9:58am PT by Eriq Gardner
Elvis Presley Estate Fighting Sony Over Royalties
Elvis Presley has left the building, but the digital income issues that have bedeviled more contemporary musicians have hardly escaped the King.
His estate is currently battling a subsidiary of Sony Music in Germany over foreign royalties. This month, the 4-year-old legal battle spilled into a New York federal court as Elvis Presley Enterprises contends with Sony's corporate structure and intercompany licensing agreements and looks to obtain more documentation on how Presley's musical works have been exploited.
In 1974, Presley entered into a buyout agreement with RCA, terminating all previous agreements between the musician and the record company. As part of that deal, Presley got $2.8 million, and his manager "Colonel" Tom Parker got $2.6 million.
What the King didn't see coming was copyright term extensions that would push back the date when his songs entered the public domain. A lot more revenues would be enjoyed by the owner of such hits as "Love Me Tender" and "Hound Dog." In Germany, for example, where Presley was once stationed as a soldier in the Army and remains popular, the copyright to his songs were once scheduled to expire in the 1990s whereas now they enjoy another twenty to thirty years of protection. Here's a chart in the plaintiff's papers:
Backed by a private equity firm, Elvis Presley Enterprises went to court in Germany looking to amend the buyout contract for more "equitable remuneration."
Thanks to decisions by several regional and appeals courts in Munich, Elvis Presley Enterprises is only being allowed to pursue royalty claims since 2008. In July 2013, an appeals court set the level of equitable remuneration on phonograms (or physical sound recordings) at 13 percent of the recommended retail price. And as one can see by the following chart, those revenues have been on the decline. The "revenues earned" represent the published price to dealer while the "net to owner" represents what Sony Music Entertainment Germany pays to Sony subsidiary Arista Music, which has the effect of lessening any royalty share to the Presley estate.
While revenue earned on phonograms continues to dwindle, money from digital exploitation is unsurprisingly headed north. Here's another chart concerning digital royalties that plaintiffs have constructed from their review of Sony documents:
Naturally, Elvis Presley Enterprises wants a bigger share of this pie and is treading on arguments that have come up in American courts by other prominent musicians.
"It is standard practice in the case of licensing revenues for authors and performing artists that authors and performing artists have a 50% share of the royalties earned and that the equitable remuneration for performing artists of the status of Elvis Presley are at a level of a 50% share also in respect of royalties which the record producer earns," states an English translation of the complaint that's been filed. "These also include revenues from digital exploitation because the Defendants do not sell those files themselves rather they grant exploitation licences to third parties, for example iTunes, Amazon.de or Spotify."
The money being pocketed for Elvis songs in Germany also includes public broadcast income as well as other sources.
As for what Elvis Presley Enterprises has actually gotten from the Buyout Agreement for 2008-2013, the inflation adjusted remuneration has been calculated at $245,945 compared to $6.3 million allegedly reaped by Sony entities.
"As there were at least 1,080 songs which were covered by the Buyout Agreement, the sum per song per year which Elvis received for all exploitations in Germany was a ridiculous USD 35.42 (after adjustment for inflation!)," complains the plaintiff to a German court. "The Defendants cannot escape a claim under Sec. 32a German Copyright Act simply through clever distribution of their income within their corporate group."
A response from Sony will be filed soon.