For all its talk of good karma, the legitimate digital-music industry is offering little advantage to music creators, it seems.

The first tranche of digital-music royalty payments are emerging now, and they reveal a poor deal for the artists, music managers have complained.

This may appear strange, given that the majority of music download prices are passed directly to the labels, but the devil is in the royalties, The Times reports.

The Music Managers Forum (MMF) is unhappy about the royalty rates artists receive, despite the recording companies' constant stress that music theft isn't an option.

Artists to labels: 'don't steal music'

The Times reports that artists: "Typically receive a royalty of 4.5 pence on every track sold on iTunes." That's just 6 per cent. But if a physical single gets sold in the shops, artists receive a royalty of 12 per cent, or 35 pence.

Snow Patrol manager and MMF chairman Jazz Summers said: "Sale prices and royalties have gradually been eroded to the point where an artist needs to sell in excess of 1.5 million units before they can show a profit, after paying for recording time and tour support."

Artist managers are at once complaining that digital-music services have been given too much power to set prices; while labels have forced artists into accepting digital-download royalties set 25 per cent less than other types of sales - a similar trick to the one the industry played when it began selling CDs.

BPI attacks artist representatives

This happens as the BPI (British Phonographic Institute) is teaming up with Apple and other digital-music services to attack the publishing royalty rates demanded by artists' representative body the MCPS-PRS Alliance, a joint venture between the MCPS (Mechanical Copyright Protection Society) and PRS (Performing Rights Society).

Artists want 12 per cent for their published songs (reduced for a time to 8 per cent to help encourage new services), while the BPI (which represents record labels) wants to give the music creators whose art is the backbone of the music industry just 6.5 per cent.

The labels argue that the artists whose work they sell "have not had to invest heavily in creating new legal online services and fighting Internet piracy".

Unimaginative leap

Adam Singer, group CEO of the MCPS-PRS Alliance, slammed the labels for the move, saying: "For a creative industry this demonstrates a complete lack of imagination."

Some industry observers note that while music label bosses are more than ready to act against file sharers, they seem less prepared to reward the artists they claim to protect.

Who is killing music?

On announcing a wave of litigation against file sharers, BPI chairman Peter Jamieson said, "Music fans are increasingly tuning into legal download sites for the choice, value and convenience they offer. But we cannot let illegal filesharers off the hook. They are undermining the legal services, they are damaging music and they are breaking the law."

Universal Music Group executive Barney Wragg recently warned that artists would be disappointed by the royalties they receive on digital music sales. Speaking at a recent event in summer, he warned that these royalties "would disappoint" artists.

Artists need their lunch

Meanwhile, in related news, recent sales figure show that digital-music sales now account for 6 per cent of all music sales worldwide, while sales of physical products continue to rise.

The MMF supports the MCPS/PRS alliance, telling The Times: "The BPI is jumping into bed with a group of digital music retailers, which are in the process of eating our lunch," said Summers.