February 3, 2012

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The members of the musical group Sister Sledge have banded together with an Oscar-nominated actress and songwriter to file a major class action lawsuit against Warner Music Group alleging they have been cheated out of millions of dollars based on improper calculations of revenue from digital music sales.

Debra Sledge, Joan Sledge, Kathy Sledge Lightfoot, Kim Sledge Allen and Ronee Blakely filed suit in federal court in San Francisco on Thursday claiming that the music giant's method for calcluating digital music purchases as "sales" rather than "licenses" on songs such as the band's chart-topping "We Are Family" cheats artists out of money due to them under recording contracts, many of them signed decades before music was sold digitally via iTunes, Amazon, ringtones and other outlets.

"Rather than paying its recording artists and producers the percentage of net receipts it received--and continues to receive--from digital content providers for 'licenses,' Warner wrongfully treats each digital download as a 'sale' of a physical phonorecord...which are governed by much lower royalty provisions than 'licenses' in Warner's standard recording agreements."

If that claim sounds familiar, it's one of the most hotly-disputed issues in the music business. Songwriters typically make much less money when an album is "sold" than they do when their music is "licensed" (the rationale derives from the costs that used to be associated with the physical production of records). But record labels have taken the position that music sold via such digital stores as iTunes should be counted as "sales" rather than licenses.

The difference in revenue can be significant. The Sister Sledge members claim their record deal promises 25 percent of revenue from licenses but much less from sales. Blakely, who is an Oscar nominated actress (Nashville) as well as songwriter and performer, alleges that her deal with WMG grants her 50 percent of licenses, much more than the rate WMG is paying based on its calculation of sales.

Eminem's publisher brought a nearly identical claim against Universal Music Group and won a fairly important decision at the 9th Circuit Court of Appeals in 2010 (the Supreme Court declined to hear an appeal). The 9th Circuit ruled that iTunes' contract unambiguously provided that the music was licensed. At the time, UMG downplayed the ruling as specific to Eminem's contract, but music lawyers believe more of these cases are going to be filed by legacy artists (newer contracts have specific language precluding such suits).

And now we have a full-fledged, 35-page class action lawsuit seeking to bring together many artists in one proceeding, calling Warner Music's actions "wide-spread and calculated." Hundreds of millions of dollars in revenue is at stake, the complaint alleges. It should be interesting to see which artists come forward.

Sister Sledge also claims WMG has improperly kept revenue from "reserves," which is money withheld to offset losses related to unsold records. The plaintiffs point out there's no such thing as unsold inventory in a digital universe.

The suit was filed by four firms: Pearson Simon Warshaw & Penny in San Francisco, Hausfeld in Washington DC, and Kiesel Boucher Larson and Johnson & Johnson in Beverly Hills.

It truly is a license................this is going 2 be interesting.

the writer of the article didnt do their research cause clearly that isnt SISTER SLEDGE as a collective that in the article. Thats only Debbie and Joni

All four sisters are mentioned in the piece: Debra Sledge, Joan Sledge, Kathy Sledge Lightfoot, Kim Sledge Allen.

Identity said:

All four sisters are mentioned in the piece: Debra Sledge, Joan Sledge, Kathy Sledge Lightfoot, Kim Sledge Allen.

thats not them in the PIX only 2 of the 4

(Left to right: Unknown singer, Kim, Joni, and Kathy)

Identity said:

(Left to right: Unknown singer, Kim, Joni, and Kathy)

The woman on the right isn't Kathy, her name is Amber Dirks. But I think it's funny how they dress her up in one of Kathy's signature babydoll tops/dresses.

getxxxx said:

Identity said:

All four sisters are mentioned in the piece: Debra Sledge, Joan Sledge, Kathy Sledge Lightfoot, Kim Sledge Allen.

thats not them in the PIX only 2 of the 4

They probably perform as Sister Sledge. It doesn't matter what the pic is at the top as long as the info in the article is correct.

Sorry, but how is it a "license" vs. a "sale"? I'm reading the rationale within the article, but it really is a sale, not a license at all. Once it's paid for, the file belongs to you the same way a physical record does, it isn't something that's being temporarily lent to you for a fee. If it was a license, and I paid the $.99 or $.1.29 for it, then it would come with permissions for other uses besides my own personal listening.

The inaccurate details of the picture don't make this article any less valid.

But this is very interesting. The sisters never wrote any of their famous hits, did they?

Debbie, Kathy, Oprah, Joni, Kim

errant said:

Sorry, but how is it a "license" vs. a "sale"? I'm reading the rationale within the article, but it really is a sale, not a license at all. Once it's paid for, the file belongs to you the same way a physical record does, it isn't something that's being temporarily lent to you for a fee. If it was a license, and I paid the $.99 or $.1.29 for it, then it would come with permissions for other uses besides my own personal listening.

How is it any diffrent that licensing software?

Timmy84 said:

The inaccurate details of the picture don't make this article any less valid.

But this is very interesting. The sisters never wrote any of their famous hits, did they?

No.

yanowha said:

Timmy84 said:

The inaccurate details of the picture don't make this article any less valid.

But this is very interesting. The sisters never wrote any of their famous hits, did they?

No.

It'll be interesting if they're just looking for performance royalties if it existed with anything digital.

Graycap23 said:

errant said:

Sorry, but how is it a "license" vs. a "sale"? I'm reading the rationale within the article, but it really is a sale, not a license at all. Once it's paid for, the file belongs to you the same way a physical record does, it isn't something that's being temporarily lent to you for a fee. If it was a license, and I paid the $.99 or $.1.29 for it, then it would come with permissions for other uses besides my own personal listening.

How is it any diffrent that licensing software?

I was just about to say that. There is no difference. You pay for a software license and can use it on any computer. The same goes for a song.

If we were buying physical copies of a cd/record, then it would count as a record sale.

daPrettyman said:

Graycap23 said:

How is it any diffrent that licensing software?

I was just about to say that. There is no difference. You pay for a software license and can use it on any computer. The same goes for a song.

If we were buying physical copies of a cd/record, then it would count as a record sale.

I always look at it like that too. I don't see how that's any different myself.

The absence of a physical media is what differentiates a digital download from a CD/record sale. These labels are still operating under the premise that they are still selling physical media when they are, as defined under the law, selling licenses. When you buy a CD/tape/record, all you legally own is some plastic.

From Wikipedia:

Music licensing is the licensed use of copyrighted music. Music licensing is intended to ensure that the creators of musical works get paid for their work. A purchaser of recorded music owns the media on which the music is stored, not the music itself. A purchaser has limited rights to use and reproduce the recorded work without a separately arranged agreement.