Sony Music filed a breach of contract counter-claim on Tuesday against American Idol label, 19 Recordings, according to the Hollywood Reporter:
In new court documents, Sony asserts that it has overpaid at least $2 million in royalties for these star musicians and is demanding recovery of the money.
Sony’s contention comes more than a year after 19 filed a blockbuster lawsuit alleging the systematic robbing of Idol stars through tricky accounting. In a February 2014 lawsuit, 19 took issue with how Sony was treating income from streaming services like Spotify, how Sony was doing the math for television advertising deductions, and how Sony was interpreting bonus royalty escalators when consumers bought tracks off an album from Apple’s iTunes.
Because Sony failed to dismiss the lawsuit, it had to file an Answer, which it did on Tuesday with some quirkiness. For example, Sony denies that over 15 million copies of Kelly Clarkson’s album Breakaway have been sold worldwide, and that “Since U Been Gone” has been certified “multi-platinum” by the RIAA.
American Idol alums, Kelly Clarkson, Clay Aiken, Carrie Underwood and Kellie Pickler are cited specifically by Sony for overpayment:
“The royalty overpayment resulted from the incorrect application of the royalty rate associated with sales of Albums to these sales of Compilation Albums,” Sony states. “The royalty rate associated with sales of Records other than Albums should have been applied to these sales of Compilation Albums.”
Second, Sony claims that it has handed over too much royalties on digital downloads under the agreements concerning Aiken, Clarkson and Underwood. The music giant says it applied a “rate associated with sales of Albums” rather than the “rate associated with sales of Records other than Albums.” The allegation appears to reignite examination of how to account for consumers buying individual 99 cent album tracks off of iTunes.
Finally, Sony says it overpaid 19 an advance for an album from Kellie Pickler, the country music artist who made the Top 6 during the fifth season of Idol. Sony asserts that money paid in December 2011 failed to account for applicable reserves.
Earlier, the court trimmed 19’s original suit against Sony:
Two weeks ago, a federal judge in New York trimmed the lawsuit — most consequentially, the royalty escalation claims were rejected as were claims that 19 should have received a share of settlements that Sony won against services facilitating piracy— but the judge wouldn’t disqualify the big claim that Sony’s licensing agreements mischaracterize the distribution of music on streaming services as “sales” rather than “broadcasts” or “transmissions.” Further, the foreign advertising deductions survived as well.