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Sony is in the news again


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By Jim Welte, MP3.com

April 27, 2006 at 03:35:00 PM


Veteran bands claim label giant isn't giving them their fair share of digital-download revenue from stores such as iTunes.


The digital-download business is booming, but the Allman Brothers Band and Cheap Trick claim they aren't getting their fair share of the pie.


The two veteran rock bands sued their label Sony Music today, charging the music giant with not paying them the required percentage of net licensing revenue it receives from Apple's iTunes and other digital-download stores.


"Sony Music is presently engaged in a widespread attempt to underpay its recording artists," attorney Brian Caplan said in a statement. "With the technological advancements in the music industry, where many people download songs to their iPods and other portable devices, it is essential that artists receive the royalty income to which they are entitled."


The class-action lawsuit claims that the artists' contracts require Sony to pay its artists about 30 cents out of every 70 cents it gets for digital downloads--out of a total of 99 cents that iTunes charges per song. But the complaint maintains that Sony is only paying artists 4.5 cents for each song.


The case hinges on whether a digital download is comparable to a sale of a CD, as the labels contend, or more on par with a license of a song for use on a movie soundtrack, for example, as the artists claim.


Bob Kohn, founder of indie digital-music store eMusic and now CEO of royalty processing service RoyaltyShare, said that contracts that have been signed in the past five years should clearly stipulate how to treat digital downloads, but that older contracts for veteran bands such as the Allman Brothers or Cheap Trick might not. He said newer contracts treat digital downloads like a CD sale and thus allow for the smaller payments to artists.


"This kind of dispute arises every time a new technology arises," Kohn said. "It happened when piano rolls were invented, when motion pictures were invented, when TV was invented, and when videocassettes were invented, and now it's happening with digital downloads."

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