What’s The Verdict: American Idol May Be Cancelled but Affiliated Record Company is Putting Up a Fight Against Sony!

What’s The Verdict: American Idol May Be Cancelled but Affiliated Record Company is Putting Up a Fight Against Sony!

An American Idol-affiliated record company, representing Kelly Clarkson, Clay Aiken and Carrie Underwood, has asked a federal judge to take a dispute over streaming income to an appeals court.  This type of dispute comes as no surprise considering the recent controversy betweens streaming service Spotify and competitor Tidal over the difference in streaming royalties paid out to artists.  [Tidal is paying artists 5x as much as Spotify].

The record company, 19 Recordings, sued media giant Sony Music back in February 2014 claiming that streaming music was being treated as “sales” or “distributions” instead of as “broadcasts” or “transmissions.”  In doing so, Sony was calculating incomes off platforms, including Spotify, and paying out much less than was allegedly due. Who wouldn’t want a bigger piece of the pie though? 19 Recordings is suing Sony Music with claims of breach of contract and breach of the duty of good faith and fair dealing.

A New York federal court judge, Ronnie Abrams, has dismissed claims that Sony was working in bad faith; however, breach of contract claim still stands, where damages are said to amount to as much as $3 million! Although the judge dismissed bad faith claims, 19 recordings would like him to reconsider. It can be assumed that Judge Abrams doesn’t want to come off as inconsistent by reversing his original decision.  In the event that he doesn’t reverse, 19 is prepared to request and file an interlocutory appeal.  If Judge Abrams agrees, 19 Recordings would attempt to get to Court of Appeals to give its two cents on whether Sony has “unfettered discretion to choose between two different classifications, and, thus, two different royalty structures without any regard for the actual structure of the exploitation.”

Why is this important? An appellate decision on this matter could be extremely valuable for artists as streaming continues to become the dominant platform that consumers listen to music.

Bad timing? The request from 19 Recordings comes right after a contract between Spotify and Sony was leaked highlighting the $25 million advance Sony got for the first two years under the contract.  This puts into question whether the money is being put into the ‘cookie jar’ for artists or being kept by Sony without sharing.  You gotta keep those hands out of the cookie jar!

What do you think federal judge Ronnie Abrams will do? Will he sacrifice his own reputation by appearing wishy washy? Or will he grant the request to move the case to the appeals court?

Stay tuned on What’s The Verdict for more updates!

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