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Case against Sony highlights complexity of royalty payments

As we have mentioned before on this blog, contractual agreements in the music industry are highly complex legal documents that often require extensive help from lawyers to draft and maintain. They outline everything from who owns the rights to a certain song to how those associated with the song will be paid. But if one party misunderstands any part of these agreements, it can lead to litigation.

A case against Sony Music Entertainment illustrates this fact perfectly to our California readers. Some of your may have heard about Sony's legal battle in federal court where it had to defend itself against civil claims filed by the rock band Toto. The band accused Sony of failing to pay royalty payments -- a claim Sony felt was incorrect.

Like so many entertainment law cases before it, the Sony case highlights an issue commonly found in the music industry: how to calculate royalty payments. As we have discussed in other posts on our blog, the amount of royalties an individual receives for their contribution to a song varies depending on that person's role. On top of that, there are also other instances that can also lead to royalty payments.

In the music industry, there are four instances that could result in further royalties and they are: mechanical licenses, performance-rights license, synchronization licenses, and print rights. Respectively, each instance pays royalties to those associated with a song for reproduction to other forms of media, for live performances or broadcasts of the song, use of a song in a movie or on television, and sales of printed sheet music.

As we pointed out above, and as Sony's case illustrates, sometimes royalty payment calculations aren't fully understood sometimes, which can leave one party feeling as if they are not being fully compensated for their contribution to a song. This can lead to complicated litigation that often requires the help of courts and skilled lawyers in order to reach a resolution.

Sources: How Stuff Works, "How Music Royalties Work," Lee Ann Obringer, Accessed Oct. 13, 2014

Courthouse News Service, "Sony Ducks Royalty Lawsuit from Toto," Adam Klasfeld, Oct. 9, 2014

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