Recent Entertainment Lawsuits

If you have ever taken a business class, the Section 1 Sherman Act might ring a bell. This act protects businesses from business practices that may be deemed unfair for competition within its own market. Sirius XM Radio has recently exercised this law in their lawsuit against SoundExchange and A2IM.

In the past few months Sirius XM has been working on proposals in which deals would be made with major record labels in order to reduce the statutory royalty rate from 8% to 5%-7%, also known as direct licensing. However, these reductions of royalty rates will drastically effect SoundExchange’s financial earnings, since SoundExchange serves as a platform for SiriusXM. Due to these facts, SoundExchange allegedly took action and in conjunction with A2IM reached out to their members and commenced a boycott aiming towards SiriusXM’s attempt to pay lower royalties, or direct licensing. SiriusXM took this boycott interference as an unfair business practice from SoundExchange and A2IM, especially when only 80 independent labels signed to SiriusXM’s proposal when potentially they could have signed many more, however due to the boycott, their potential was minimized. I personally feel neutral in this case because I understand SiriusXM is trying to minimize cost, however, they are also reducing the amount of royalties to music owners. On the flip side, I understand SoundExchange since they are trying not to lose revenue, however, they should know better, and not form trusts in order to stop their competition. The case is very recent, and SiriusXM is asking the courts to put some type of monitor system to track SoundExchange’s business movements.

            Clearing the rights of a musical composition is one thing; however paying those clearance fees and licenses on time is an entirely different thing as we see in the next article. In this legal case, EMI Publishing sues Cash Money Records for not paying a total of $ 491,176.16 on time, resulting as copyright infringement and breach of contract. This case dates back from 2009, in which Cash Money failed to pay EMI their clearance fees for Cash Money’s “The Carter III” album, however Cash Money paid $1.5 million as the first payment. 180 days is what the court gave Cash Money to pay the remaining, $392,940.39, however it has taken Cash Money until now to pay, and as a result of the failed payment, Cash Money now owes $491,176.16. Its rare to see this in the music industry, but both parties in this dispute resolved this “amicably”.

            Another recent case involves top executives Todd DeStefano and Patrick Lynch being accused of stealing and mishandling millions of dollars from the Los Angeles Memorial Coliseum. DeStefano, the events manager for the arena and Lynch, the general manager served as middle men for promoters and entertainment company who could not successfully obtain permits for certain music concerts. Therefore, DeStefano and Lynch provided these promoters with the space in the arena for their unauthorized acts, and lowering the fees to use the arena and surrounding facilities. Most of these concerts were known to be raves in which large amount of drugs circulated during these events, and eventually killing a young woman due to an overdose at these concerts. Since allowing these acts to take place was illegal, Lynch and DeStefano received multiple bribes, and large commissions from allowing these acts on their property, therefore, since they were collecting all the money, the Coliseum lost millions of dollars. After a long investigation, Lynch and DeStefano have been arrested along with other promoters and are being charged with embezzlement, bribery, conspiracy and conflict of interest.

 REFERENCES

1)   Deutsch, L. (2012 , March 23). Indictment unsealed in la coliseum contracts probe. Retrieved from http://www.billboard.biz/bbbiz/industry/touring/indictment-unsealed-in-la-coliseum-contracts-1006565352.story

2)   Christman, E. (2012, March 28). Siriusxm files lawsuit against soundexchange and a2im, alleging licensing interference. Retrieved from http://www.billboard.biz/bbbiz/industry/legal-and-management/siriusxm-files-lawsuit-against-soundexchange-1006591952.story

3)   Rys, D. (2012, March 23). Emi resolves lawsuit with cash money over licensing payments. Retrieved from http://www.billboard.biz/bbbiz/industry/legal-and-management/exclusive-emi-resolves-lawsuit-with-cash-1006564152.story

4)   http://usgovinfo.about.com/blsherman.htm