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Sony Music sued over royalty payments

1 May 2006 19:30 by James "Dela" Delahunty | 13 comments

Allman Brothers and Cheap Trick, two veteran bands signed to the record label giant Sony Music, have sued that label today for failing to pay sufficient royalties for digital downloads from services like iTunes and Napster. The digital download business is growing at increasing speeds, with Apple's iTunes having sold over 1 billion downloads to customers. However, some artists are very unhappy with what they receive for the sale of their work from the world's largest record companies.

"Sony Music is presently engaged in a widespread attempt to underpay its recording artists," attorney Brian Caplan said in a statement. "With the technological advancements in the music industry, where many people download songs to their iPods and other portable devices, it is essential that artists receive the royalty income to which they are entitled." Specifically, out of every 70c Sony is making per download on iTunes, the artists are only receiving a minuscule 4.5c.

The complaint challenges this rate, saying that artists are entitled to a payment around 30c instead. It all boils down to whether a digital download can be considered comparable to a CD sale, which the labels believe it is, but the artists believe it is more on par with licensing music tracks for motion pictures. According to Bob Kohn, founder of indie digital-music store eMusic and now CEO of royalty processing service RoyaltyShare, contracts signed by artists in the past five years should clearly stipulate how digital downloads are treated.

He added however, that older contracts such as those signed by Allman Brothers or Cheap Trick may not. He said newer contracts treat digital downloads like CD sales and allow for lower royalty payments. "This kind of dispute arises every time a new technology arises," Kohn said. "It happened when piano rolls were invented, when motion pictures were invented, when TV was invented, and when videocassettes were invented, and now it's happening with digital downloads."

Source:
MP3.com

Permalink to this article

Universal Music sued over digital royalties (12 August 2008)

Labels tell artists 'we gave your money to our lawyers' (2 March 2008)

Apple keeps tight grip on iTunes 99c price policy (4 May 2006)

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Discuss this article!
PirateDan (Member) 1 May 2006 20:16
Well don't we see their true colors shining through. Sorry I couldn't help myself. [ + quote]
hot_ice (Senior Member) 1 May 2006 21:55
He makes a valid point, we see it with every technology, but I still believe artists should get more money in royalties. [ + quote]
flamin3 (Inactive) 2 May 2006 2:08
makes you wonder who the real pirates are. yep who is doing the money grabbing [ + quote]
DVDdoug (Junior Member) 2 May 2006 10:13
It's always fun to see Sony sued! How about if we just pay the artist 5 cents and cut-out the middleman! Actually, it seems logical to pay the same royalty as a CD single. But, if digital-distribution is not in the contract, Sony shouldn't be doing it at all without re-negotiating with the artist. So, sue their A** off!!!! Contract law... fun stuff. Sadly, Sony probably has the upper-hand. The record company usually "owns" the performance, and the artist gets a token for contributing to it. I seems wrong, but that's the music business. [ + quote]
hot_ice (Senior Member) 2 May 2006 11:46
Sony will probably settle. Everybody settles in the end to avoid mounting lawyer costs. [ + quote]
DarkJello (Senior Member) 2 May 2006 13:31
It shouldn't be equivalent to CD sales because production and distribution costs are less. It costs more then 30 cents for Sony to print and distribute the CD's, while right now all they're losing is the 30 cents to iTunes per track. 30 cents might be pushing it but 20 is a reasonable amount. [ + quote]
RavenD (Newbie) 3 May 2006 2:46
It has always and will always be the same, big corporations hiding behind a mask of righteousnes only to be the real pirates/con artists. When will people realise that in the governments/corporations eyes we are only cattle, to be herdered wherever they want us to go. To be squeezed of every hard earned penny untill we drop dead into the ground. We are merely worker ants who are expendable ( see the iraq war and also the kidnapped hostages who have been beheaded ) No one can serve two masters ;) [ + quote]
tranquash (Member) 3 May 2006 6:03
Hi, I'm not a lawyer (and I wouldn't want to be one) but Who owns the songs? The artist or the companies? Who is ripping the artists? I liked the idea of payind the 5c and cut the middleman. lol [ + quote]
Chris1000 (Junior Member) 3 May 2006 10:50
About time that Sony got slapped over this. Seriously, I have read or heard so many stories of them ripping off artists, that I haven't bought anything from a major record label in YEARS. I stick with Japanese music that I download, and movie soundtracks. [ + quote]
bluedogs (Junior Member) 4 May 2006 8:11
And companies like Sony say the "Illegal Downloaders" are robbing the artists of their of their rightful income.... yeah obviously its 4.5 cents ( not 4 or 5 but 4.5)Hmmmm whos got the most to lose NOT SONY OF COURSE [ + quote]
sammorris (AfterDawn Addict) 4 May 2006 8:47
Unfortunately, piracy robs Sony and the artists of 1% of their income (so one less gold plated Sunseeker then), whereas Sony, in giving 4.5c versus 30, is robbing over 80%. Hmmm. Companies do have right to try and stop people from illegal downloads etc, but not when they're worse themselves. [ + quote]
qazwiz (Junior Member) 4 May 2006 21:44
A digital DL is NOT comparable with the sale of a CD. It is free money just like movie play rights. the only thing it costs them (Sony et al) is the money for the ink to sign the contract. A CD has to be produced and distributed but a DL is instantanious without other costs AND all these costs are included in the 29 cents that goes to Apple. [ + quote]
sammorris (AfterDawn Addict) 5 May 2006 0:00
I know apple are moaned at about itunes being overpriced, but tbh if anything they deserve more, since sony deserve FAR less in the transaction. They quite happily made money on CDs when digital downloads weren't about, so they still can now, and thus there's no need to take so much from digital sales. All they have to do is sign contracts and print their picture everywhere. Itunes have to develop the software and run the servers hosting the files, so they've a lot that they deserve to charge for. [ + quote]