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Sony try to get Toto’s digital royalties action dismissed

By | Published on Thursday 29 March 2012

Sony Music

Sony Music has fired a shot back at Toto in the ongoing digital royalties dispute that is rumbling around the American record industry with increased volume of late.

As previously reported, many heritage artists with pre-iTunes record contracts are saying that download revenue should be treated as licensing income not record sales money. This is important, because most artists get a significantly bigger share of licensing money versus record sales cash. All four majors now face lawsuits on this issue, most citing the ruling in the recent legal dispute between Universal and Eminem collaborators FBT Productions, where the producers successfully argued the high ‘licence’ royalty should be paid on iTunes revenue. Universal insist that ruling doesn’t set a precedent relevant to all pre-internet artist contracts, but most artists disagree.

Toto pulled Sony into the latest round of digital royalty squabbling last month, though interestingly at the exact same time that particular music major was close to settling a much earlier lawsuit on this issue, which had been led by The Allman Brothers and Cheap Trick. Unlike Universal, Sony has agreed that heritage artists should get a higher cut of download royalties, though only a few per cent more, rather than the figure paid out on traditional licensing deals (often 20-25% more than their record sales share).

Sony’s proposed settlement, which includes an upfront compensation payment as well as the 3% increase in royalties moving forward, is currently with the courts for approval (because the Allman Bros lawsuit became a class action). If the judge approves the settlement, any affected artists will have to opt out of the deal, or it will be assumed they accept it.

It remains to be seen how most artists respond to the settlement. It’s thought The Allman Brothers and Cheap Trick themselves have a separate more generous agreement with Sony, which might motivate other artists to also push for a higher pay out too, though some might reckon taking the 3% increase now is easier than going to the cost and hassle of pushing for more through the courts.

Either way, word is that Toto aren’t especially impressed with the proposed class action settlement, and plan to proceed with their lawsuit – which is why Sony are on the offensive. In a response to the band’s initial litigation, Sony says that it has a separate 2002 agreement with Toto which clarifies the situation on download revenues. They also take issue with some of the terms used in Toto’s legal papers, a tactic that forced The Allman Brothers’ first legal action on the digital royalties issue in 2006 to be dismissed.

It remains to be seen how the court responds to Sony’s latest filing on the Toto dispute. Meanwhile, we await judgement on the major’s class action settlement proposals, and perhaps most importantly, an up coming court hearing on what kind of settlement the aforementioned FBT Productions should get.