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Allman Brothers and Cheap Trick possibly have separate digital deals to Sony’s proposed class action settlement

By CMU Editorial | Published on Thursday 15 March 2012

So, a little more insight on Sony’s previously reported proposed settlement with those pesky heritage artists who reckon they are due more money than they are currently getting on download sales.

As much previously reported, many veteran artists with pre-iTunes record contracts reckon downloads should be treated as licensing rather than record sales income, which is an important distinction because under many record contracts the labels pay a significant bigger artist royalty on licensing money that record sales revenue.

Sony were sued first on this issue by a coalition of artists led by the Allman Brothers and Cheap Trick. Their lawsuit was initially dismissed by the courts, but readmitted in 2009, and secret negotiations have been going on ever since. In the meantime Eminem collaborators FBT Productions won a similar legal battle with Universal over the royalties they are due on Slim Shady’s early recordings.

Last week it emerged that Sony had now reached a settlement with the Allman Brothers et al, but as the lawsuit was a class action – and therefore if the case was won in court any artists with similar record contracts could claim damages and new royalty arrangements – that agreement must be approved by the courts. A filing with said courts reveals that Sony will set aside a one off sum of $7.95 million to settle with affected artists, and then pay them a 3% bigger cut on subsequent download sales.

If approved by the courts, any artist that falls within the ‘class’ – which is seemingly anyone who signed to Epic, Columbia or Arista Records in the US between 1976 and 2001 – would be entitled to a share of the one-off settlement and the 3% increase in royalties, but if they felt they were due more would have to opt out of the settlement and launch their own legal proceedings on the matter.

Sony’s offer is nominal compared to what many think heritage artists could demand from digital revenue, and of the $7.95 million, $2.6 million will go to the lawyers who negotiated the settlement, and $5 million will be split pro-rata among only those artists who sold more than 28,500 downloads between 2001 and 2010. The rest will get a share of just $300,000. Nevertheless, many veteran artists might be persuaded to take this zero-effort offer now, rather than opting out and having to go to the hassle and risk of pursuing their own legal claim.

Interestingly, the deal on the table is considerably less generous than what the original plaintiffs, the Allman Brothers and Cheap Trick, were thought to be pushing for. And yet there were rumours just before Sony filed its class action settlement proposals with the courts that reps for both bands were very happy indeed, but NDAed to the eyeballs. And, according to Digital Music News, that’s because those two acts have negotiated their own separate and totally confidential deals on digital monies apart from the class action agreement.

Which, if true, might cause some of the other veteran artists being offered this new class settlement to wonder if they should push for their own deals, rather than accepting Sony’s current terms, which are definitely favourable to the major, even if it does mean the music firm, unlike its competitors, is now conceding that its heritage artists are due a bigger cut of the digital pie than they have been paid so far.

Quite what artists choose to do may depend on how an upcoming court hearing on the aforementioned FBT v Universal case, to ascertain what the latter should now pay the former, is decided.

Meanwhile, US music industry lawyer Steve Gordon has given his take on the proposed Sony settlement to Digital Music News here.