downloaded ringtones of the day.

It may not be a stretch to say then that the recording industry was saved by the ring tone. Sy himself says that this is one of the “bright spots” in the music business. But he also points out the earnings generated by ring tones won’t compensate for the huge decline in record sales. Ringtones can also be pirated, prompting Sy to comment that while ringtones offer hope, it’s not a cure-all for the problems piracy has brought the industry.

As it is, Sy has all but given up on ever getting rid of piracy. “We must learn to live with it (piracy), and find a way to make technology work for us,” he says. “It requires a paradigm shift on the way we monetize music.”

Failing that, Sy says, the local recording industry may just go the way of the dodo.

Name that Tune's Price HOW MUCH is a song worth? It may be impossible to quantify the pleasure that hearing a song produces. But composers agree that they should be compensated every time a song they wrote is used. Under the Intellectual Property (IP) code, copyright of a musical work is acquired and exists from the moment of its creation. The creator owns the composition, and is vested with the copyright, a bundle of exclusive economic rights that covers the reproduction, adaptation, distribution, rental, display, performance, and other communication of the work to the public. “(Music) is like water and electricity, it's a utility that should be paid for, it's a product,” says Debbie Gaite, general manager of the Filipino Society of Composers Authors and Publishers Inc. (FILSCAP). FILSCAP counts over 900 composers among its members. It mostly administers its members' public performance rights, charging two percent per concert and three percent for music intensive radio and television programs. Malls, restaurants, and other establishments that play the music of FILSCAP members are also charged depending on their size. Other composers' rights include publication, adaptation, mechanical reproduction and the recording of a work, and synchronization, or when music is used as a film soundtrack or an advertising jingle. The enactment of the IP code in 1998 established a copyright system for Filipino composers. Yet while both FILSCAP and composers say that the code is sufficient in laying down the terms, there are still far too many recalcitrant businesses and record producers who simply do not pay the proper royalties. It's no help, too, that violating copyright of musical works is not a criminal offense. FILSCAP has filed close to 40 copyright infringement cases, while some composers have formed groups like M2K Music to properly manage their songs. When it comes to mechanical reproduction, Gaite says that a record producer would normally pay a composer an advance. This amount is assumed to be recoupable, and producers are supposed to pay composers again after they have sold a certain number of CDs. “But most of the time you don't get accurate reports or you don't get reports (of CD sales),” says Gaite. “Composers know that normally, the advance mechanical royalty is the last that you'll see.” Royalties are more than a gauge of a composition's acceptability, says renowned composer Ryan Cayabyab. “It inspires music writers to write more music for two main reasons — revenue-generation and personal accomplishment,” he says. For all his fame, Cayabyab says he receives good royalties only from popular tunes. “The Philippine market is very small — hence the small royalty figures,” he says. “And because of technology and new trends and lifestyles (and the global competition) my royalty share is bound to shrink all the more.” Composer and M2K licensing manager Christine Bendebel, 42, says that composers are usually paid P10,000 to P40,000 for the mechanical reproduction of a single song. Popular songs obviously make the most money — “Kung Maibabalik Ko Lang (If I Could Turn Back Time),” a hit single that Bendebel penned in 1987, earns her around P300,000 to P500,000 annually. Bendebel and Cayabyab agree that the present royalty system provides fair compensation, but the latter says that only big commercial writers make big bucks. He notes that while Freddie Aguilar's “Anak (Child)” has made millions of pesos, it has not made Aguilar a millionaire. Meanwhile, composer Lito Camo, who has penned the hit novelty songs “Boom Tarat,” “Spageti Song” and “Otso-Otso,” supposedly “basks in opulence” and has a garage filled with luxury cars, according to a recent Manila Times article. Aguilar has been locked in a 10-year court case with Bayanihan Music Publishing Inc. (BAMI) over royalties from “Anak.” Aguilar says he signed a contract with BAMI where "50 percent of all monies will be given to me." But BAMI maintains that Aguilar assigned it all his rights, interests, and participation in a number of songs including “Anak.” To which Aguilar retorts, "I don't remember that I surrendered ownership (of the song)." Since he filed the case in 1998, he has not received any royalties for “Anak.” Bendebel, who also writes jingles, has been able to support herself through writing songs. But she points out that the money is enough only because she's single. “Once you're married I doubt if they'll sustain you,” she says. She also owns 100 percent of the copyright to her compositions, unlike many other songwriters who have signed lifetime contracts with publishing companies. Under this scheme, the composer and company split the royalties, but the composer ends up getting only around 30 percent after taxes, and only after a considerable wait. She cites the case of a composer who split P150,000 in royalties with his publishing company, but who got only P32,000 after eight months. “Most of the songwriters I know, those who are not singer-songwriters, those who don't have a day job, that's the income that they're relying on, they rely on the income that they get quarterly,” says Bendebel, adding, “Songwriters have this tendency to sign anything that is presented to them right away without reading the contract.” She says that composers should not sign anything off the bat, and advises songwriters to copyright their material before submitting it to a music label or publishing company. She also says that it is better to find a publisher who will not administer one's material for life. Instead, one should opt for a fixed term. A length of five years is a long time, says Bendebel, but this would be acceptable as long as one is compensated financially. Cayabyab, for his part, advises composers to ask those with more experience for advice to ensure that they would get a fair amount for their efforts. He also says that one should research on the prevailing system, comparing general worldwide trends with local practices. One should also ask around, he says, to see which recording companies and publishers “are honest to deal with and are reasonable, and open about the business of making music.” He recommends that composers join FILSCAP, whose collections hit P1 million last year. Gaite says it is looking to double that amount in five years. Yet while Cayabyab is satisfied with FILSCAP's efforts, Bendebel, a former FILSCAP board member, says the organization could improve its royalty reporting, monitoring, and distribution. At the very least, FILSCAP has seen only three outright wins out of all the copyright infringement cases it has filed so far. Then again, most of the other cases did end up in out-of-court settlements. Filing cases takes time, says Gaite. It took three years before a favorable verdict was promulgated in a case FILSCAP filed in 1999 against Upbeat Entertainment Inc., the owner of Pegasus club. FILSCAP, however, continues to file copyright infringement cases against erring establishments. This year, Gaite is looking to file another 12 cases, one against a government corporation. These are the worst violators of copyright, she says, adding that the companies always say that there is no budget to pay for the use of music. — Isa Lorenzo