Sony's Spotify Stake Becomes Issue In Amended Suit By 19 Recordings
June 25, 2015 at 3:57 AM (PT)
19 RECORDINGS LTD. has filed an amended complaint against SONY MUSIC in its royalty suit, and the new filing includes an allegation that SONY is "self-dealing" because of its stake in SPOTIFY.
THE HOLLYWOOD REPORTER reports that a redacted copy of the amended complaint that it obtained makes the allegation that "Each of the major record labels also own an interest in SPOTIFY. On information and belief, those other record labels have engaged in the same self-dealing as SONY with respect to the diversion of payments to them, and the below-market streaming royalty rates to artists.
Together, and individually, SONY and the other major record labels therefore have significant power to exert control over SPOTIFY in order to not only dictate how revenue will be paid, but wrongfully and in bad faith divert money from royalties that must be shared to other forms of revenue that they can keep for themselves."
19 sued SONY in 2014 over the treatment of streaming music for royalty purposes, challenging the label's characterization of streams as sales rather than broadcasts and thus allowing for lower royalty payments. The amended complaint claims SONY's deal with SPOTIFY was structured to include income "purportedly unconnected to the exploitation of sound recordings" and alleges that "this structure evidences bad faith on SONY's part in (an) attempt to rob 19, its artists and indeed all of SONY's artists of royalties properly due them."
The complaint also alleges that SONY incorrectly deducted certain amounts spent on television advertising without 19's consent, as well as excess charges for music video production not approved by 19, underpaid royalties on joint venture compilation albums and digital album downloads, and underreported foreign sales.