Oakland, California-based Tower of Power has filed a class action lawsuit against Warner Music Group claiming to represent a class of plaintiffs whose recording agreements entitled them to 50% of revenue for digital downloads. According to the complaint, which is provided below,
The WMG Agreement provided a significantly higher percentage of royalties under the licensed equation than under the sold equation. In general, the sold equation provides for royalties often percent (10%) (depending on the popularity of the artist, album and price the record was sold at; i.e., the more popular the artist, or the more expensive the album, the higher the royalty rate) while the licensed equation provides for royalties of fifty percent (50%) of net receipts. As a result, a recording artist or producer is paid a significantly lower percentage of the total money received by Defendant for their commercial exploitation of the artist or producer’s master recordings under the sold equation than under the licensed equation.
While I understand the strategic play, class certification is always hard in these circumstances, as even small differences in contractual language may have important implications for the applicable royalty rate.
What is clear is that these suits are going to become more and more common.
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