James Taylor Sues Warner Bros. Records for Nearly $2 Million (Exclusive)

James Taylor Performing at DNC - H 2012

James Taylor Performing at DNC - H 2012

Add James Taylor to the list of musicians suing record labels over royalties from iTunes and other digital outlets.

The famed singer-songwriter filed a complaint against Warner Bros. Records on Thursday in Los Angeles Superior Court claiming approximately $2 million in damages. The new lawsuit is among many in recent months to take issue with the way record companies treat digital income.

Taylor, who was inducted into the Rock & Roll Hall of Fame in 2000 with such hits as "You've Got a Friend," "Sweet Baby James" and "Carolina in my Mind," signed his first deal in 1969 when his production company entered into a distribution agreement with Warner Bros.' predecessor company. The contract was amended in 1972.

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Like many musicians, Taylor got a deal that treated records "sold" different than when recordings were "licensed." The royalty rate for Taylor for sales is between 10 to 12 percent. The royalty rate for licenses is 50 percent of net receipts.

In the late 1970s, Taylor left WBR for Columbia Records. In 1979, Taylor and WBR executed a "termination and settlement agreement" that provided for continued payments with some modifications as well as auditing rights. In 2002, the parties made another amendment to their agreement with new rates so that a new "Greatest Hits" album could be released and old albums could be remastered and reissued, but WBR never re-released the albums, and Taylor says the 2002 agreement doesn't apply.

Under the auditing rights from the 1979 settlement, Taylor has been auditing WBR's accounting since 2008.

The results of two audits have purportedly turned up several forms of underpayment.

This includes smaller ticket items like foreign receipts, budget sales and the unauthorized use of Taylor's songs on certain compilation albums. It also includes intriguing items like an alleged smaller-than-expected share of proceeds from WBR's $110 million settlement with Napster (Taylor got 0.24 percent instead of the claimed amount, approximately 0.33 percent).

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But the biggest pot of money comes over the issue of whether Taylor should be splitting money equally with WBR whenever a consumer downloads one of his old songs from iTunes, Verizon and other digital or mobile outlets.

Others have sued over this same issue, including Kenny Rogers, Chuck D, Rob Zombie, Rick James, Sister Sledge, Peter Frampton, George Clinton and on and on...

Many of these lawsuits, including the latest from Taylor, mention the case brought by Eminem's producers and the 2010 decision at the 9th Circuit Court of Appeals suggesting digital downloads should be treated as "licenses."

WBR hasn't yet responded to a request for comment, but according to the lawsuit, the record company denies that downloads off of digital outlets require a 50 percent share. In addition, the parties have had discussions about this for some time and in 2010 entered into a tolling agreement to extend the statute of limitations on claims to Sept. 14, 2012. At the deadline, Taylor decided to bring the lawsuit.

"Warner Bros.' failures have created a dispute of almost $2,000,000 with respect to Warner Bros.' breach of the Distribution Agreement and its various Amendments."

Taylor is represented by Paul Duvall and Richard Busch at King & Ballow.

E-mail: eriq.gardner@thr.com; Twitter: @eriqgardner