Why OK Go will never see a dime from their label

From Digital Music News:

This is the strange story of a band that can make a million dollars from Chevy, but never see a dime from EMI. OK Go manager Jamie Kitman pointed to a permanently unrecouped position. Which essentially means that the band will always be underwater on its original, major label deal. And, a big reason for that is a very exorbitant level of upfront expenditure.

The lead-up to this was a conversation in San Francisco (at SF MusicTech) in which Kitman likened YouTube streams to ‘finding coins on the street,’ while noting that his band has never seen payments from VEVO (the reason – an utter and complete state of unrecoupability – is explained here).

“I am the manager of OK Go and as with all out of context quotes, mine lends itself to misreading. What Rio [Caraeff] from Vevo says is absolutely the case — as far as I know, they pay our former label [EMI] for the content they own and because we are — and probably always will be — in an unrecouped position, we’ll never see a dime, as we are forever destined to be paying them back for tour support we received in 2002, or the $505,000 video they commissioned for our first song after turning down our $65,000 budget, before they decided we weren’t a commercial proposition, or the 13 times they secretly retracked the drums on our first single at a cost of $35,000 (only to wind up using our killer drummer’s original track–priceless.)

The wrinkle in our contract which stings the most is the one that allows a label to recoup publishing income from videos — as distinct from mechanical royalties and other publishing incomes from record sales and other licenses — apparently a standard clause in old-school record deals. No one anticipated Youtube or Vevo and what do you know, this one breaks in the favor of the majors. And while I’m busy clarifying, let me also say that the band and I bear Youtube no ill will, either. I was merely making the point that you won’t get rich just by having an internet hit.

Besides, netizens, money is for losers. Don’t forget it.

Jamie Kitman

The Hornblow Group USA”