Sony Music has agreed to pay $12.7 million to settle a class action lawsuit filed by Rick Nelson’s estate over deductions Sony made on foreign streaming royalties. The settlement agreement, filed Sept. 4, alleges that Sony improperly reduced foreign streaming royalties for its musicians by imposing an “intercompany charge” on streaming revenues collected by its foreign affiliates and subsidiaries.
Rick Nelson’s estate filed the original lawsuit against Sony in September 2018, alleging breach of contract and unjust enrichment. The lawsuit argued it was unfair of Sony to place extra charges on foreign streaming for legacy artists such as Nelson who don’t have such provisions in their contracts.
Nelson, a former teen idol who topped the charts with hits including “Poor Little Fool” in 1958 and “Travelin’ Man” in 1961, was killed in a plane crash in 1985, far before streaming became the dominant form of music distribution, and his contract with Sony has no provisions calling for a deduction on foreign streaming revenues.
According to the settlement, Sony will pay $12.7 million to compensate members of the class action suit for retrospective damages. Sony will also increase all class members’ streaming royalties for all eligible recordings going forward by 36 percent.
Rick Nelson’s estate said in the settlement agreement that it expects the value of the settlement agreement to be “many millions of dollars,” since streaming is now the most dominant form of music distribution, and said it will provide “substantial and significant relief” to class members.
Sony maintains that it isn’t liable and that it has accounted correctly for royalties on foreign streaming, according to the settlement agreement. The company told Billboard that it “believes this Action lacks merit” and said it entered into the settlement agreement “for the purpose of avoiding prolonged and expensive litigation.”
The court still has to give final approval to the settlement.