September 24, 2012 9:46am PT by Eriq Gardner
REO Speedwagon, Boz Scaggs Sue Sony Music (Exclusive)
Sony Music has been hit with more litigation over the way artists are compensated whenever consumers buy songs on iTunes and other digital outlets.
Late last week, separate lawsuits were filed in New York federal court by REO Speedwagon and William "Boz" Scaggs. Both plaintiffs say Sony has breached recording contracts by counting digital downloads as "sales" rather than "leases" or "licenses." As a result of this accounting treatment, the artists allege they haven't been paid appropriately. The royalty rate on a sale is about 15 percent compared with 50 percent for a "license/lease."
In March, Sony appeared to resolved much of the legal nightmare over digital downloads by coming to a $8 million settlement with several musicians who had been fighting the label for some time. Attorneys in that class action pushed a New York judge Thursday to give final approval of the settlement. In a memorandum, the lawyers stated that there have been no objections to any aspect of the proposed settlement.
Nevertheless, Sony continues to see more artists filing litigation over digital royalties. A 2010 decision by the Ninth Circuit Court of Appeals that suggested digital downloads should be treated as "licenses" has emboldened many artists to seek a greater cut.
In August, a producer who has worked with Journey, Guns N' Roses and Ozzy Osbourne filed his own action on this front.
Now, REO Speedwagon, a band with 13 Top 40 hits, and Scaggs, with eight Top 40 hits, have both joined the legal parade.
Sony isn't the only music major facing a rash of digital royalties litigation.
Two weeks ago, James Taylor sued Warner Bros. Records for almost $2 million in damages. Warner also is battling Sister Sledge and Gary Wright.
Meanwhile, Universal has been facing lawsuits from the likes of The Temptations, Peter Frampton, Chuck D, Rob Zombie, Rick James and George Clinton and others.
As for EMI, Kenny Rogers and The Knack are battling subsidiary Capitol Records.
The two new lawsuits on behalf of REO Speedwagon and Scaggs are being spearheaded by Richard Busch at King & Ballow, who has quickly become one of the go-to lawyers for many artists on this front. He's also representing Taylor as well as the producers of Eminem, whose legal win helped trigger the parade of veteran musicians looking to collect more money on newer revenue sources. Although some of these artists might not enjoy the kinds of success they experienced in their heyday, they are still very important to the labels as it takes lesser promotional costs to exploit their existing fame.
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