Sony Music can add two more digital royalty lawsuits to its pile, which is fun. Last week both REO Speedwagon and William ‘Boz’ Scaggs sued the major for a bigger cut of digital revenue.
As much previously reported, most traditional record contracts paid artists a much bigger share of so called licensing revenue than of monies generated by record sales. Since the digital revolution, the majors have treated download income as record sales and paid the lower royalty. But many artists argue that download revenues actually stem from licensing deals with the likes of iTunes, so where download income isn’t specifically mentioned in a record contract, it should be considered licensing revenue and the higher artist cut should be paid.
Numerous heritage artists now have lawsuits pending on this issue, some of them class actions. All are relying on a precedent possibly set in a legal dispute between some early Eminem collaborators and Universal Music. FBT Productions convinced a US court that they should be getting the higher licensing royalty on download sales of various Slim Shady tracks in which they have a stake. Universal insists that the ruling in that case does not apply to all pre-digital record contracts, though Rob Zombie, Chuck D, George Clinton, Peter Frampton, Sister Sledge, Kenny Rogers and James Taylor, among others, do not agree.
As also previously reported, Sony Music has actually been battling digital royalty litigation longer than Universal, the Allman Brothers and Cheap Trick having sued the major over the issue in 2006. That lawsuit initially ran out of steam, mainly because of legal technicalities, though negotiations continued behind closed doors and in March this year a deal was announced offering all of Sony’s heritage artists still on old record contracts a 3% increase in their download revenue share.
Linked to the Allman Brothers and Cheap Trick’s original class action, that deal still needs court approval and, ironically, last week, just as the lawyer representing both REO Speedwagon and Boz Scaggs filed his paperwork, lawyers working on the settlement deal were pushing a judge in New York to reach a decision on the 3% proposal. If that settlement gets court approval, any qualifying heritage Sony act will be able to take the 3% increase, or opt out to pursue their own action against the major.
As those artists already suing the various majors on this issue expect to get a much bigger increase in their digital royalties than 3% if they win, it will be interesting to see if any Sony acts take the carefully negotiated quick-fix settlement should it get court backing. REO Speedwagon and Boz Scaggs, presumably, are hoping for the bigger prize.