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Sony settles in dispute over royalties received by some American Idols

By Chris Cooke | Published on Monday 8 January 2018

A long-running dispute between Sony Music and a company representing various former ‘American Idol’ winners looks like it’s at an end. The court was told last week that the two sides had reached a settlement.

As previously reported, 19 Recordings, which represented former winners of ‘American Idol’ – its parent company having been behind the talent show franchise – sued its former label partner Sony Music back in 2014.

It was a multi-layered lawsuit that included many common royalty gripes, the overall claim being that Sony was short-changing various ‘Idol’ finalists when it came to sharing the income generated by their recordings.

Most attention fell on those allegations made over streaming income. In part because the lawsuit put the spotlight on the various kickbacks the major record companies have received from their deals with the streaming firms, and whether or not those kickbacks were being shared with artists.

As the lawsuit progressed Sony initially insisted that it wasn’t obliged to share those elements of its steaming deals with talent. Though once streaming kickbacks became a wider talking point in the industry, Sony subsequently said that of course it would be sharing the value of other elements of its digital deals with its artists.

The lawsuit also brought up the sales v licence debate that had previously been in the US courts in relation to downloads. Pre-digital record contracts obviously don’t set a specific download or streaming royalty rate, but they do often distinguish between ‘sales income’ and ‘licence income’, with a much higher royalty often paid on the latter.

Licensing income traditionally meant things like sync, but many artists have pointed out that digital income stems from licensing deals rather than the selling of product. Nevertheless, labels have mainly paid the lower sales royalty (or thereabouts) on digital income, despite Eminem collaborators the Bass Brothers winning when they sued Universal Music on the sales v licence point.

The 19 v Sony case not only brought the sales v licence dispute back to court, but it did so specifically with streaming in mind, where arguably there is an even stronger argument that this is licensing income and therefore the higher royalty should be paid.

However, it seems, we won’t get any judicial insight on that point now, because – according to The Hollywood Reporter – the whole matter has been settled. More or less. Last week judge Ronnie Abrams discontinued the proceedings after being told an out-of-court settlement was now pending.