It’s Business, And It’s Personal

Band claims breach of contract

On Behalf of | Jan 20, 2014 | Business Litigation |

Artists in the record industry in North Carolina, or any place else in the country depend upon the labels that they record for to give them an honest accounting of the money they are owed. The well-known band Counting Crows recently filed a breach of contract lawsuit against UMG Recordings claiming the record label did not pay them what they were owed from royalties due for ring tones, downloads and other uses based on their songs.

The contract dispute focuses on the methods recording companies use in calculating royalties earned by musicians and producers from licensing agreements the companies have with retailers. According to the lawsuit, recording companies try to disguise transactions with iTunes, Amazon, Verizon and other entities as transactions taking place under a sales agreement that pays lower royalties to the artists and producers than revenues generated under a licensing agreement. The lawsuit claims the practice underpays royalties by $2 to $5 per download and ringtone.

Lawyers representing the band in the litigation claim that for this type of conduct to go on, the recording companies are presumably conspiring with each other to underpay royalties. The lawsuit alleges breach of contract, unfair competition and breach of fiduciary duty and seeks damages of $1 million. The litigation also seeks an order declaring the band to be entitled to a 50 percent share of the receipts from licensing agreements for its recordings.

While the recording industry has seen its share of situations where musicians and songwriters have been unfairly denied compensation that is rightfully owed, there may very well be a contractual basis for UMG to treat the revenue in question in the manner taken. It will be interesting to see if this particular lawsuit makes it to the trial stage.

Source: Courthouse News, “Counting Crows Sues UMG for $1 Million+“, Matt Reynolds, January 16, 2014