Bombshell Lawsuit! 19 Recordings is SUING Sony music for underpayment of royalties, and other things, reports The Hollywood Reporter.
In the lawsuit, 19, and by extension all of the artists — including Kelly Clarkson, Clay Aiken, Carrie Underwood and Chris Daughtry — who have entered into deals as part of their participation on Idol, claim that Sony Music has been systematically robbing them of millions of dollars in royalties. The lawsuit, seeking at least $10 million in damages, was filed after 19 exercised the right to audit Sony’s books pursuant to recording agreements, and the parties couldn’t come to any settlement.
“We did not want to have to file this lawsuit, but Sony left us no choice, so this became necessary to protect our artists,” says 19 Entertainment Worldwide Head of Music Jason Morey. “Our complaint lays out the claims in great detail. Everything we have to say about the case is set forth in it.”
The biggest claim, are alleged underpayment of streaming media royalties Sony is counting a stream as a download sale, resulting in “significantly” lower payouts to the artists. The plaintiff says the “discrepancy has resulted in at least $3 million in damages.”
“Such exploitation can only be fairly described as ‘transmissions’ or ‘broadcasts,’ and, upon information and belief, are so described in the licenses or other agreements between Sony and the streaming services,” says the lawsuit. “However, Sony has nevertheless accounted to 19 for all streaming income received at the lower Album rate as if the exploitation between the streaming service and the end user was described as a ‘distribution’ or ‘sale’ and, by so doing, Sony has breached the Recording Agreements.”
Also at issue, according to the report:
- Sony is accused of improperly deducting money spent on television advertising.
- Sony has made other improper deductions over things like music videos
- Has incorrectly paid royalties on joint venture compilation albums
- Has improperly calculated escalated royalty rates in instances of more-than-a-million-selling albums
- Is failing to pay over money from past lawsuits
- Is improperly deducting foreign income taxes
- Is underreporting or not reporting at all synchronization master uses in films and TV shows
In reply, Sony insists it has overpaid 19 on some items.
“Sony attempts to state compilation albums are not albums,” says the lawsuit, which rejects the premise as merely another excuse for a lower royalty rate.
The lawsuit says that Sony takes advantage by pretty much always delivering answers in its favor — or, as the case may be, treating downloaded tracks as singles as much as possible. The plaintiff says this is unfair because there are no extra manufacturing, marketing or promotional costs associated with individual songs available for purchase separately. For its part, Sony claims that it has overpaid royalty participants on digital track downloads, according to the suit.
Beginning with Season 10, American Idol has been releasing the show’s music via Interscope records.
