August 31, 2011 11:31am PT by Eriq Gardner
Elvis Presley Estate Sues to Recover Ringtone Revenue
Alleging that the iconic Elvis Presley "was unjustly exploited during his lifetime by his record company," the King's estate has announced a multimillion dollar lawsuit filed in Germany demanding proper payment over new media income such as ringtones, downloads and entertainment apps.
According to a press release, Elvis Presley Enterprises is suing Arista Music, formerly RCA Records, in Germany.
The plaintiff says that in 1973, Elvis entered into a buyout agreement with RCA, terminating all previous agreements between the musician and the record company. The deal is said to have been orchestrated by Elvis' manager, “Colonel” Tom Parker, whereby rights to Presley’s entire back catalogue of more than 1,000 recordings were purchased by RCA for just $5.4 million.
The money was to be split evenly between Elvis and Parker, and the suit alleges that the effect of the buyout agreement was that Presley only received an annual payment of about $10 - $15 per song for the German rights.
Elvis Presley Enterprises alleges this was “conspicuously disproportionate” to the revenue received by RCA from its exploitation of Presley master recordings, so it's seeking the remedy under German copyright law of "equitable remuneration," which it believes is available in circumstances like this.
Thanks to the buyout agreement, the estate may be out of luck pursuing revenue from Elvis' continually strong record sales in Germany, but in seeking new media revenue, the estate is going after income that may have been unanticipated when the parties drew up the contract. Stuff like ringtones, says the estate, are items that "Presley himself could not have dreamed would someday exist."
Arista Music, a subsidiary of Sony Music Entertainment, couldn't be reached for comment.
One more interesting note about this lawsuit:
The Elvis estate is being backed by a firm called the Calunius Litigation Risk Fund. It's said to be a private enterprise with $60 million in reserves. The fund is based in Guernsey, a small island off the coast of Normandy. According to a recent story in a UK legal publication, Calunius is attempting to break into the litigation market by offering general counsels an alternative method of funding cases. In return, funders get a slice of any settlement as repayment for funding.
It's worth watching to see whether Calunius has identified some sort of legal exposure for big media companies in relation to digital rights of long-existing intellectual property and whether the firm intends to fund more of these types of cases.