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Beach Boys guitarist wants foreign royalties lawsuit against Universal Music revived
By Chris Cooke | Published on Tuesday 13 June 2023
Lawyers for former Beach Boys guitarist David Marks yesterday tried to convince the Ninth Circuit Appeals Court in the US to revive a class action lawsuit over how Universal Music processes and pays streaming royalties to heritage artists.
Marks was originally a member of the Beach Boys in 1962 and 1963, and rejoined the band for a couple of other short stints in the 1990s and 2010s. Universal Music, meanwhile, acquired the band’s 1960s catalogue when it bought EMI and its Capitol Records label back in 2012.
The lawsuit filed by Marks centred on a common gripe among many heritage artists over the deductions that are made by local subsidiaries of the major labels when music is streamed in countries other than the one in which those artists were signed. The question is, is the artist royalty – a percentage of income, of course – calculated before or after the local subsidiary’s deduction?
Marks hit out at Universal for calculating what royalties he was due based on what monies the major received in the US after its local subsidiaries had taken a cut. He also accused the major of not properly communicating that this was happening.
“Defendants failed to disclose”, his lawsuit stated, “and omitted material facts regarding the total foreign streaming revenues collected by its foreign affiliates as detailed herein and instead only disclosed amounts remaining after imposing an inter-company charge between defendants and their foreign affiliates”.
The LA court where Marks went legal dismissed his lawsuit twice, basically saying that the musician had failed to show what specific contract terms the major had breached by applying inter-company charges when processing the royalties he was due from streams outside the US.
Of course, the old record contracts at the heart of this case don’t talk about digital income at all, which means the dispute is really over how the major has chosen to interpret deals that were negotiated with physical products in mind in the context of streaming. And whether those deals can be interpreted in a way that puts the music firm in breach of contract by applying the inter-company charges and/or not declaring that practice.
According to Law360, lawyers for both Marks and Universal presented their respective arguments in that domain before the appeals court yesterday, the former hoping that the Ninth Circuit will reinstate the musician’s legal claim. Given the complexities of applying physical-era record contracts to the streaming business, the discussions in court proved to be, well, quite complex.
One of the judges, Jay Bybee, noted that this is not the only litigation on this kind of dispute going through the motions at the moment, and asked if there had been any efforts to mediate outside of court. The lawyers present did not seem to be aware of any such mediation process.
It remains to be seen whether the Ninth Circuit reinstates this particular foreign royalties lawsuit.
