Sony is currently being sued by 19 Recordings Ltd. Sony has taken a financial stake in the music download site Spotify and therefore benefits from general advertising revenue however it fails to pay the artists a share of this additional revenue which, according to 19 Recordings, is in bad faith.
The claim has come to light due to the release of documents from the US District Court of the Southern District of New York ("SDNY").
Sony has defended itself stating that it does not have to share its general income or profits with artists which are not directly related to individual tracks or albums and claim that this is explicitly set out in their contracts with 19 Recordings.
Sony also relies on an earlier SDNY ruling that proceeds from other lawsuits which include successful infringement and piracy law claims are deemed to be general income and do not have to be passed on to artists.
The recent action is in regard to preliminary matters. It dealt with an attempt by 19 Recordings to amend its particulars of its claim, and Sony's motion for summary dismissal of the amended claim. Given that the matter is only in the early stages of proceedings it remains to be seen whether it will ever reach a full trial, however, the public coverage of disputes like this and the perceived 'David and Goliath' nature of the disputes does nothing to improve the perception of majors players in the music market being out of touch and only interested in their own profits.
This claim and claims like this are currently a huge talking point within the music industry. Only a few weeks ago, as reported previously, Taylor Swift wrote an open letter to Apple with regard to their new music download site claiming that it was unfair on the artists as they wouldn't receive royalties for the first three months whilst free to the public. Since her letter, Apple are now in discussions regarding payment during this free period.
In other, Taylor Swift 'news', the artist removed her entire song list from Spotify because she wasn't receiving royalties. Along with The Featured Artist Coalition, a UK based performance and music artist campaigning organisation, their view is that, "Whatever the legal rights or wrongs in Sony's case, the breach of moral trust that has long been felt amongst artists is now in the public domain and on the record. If the labels won't come together with artists to fix the problem, perhaps legislators will. Without solutions, the future of the music industry hangs in the balance as artists cannot make a living out of scotch mist, lining the coffers of record labels who appear not to care about the very hand that feeds them."
Commenting on the case, the worldwide head of music at 19 Entertainment Ltd, Jason Morey said, "We did not want to have to file this lawsuit, but Sony left us no choice, so this became necessary to protect our artists".
The company also alleges that Sony has made improper deductions from music videos, incorrectly paid royalties on joint venture compilation albums, improperly calculated escalated royalty rates for more-than-a-million-selling albums, failed to pay for past lawsuits, improperly deducted foreign income taxes and is under-reporting or not reporting at all synchronization master uses in films and TV shows.
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