At a time when the singing competition landscape, namely American Idol, is seeing signs of aging, the bombshell of all bombshells drops onto the Idol-oonie nation.
In a brand new lawsuit, filed on Thursday (Feb. 20) and obtained by The Hollywood Reporter, 19 Recordings (founded by show creator Simon Fuller) claims that Sony Music has bilked their artists (Carrie Underwood and Kelly Clarkson among them) out of millions of dollars in royalties. Fellow singers Jordin Sparks, David Cook, David Archuleta, Clay Aiken and Chris Daughtry are also represented by 19.
As a result of the breached contract terms, the firm is seeking $10 million in damages.
"We did not want to have to file this lawsuit, but Sony left us no choice, so this became necessary to protect our artists," 19 Entertainment Worldwide Head of Music Jason Morey says. "Our complaint lays out the claims in great detail. Everything we have to say about the case is set forth in it."
Streaming royalties appear to be at the center of the suit, with Sony, allegedly, treating streams the same as downloads. While the distinction between “sales” and “distributions” and “broadcasts” and “transmissions" appear shallow on the surface, it's led to Sony dishing over significantly less money than it would otherwise.
The lawsuit reads: "Such exploitation can only be fairly described as 'transmissions' or 'broadcasts,' and, upon information and belief, are so described in the licenses or other agreements between Sony and the streaming services," says the lawsuit. "However, Sony has nevertheless accounted to 19 for all streaming income received at the lower Album rate as if the exploitation between the streaming service and the end user was described as a 'distribution' or 'sale' and, by so doing, Sony has breached the Recording Agreements."
This isn't the only infraction Sony has been breaching: music videos, TV advertisements, compilation albums, single vs. complete-the-album downloads have also been misreported. The lawsuit continues, "Sony’s interpretation would lead to the absurd result of potentially allowing it the ability to conduct an unlimited number of TV and/or radio advertising campaigns in a given country for a particular Album without ever seeking 19’s prior approval so long as each individual campaign, however limited, was within the specified required range."
How this affects the music business model going forward remains to be seen. Needless to say, the fine print in artist contracts will be severely scrutinized in the future.