The latest in the ongoing saga between 19 Recordings, the record label for American Idol alums such as Carrie Underwood and Kelly Clarkson, and Sony Music has the latter asserting its right to structure deals with Spotify, even if the results impact 19 and their artists negatively.
19R had filed an amended complaint against Sony, charging that the label’s equity in streaming company Spotify, had resulted in the label self-dealing profits at the expense of artists. Previously, 19 sued Sony on behalf of their artists for underpayment of royalties and more.
Sony responds, more or less asserting they can do whatever they want when the make deals with Spotify, without considering the impact on artists. From the Hollywood Reporter:
Sony says it isn’t required “to structure its affairs in whatever way yields the greatest royalties for 19.” Citing the judge it says it may “act on its own interests in a way that may incidentally lessen the other party’s anticipated fruits from the contract.”
Sony makes two major points in its response: “…the parties anticipated that SME may exploit the recordings in certain ways that would benefit SME, but that may not result in revenue for 19.” They cite settlements made with companies like limewire as a result of copyright infringement and piracy lawsuits.
“Because no royalty provision required SME to share settlement revenue recovered ‘on a general or label basis,’ SME was free ‘to retain the full amount of any settlements such suits yield,” states Sony.
Second, Sony says the plaintiff “has failed to allege facts giving rise to an inference it controls Spotify.”
Sony seems to be saying “We can do what we want when we strike deals with Spotify.” It’ll be interesting to see how this case eventually pans out.
