Steely Dan Sued By Former Singer Over Digital Royalties

David Palmer, an original member of Steely Dan, is going to court against his former bandmates with claims of being cheated on digital performance royalties.

His lawsuit was filed on Friday in LA Superior Court and highlights a little-known fact about the system set up by SoundExchange. In passing along money derived from sources like Sirius XM and Pandora, the digital performance rights organization has a policy of paying featured artists directly rather than band entities.

That system makes sense for the most part, but raises some problems in instances of bickering band members. Such appears to be the case for Steely Dan, which hit it big in the 1970s and has sold more than 40 million albums worldwide.

According to Palmer's lawsuit, he was contacted last summer by AFTRA who wanted to know whether he was merely a "side man" or a royalty participant.

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Palmer says that under a written agreement in 1972 that established Steely Dan Inc. (SDI), he was given a one-sixth percentage share of all royalties earned on songs in which he performed. Palmer sang lead vocals on two tracks from the band's 1972 debut album Can't Buy a Thrill, provided backing vocals on three other tracks on that album, and did work on the follow-up album and some live performances. He left Steely Dan in the middle of 1973.

Although he was a member of the band for a short time, he doesn't want to be forgotten on the digital royalty front.

When AFTRA came to him, he answered that he was a royalty participant. So Palmer was told to go to SoundExchange, which in turn, contacted SDI. The band allegedly told SoundExchange that all Steely Dan royalties were administered through SDI, but that didn't fly thanks to SoundExchange's policy noted above.

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Palmer says he eventually got a royalty fix "going forward," and that "perhaps out of guilt over its outright deception and concealment of these royalties in the past," he was issued a check from SDI for more than $8,000 -- his one-sixth share from a nine month period up to March 31, 2013. But Palmer says that there's still the lingering issue of all the past royalties he believes he should have been getting since SoundExchange's inception in 2000.

He's suing with claims of breach of contract, breach of the implied covenant of good faith and fair dealing, money had and received, and accounting. Palmer is represented by Chad Fitzgerald at Kinsella Weitzman.

Steely Dan couldn't immediately be reached for comment.

Twitter: @eriqgardner