Tuesday 14 July 2015

N-N-N-Nineteen and Sony spat

Thanks to a public stand by artists such as Taylor Swift, and the UK campaigning organisation The Featured Artists Coalition, the music buying public are becoming increasingly aware of the often poor deal most recording artists get when it comes to royalties from digital downloads of their works. Now, documents released by the US District Court of the Southern District of New York reveal just how cynical is the position of Sony when it comes to negotiating deals with the likes of Spotify. This will come as no surprise to regular readers of this blog, following Ben's story here about the leaked contract between Sony and Spotify. 

Sony is being sued by 19 Recordings Ltd (which represents a number of artists from the American Idol series, including Kelly Clarkson and Carrie Underwood) over claims that Sony has acted in bad faith in taking a financial stake in Spotify and benefiting from general advertising revenue without passing on a share to the artists. Sony defends its activities by saying it is not required to share its general profits with its artists. While this may in principle be true, 19 are alleging that Sony have arranged their affairs to deliberately minimise the amount they have to pass on to the artists, often in contradiction to the 'best endeavours' clauses in the recording contracts signed with their artists. They say that Sony and other major record labels "have significant power to exert control over Spotify in order to not only dictate how revenue will be paid, but wrongfully and in bad faith divert money from royalties that must be shared to other forms of revenue that they can keep for themselves."

Sony rely upon the clauses within the contracts agreed between Sony Music and 19 Recordings Ltd which explicitly set out that Sony is not required to pass on general income or profits unrelated to individual tracks or albums. They also point to the SDNY Court's earlier ruling that proceeds from successful infringement and pirating lawsuits brought by Sony are to be treated as general income to record label and do not need to be passed on to the recording artists.

The current skirmish is about 19's attempt to amend the particulars of its claim, and Sony's motion for summary dismissal of the amended claim. We may have to wait some time before knowing if the actual issues will be heard at a full trial, but in the meantime, the public airing of disputes like this does nothing to improve the perception of the majors being out of touch and only interested in their own profits. Here is The Featured Artists Coalition's take on the situation:

"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."

More details of Sony's response to 19's Amended Claim here (pdf)

Article on BBC News about Apple Music and streaming here

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