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Fri, 28 Apr 2006 Artists sue Sony for iTunes royalties

Jonny Evans

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Sony Music stands accused of deliberately underpayment of artist royalties for digital music downloads in a new US class action filed yesterday.

The action was filed on behalf of the Allman Brothers Band and Cheap Trick by lawyers from Labaton Sucharow & Rudoff and Probstein & Weiner.

The bands allege on behalf of themselves and other class members that Sony Music is not paying its recording artists 50 per cent of the net licensing revenue received by Sony Music in connection with music licensed to Apple and other third party providers of digital downloads, as Sony Music is contractually obligated to do.

At issue is the way Sony accounts for such sales. Rather than paying artists approximately 30 cents of the 70 cents it receives for digital downloads (after deducting payments to music publishers), the suit alleges that Sony Music treats each download as a sale of a physical CD or cassette tape, only paying on 85 per cent of such "sales" (due to a fiction that there is breakage of product), deducting a further 20 per cent fee for container/packaging charges associated with the digital downloads (although there are none), and reducing its payments by a further 50 per cent "audiofile" deduction, yielding a payment to the Sony Music recording artists of approximately 4 1/2 cents per digital download.

The bands are claiming damages in the amount of millions of dollars.

"Sony Music is presently engaged in a widespread attempt to underpay its recording artists; with the technological advancements in the music industry, where many people download songs to their iPods and other portable devices, it is essential that artists receive the royalty income to which they are entitled," stated Brian Caplan, one the attorneys involved in the action.

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