Sony Music Sued For Under-Reporting Streaming Revenue

Here’s one to keep an eye on as it can open up a whole new set of artist/label lawsuits. The estate of the late 60s pop start Ricky Nelson has filed a class action lawsuit against Sony Music over streaming royalties. The suit alleges that Sony assessed an intercompany charge on international streaming royalties, and as a result, there’s no good way to get an accurate account of foreign sales.

The suit alleges, “”By assessing an intercompany charge for international sales, [Sony] impermissibly takes up to 68 percent off the top of the international revenue earned from streaming sales, and bases the artist’s royalty rate on the remainder, which methodology directly violates the terms of the [artists’ compensation agreements].”

In other words, the label would charge each of its affiliates like Sony UK and Sony Japan an unspecified fee on their streaming royalties, pocket it, then pass whatever’s left to the artist.

Since the beginning of music business time record labels have been using creative accounting practices to keep more of the revenue and pay their artists less. Sometimes they get caught and sometimes they don’t. That’s not to say that it’s been proven that Sony did anything wrong in this case though, but the reputation and history of record label practices always lead one to think that if there’s smoke there’s fire.

The fact of the matter is that Sony signed Ricky Nelson at the tail end of his career when he wasn’t selling all that much, so the fight here probably isn’t over a huge amount. That said, it’s expensive to launch a lawsuit, but not so much if it’s a class action with a group of people, which is the case here. The number of former and current Sony artists involved could number into the hundreds before this is all over.

That Spotify direct deal is looking a little better today for a few artists after seen this.