Lit vs. Sony | Matt Connarton Unleashed

0:00 Speaker 1: I did not know that this was going on. But

0:02 Speaker 1: you know, artists suing record labels is not a terribly

0:07 Speaker 1: unusual thing, it would seem. And usually when we talk

0:12 Speaker 1: about one of these stories, it's usually Universal music group

0:15 Speaker 1: that is being sued. But this time it was not.

0:18 Speaker 1: This time it was Sony Sony Music. You know. It's

0:21 Speaker 1: funny because when Al was on the show, we were

0:23 Speaker 1: talking about talking a lot about the nineties. Well, there's

0:25 Speaker 1: a nineties band called Lit who had a song, you

0:29 Speaker 1: might remember, a pop punk song called My Own Worst Enemy,

0:32 Speaker 1: and they have just settled a streaming royalty lawsuit with

0:36 Speaker 1: Sony Music. You know, again, artists suing labels over royalties

0:43 Speaker 1: is not a new thing. And that predates the Internet,

0:48 Speaker 1: that predates streaming. It is not unusual for an artist

0:53 Speaker 1: or an accountant who works for an artist, and so

0:56 Speaker 1: on and so forth. The business manager who might work

0:58 Speaker 1: for an artist to at some point in time say, hey,

1:02 Speaker 1: I think we're missing some money. I don't think you

1:04 Speaker 1: know this. My client here has been has been selling

1:08 Speaker 1: millions of records and they're only getting a small pittance.

1:11 Speaker 1: And uh, the legal department looked at the contract and

1:15 Speaker 1: apparently there should be a lot more money than what

1:18 Speaker 1: is currently going to my client, et cetera. So maybe

1:20 Speaker 1: we need to sue the label over that. It's not

1:23 Speaker 1: a news story now. The taking that and applying it

1:28 Speaker 1: to the era of streaming, which we're in, that part

1:31 Speaker 1: is somewhat new, although not really that new in twenty

1:34 Speaker 1: twenty six. Streaming has been around for a couple decades now.

1:37 Speaker 1: But but these stories continue. But I didn't know that

1:41 Speaker 1: this one was going on. I didn't know that Litt

1:43 Speaker 1: was suing Sony Music. It says here, and again, this

1:47 Speaker 1: is from Music Businessworldwide dot com, which, if you're a

1:50 Speaker 1: regular listener, you know, one of my absolute favorite sites

1:54 Speaker 1: for music industry news. It says, LIT, the band behind

1:57 Speaker 1: pop punk hit My Own Worst Enemy, settles Sony Music

1:59 Speaker 1: stream royalty lawsuit. Litt, the rock band behind the nineteen

2:04 Speaker 1: ninety nine single My Own Worst Enemy, has settled its

2:07 Speaker 1: lawsuit against Sony Music Entertainment over streaming royalties. Never liked

2:11 Speaker 1: that song, by the way, not that I don't like Litt,

2:16 Speaker 1: They're fine. I just don't like that song. The band

2:19 Speaker 1: and the major label reached a settlement in principle, according

2:25 Speaker 1: to a July seven court filing reviewed by Music Business Worldwide.

2:29 Speaker 1: Neither Litt nor Sony has disclosed the terms, and a

2:32 Speaker 1: written agreement is still being finalized. US District Court John P.

2:37 Speaker 1: Cronin closed the case on Tuesday after being notified of

2:41 Speaker 1: the deal, which was first reported by Billboard. The members

2:44 Speaker 1: of Lit sued Sony in the US District Court for

2:47 Speaker 1: the Southern District of New York in March over their

2:50 Speaker 1: streaming royalties. The complaint was brought by frontman aj Popoff,

2:55 Speaker 1: guitarist Jeremy Popoff. I assume they're brothers, bassist Kevin unless

2:59 Speaker 1: pop up Off is a common name, which it's not,

3:03 Speaker 1: bassist Jeremy Baldez, and the estate of late drummer Alan Schellenberger.

3:09 Speaker 1: As Music Business Worldwide reported at the time, Sony, which

3:12 Speaker 1: acquired RCA Records years after the label signed the band

3:16 Speaker 1: in nineteen ninety eight, had been paying the musicians a

3:18 Speaker 1: fourteen percent US royalty rate on streams. Quick note here

3:23 Speaker 1: before we go any further, that's another thing that happens

3:26 Speaker 1: a lot consolidation. Right, one record label buys another record label. Now,

3:32 Speaker 1: all of a sudden, some of the artists who were

3:36 Speaker 1: on the record label that got bought, they're not getting

3:39 Speaker 1: their money. Or you know, there's a term that I

3:43 Speaker 1: learned a couple of years ago that is common in

3:46 Speaker 1: the well. It describes a practice common in the music business,

3:50 Speaker 1: spaghetti accounting, which is where the accounting is done in

3:53 Speaker 1: such a way that it makes it it makes it

3:55 Speaker 1: very more convoluted than it necessarily needs to be, which

3:58 Speaker 1: makes it hard to do forensic accounting, which is and

4:00 Speaker 1: you try to figure out where the money is going,

4:01 Speaker 1: and why some of the money isn't going where it

4:03 Speaker 1: should be, and or why not enough of the money

4:06 Speaker 1: is going where it should be going, et cetera. But

4:09 Speaker 1: this is a thing when when one record label buys another,

4:12 Speaker 1: if you're on the record label, it's being purchased again.

4:15 Speaker 1: This is something where if you're that artist, you want

4:18 Speaker 1: your legal team, you want your management whomever is keeping

4:23 Speaker 1: an eye on this, you want them in there making

4:26 Speaker 1: sure that you're getting everything that you have coming to it.

4:31 Speaker 1: Says here. The band argued the nineteen to ninety eight

4:35 Speaker 1: RCA contract entitled it to fifty percent of net receipts

4:40 Speaker 1: whenever a master is licensed, treating an on demand stream

4:45 Speaker 1: as a master use license rather than a sale so

4:51 Speaker 1: master being the master recording of the song, which is

4:54 Speaker 1: obviously what gets distributed to these streaming platforms because the

4:58 Speaker 1: streaming platforms obviously you want, but the platform to have

5:01 Speaker 1: the highest possible quality file of your music if you're

5:05 Speaker 1: an artist on a platform. Right, But according to the

5:10 Speaker 1: band argues or their legal team argues, according to their

5:13 Speaker 1: RCA contract, they're titled to fifty percent of net receipts

5:16 Speaker 1: when the master is licensed. So in this case, the

5:19 Speaker 1: master is licensed to a streaming platform, so fifty percent

5:22 Speaker 1: of that revenue that's generated by that track on that platform.

5:28 Speaker 1: So continuing on again this article for Music Business Worldwide.

5:33 Speaker 1: In a in a parenthetical, the band's nineteen to ninety

5:37 Speaker 1: eight contract gave an example of such a license. Quote

5:42 Speaker 1: RCA's license to another person of the right to embody

5:45 Speaker 1: a master recording on a website in a so called

5:48 Speaker 1: streaming format, which is not subject to the digital download

5:52 Speaker 1: of that master recording by a viewer. Unquote. When the

5:55 Speaker 1: nineteen ninety eight deal was signed, Napster had not yet

5:59 Speaker 1: we Will lunched, and streaming services such as Rhapsody did

6:03 Speaker 1: not arrive until the early two thousands. Litt claimed the

6:08 Speaker 1: language entitled it to more than eight hundred thousand dollars

6:13 Speaker 1: in unpaid streaming royalties. The band's attorney, Chris Vaeos, in

6:20 Speaker 1: the complaint said, quote Sony's failure and or refusal to

6:26 Speaker 1: account properly to plaintiffs for streaming royalties received from licenses

6:30 Speaker 1: from third party DSP's digital service providers under the nineteen

6:34 Speaker 1: ninety eight agreement as damaged plaintiffs in excess of eight

6:38 Speaker 1: hundred thousand dollars in unpaid royalties, as reflected on royalty

6:42 Speaker 1: statements rendered from January one, twenty twenty one, through December

6:46 Speaker 1: thirty one, twenty twenty six, unquote. The complaint also alleged

6:50 Speaker 1: that Sony used the wrong formula for video streaming royalties

6:55 Speaker 1: and that it never applied the escalated rate it's deal

6:58 Speaker 1: called for one. A Place in the Sun, which is

7:01 Speaker 1: the album that that song was on, reached gold and

7:05 Speaker 1: platinum status. That's you know, the song Mound Worst Enemy

7:09 Speaker 1: that's from the album A Place in the Sun. Reduced

7:14 Speaker 1: royalty reporting had also lowered the band's pension contributions and

7:20 Speaker 1: affected its health insurance eligibility through SAG after, the complaint said.

7:25 Speaker 1: According to the complaint, the band had tried to renegotiate

7:30 Speaker 1: since twenty twenty three, but Sony offered a half hearted

7:33 Speaker 1: defense of the rate before it stopped responding. Vius said

7:38 Speaker 1: in March, quote, this is something that we were helped.

7:41 Speaker 1: We were hoping we could resolve before having to file

7:43 Speaker 1: a lawsuit unquote. A lawyer for Sony later said in

7:46 Speaker 1: a May court filing that the band had begun settlement

7:50 Speaker 1: talks after suing. According to Billboard, MBW Music Business Worldwide

7:55 Speaker 1: has reached out to Sony Andlitz management team at Shelter

7:58 Speaker 1: Music Group for comment. The case landed as Sony faces

8:02 Speaker 1: other royalty claims in the same New York court. Again,

8:05 Speaker 1: as I said, this is a common story, and they

8:08 Speaker 1: use these labels, use spaghetti accounting to make it very

8:11 Speaker 1: difficult to figure out exactly what's going on, what is

8:16 Speaker 1: not happening that should be happening, and so forth. They

8:18 Speaker 1: make it very complicated for a reason, for the same

8:23 Speaker 1: reason anybody who makes their accounting very complicated does so

8:27 Speaker 1: to you know, it's and it's not even necessarily I

8:31 Speaker 1: don't know that they're trying to hide stuff, but they're

8:33 Speaker 1: certainly trying to make it so it's not easy to find.

8:36 Speaker 1: I guess that is an effect hiding something, but but

8:39 Speaker 1: they don't. They don't want you to figure out how.

8:42 Speaker 1: You know, Universal Music Group we talked about this on

8:45 Speaker 1: the show. Universal Music Group and again not to conflate

8:49 Speaker 1: them with Sony, but they've been sued a bunch. They

8:52 Speaker 1: were I don't know whatever happened to it, but we

8:54 Speaker 1: talked about it on the show. Limp Biscuit was suing

8:57 Speaker 1: Universal Music Group because apparently you and if you're an

9:01 Speaker 1: artist on UMG, you are provided with a portal. So

9:05 Speaker 1: it almost sounds like, you know, like if you're if

9:09 Speaker 1: you have a bank, a bank account, and you know,

9:12 Speaker 1: use your portal to check your banking information, your your

9:15 Speaker 1: balance and whatever. You log into the portal. Right, UMG

9:18 Speaker 1: actually has a portal for their artists, their signed artists,

9:22 Speaker 1: where they can log in and check what's going on

9:26 Speaker 1: with their royalties, how much they're owed, or how much

9:30 Speaker 1: they might owe in recruitment, which is another subject. We

9:33 Speaker 1: won't take that side three right now, but you can

9:35 Speaker 1: check all that through this portal. But apparently the portals

9:42 Speaker 1: don't always work, you know. Olympus gits accountant was trying

9:47 Speaker 1: to or accounting firm was trying to sign into the

9:50 Speaker 1: portal at one point, and they didn't have the right password,

9:54 Speaker 1: and they tried to create a new password, but the

9:57 Speaker 1: portal wouldn't let them, so they had to come. I mean, really,

10:00 Speaker 1: this is wild, right that this goes on. And then

10:03 Speaker 1: so they try to contact somebody at Universal Music Group

10:06 Speaker 1: to up so they could update their passwords so they

10:09 Speaker 1: could get into the portal, but no one was getting

10:12 Speaker 1: back to them. This is how these labels treat their artists.

10:18 Speaker 1: It's just a fact. This is how these artists are treated.

10:23 Speaker 1: And you can say, well, I don't really care how

10:29 Speaker 1: somebody who's rich and famous is treated by their record label.

10:32 Speaker 1: What's the matter. They're rich and famous, so what talk

10:35 Speaker 1: about your first world problems? I get that, but but

10:39 Speaker 1: it doesn't just happen to artists who are already rich

10:42 Speaker 1: and famous. You know, the guys from LIT they had

10:45 Speaker 1: that one huge hit. I don't remember if they had

10:47 Speaker 1: any others. If they did, I'm not remembering them, which

10:49 Speaker 1: makes me think, and I have a pretty good memory

10:51 Speaker 1: for that, but I don't always remember everything, so maybe

10:54 Speaker 1: they did. I don't remember, Like I remember them being

10:58 Speaker 1: really big off of that song for a sh short

11:00 Speaker 1: period of time. But I can tell you this, Being

11:03 Speaker 1: really big off of one song for a short period

11:06 Speaker 1: of time does not make you rich. It helps, it

11:11 Speaker 1: doesn't make you rich. Being really big over a prolonged

11:14 Speaker 1: period of time might make you rich. But if you

11:17 Speaker 1: have one hit song and one platinum album, you're not,

11:22 Speaker 1: you know, I mean, unless you take really good care

11:24 Speaker 1: of your money and you invest in all that. But

11:26 Speaker 1: but just based on that alone, that income alone, you're

11:28 Speaker 1: not wealthy for the rest of your life based on that.

11:33 Speaker 1: So you know, no one should be treated this way

11:36 Speaker 1: by a record label. This is why there's so much

11:37 Speaker 1: antipathy toward the major labels, the major label system. When

11:42 Speaker 1: you ever hear anyone say something nice about Universal Music

11:46 Speaker 1: Group or Sony or Warner Brothers or any of these

11:49 Speaker 1: label When do you ever hear anybody say, you know,

11:51 Speaker 1: they really you know, if you're signed to that label,

11:55 Speaker 1: they really treat you right, they really take care of

11:57 Speaker 1: the artists. That's gone. I mean, now, even if they

12:01 Speaker 1: do sign you, they want you to already be a

12:03 Speaker 1: ready made package, which that part I understand. They want

12:07 Speaker 1: you to already be at the very least Internet famous

12:11 Speaker 1: before they're going to make you really famous, right or

12:14 Speaker 1: try to. But it's a terrible system. I mean, they

12:20 Speaker 1: really abuse, they really abuse their artists. Okay, So getting

12:23 Speaker 1: back to the article, because there's an example here of

12:25 Speaker 1: what I'm talking about. And again this is from Music

12:28 Speaker 1: Business Worldwide dot com. It says here Jermaine dupri and

12:32 Speaker 1: is so so deaf Companies sued Sony for more than

12:36 Speaker 1: eighteen million dollars on Monday, July sixth, alleging unpaid and

12:42 Speaker 1: underreported royalties on records by Criss Cross, Escape Usher and

12:47 Speaker 1: Mariah Carey eighteen million dollars. And now I understand just

12:52 Speaker 1: because they're suing for that, that doesn't mean that that

12:56 Speaker 1: is accurate and that they are actually owed that much money.

13:00 Speaker 1: But it wouldn't shock me especially Well, let's look at

13:07 Speaker 1: that phrase, alleging unpaid and underreported royalties. That's part of

13:12 Speaker 1: how and again that plays into the spaghetti accounting underreported.

13:17 Speaker 1: In other words, some royalties are reported, but some are not.

13:21 Speaker 1: Why would you do that? Well, if you report enough

13:24 Speaker 1: royalties and you pay out enough in royalties, maybe no

13:27 Speaker 1: one gets suspicious, Maybe no one starts asking questions. Maybe

13:30 Speaker 1: no one says let's look at the books and figure

13:32 Speaker 1: out if we're actually getting all that we're supposed to,

13:34 Speaker 1: because we probably are because we're getting money. But what

13:37 Speaker 1: if you're actually owed more money? So you know, they're

13:40 Speaker 1: not just gonna forget to pay you. They're gonna pay

13:42 Speaker 1: you something. They might just not pay you everything that

13:46 Speaker 1: you're owed, because as long as they pay you something,

13:49 Speaker 1: maybe you won't start snooping around. Because if you hire

13:52 Speaker 1: a forensic accounting firm and you start snooping around, you're

13:56 Speaker 1: gonna find out that you're owed a lot more than

13:59 Speaker 1: what they are telling you that you're owed. So that

14:03 Speaker 1: suit is for eighteen million dollars. It says here that

14:06 Speaker 1: suit is active, and Sonya has said the parties were

14:09 Speaker 1: attempting to resolve the accounting dispute before Dupree went to court.

14:13 Speaker 1: Sonya settled similar claims before the company reached a settlement

14:17 Speaker 1: in twenty eighteen with Nineteen Recordings, the record label behind

14:22 Speaker 1: American Idol alumni including Kelly Clarkson and Carrie Underwood, which

14:26 Speaker 1: had accused Sony of underpaid streaming royalties by accounting for

14:30 Speaker 1: streams as sales rather than licenses. In twenty twenty Sony

14:34 Speaker 1: agreed to pay twelve point seven million to settle a

14:38 Speaker 1: class action brought by the estate of nineteen fifty singer

14:42 Speaker 1: Rick Nelson over royalties on foreign streaming revenue. Such disputes

14:48 Speaker 1: have become more common as legacy artists challenge how labels

14:50 Speaker 1: calculate streaming royalties under contracts signed before Spotify. Litt continues

14:56 Speaker 1: to tour, with dates booked across twenty twenty six. My

14:59 Speaker 1: Own Worst Enemy has drawn more than five hundred and

15:02 Speaker 1: eighty million streams on Spotify. According to the band's complaint,

15:06 Speaker 1: it spent eleven really eleven weeks at number one on

15:11 Speaker 1: Billboard's Alternative Airplay chart. The band's nineteen to ninety nine

15:16 Speaker 1: album A Place in the Sun was certified platinum in

15:19 Speaker 1: the US. It released its most recent album, Tastes Like Gold,

15:22 Speaker 1: in twenty twenty two. The dismissal gives the party's forty

15:25 Speaker 1: five days to restore the case if the written settlement

15:28 Speaker 1: is not completed. Yeah, and again, they probably need that money.

15:32 Speaker 1: The band probably needs that money. One platinum album, one

15:36 Speaker 1: big hit song that does not make you rich. You're

15:39 Speaker 1: not set for life based on that. I promise you

15:42 Speaker 1: You're not it's like, you know, we were we kind

15:45 Speaker 1: of were talking about that a little bit with Al

15:47 Speaker 1: from the band I when we were talking during our

15:49 Speaker 1: conversation about you know, people have misconceptions and misperceptions about

15:53 Speaker 1: how this all worked. They think you get signed and

15:54 Speaker 1: now you're famous and you're rich, and you know, you

15:57 Speaker 1: can be very famous and be broke. It happened to

16:00 Speaker 1: TLC when they released their album Crazy Sexy Cool in

16:04 Speaker 1: the late nineties. They were triple platinum and they were

16:07 Speaker 1: broke because of the way their record deal was structured.

16:11 Speaker 1: They had no money and they'd sold three million copies

16:16 Speaker 1: of that album on the strength of singles like Creep

16:19 Speaker 1: and Waterfalls and all that. I mean, it's the map.

16:26 Speaker 1: The system is all. Look, this is true in life

16:30 Speaker 1: in general, right, The system is always against you. You

16:33 Speaker 1: got to fight for every little crumb because the system

16:37 Speaker 1: is always trying to screw you in some way. In

16:40 Speaker 1: this case, it happens to be the major label system

16:43 Speaker 1: of these record companies, but they're always trying to screw

16:48 Speaker 1: somebody over and they'll do whatever whatever they they can

16:53 Speaker 1: get away with.