Friday, September 21, 2012 9:30 AM PT
REO Speedwagon Goes on Offensive Over Royalties

     (CN) - Sony Music Entertainment owes REO Speedwagon at least $150,000 on royalties for music licensed to iTunes, and Verizon, the band claims in court.
     REO Speedwagon Inc. says in federal court in Manhattan that under the royalty structure in its 1981 recording agreement with CBS Records, Sony's predecessor, Sony was supposed to pay 50 percent of its net receipts for any master recording Sony licensed to others for distribution in the U.S.
     But since January 2009, the band says Sony has been paying royalties on music downloads, mastertones and ringtones at the lower rate that is included in an agreement provision that applies only to "phonograph records."
     REO Speedwagon, popular in the 1980's for hits like "Can't Fight This Feeling," says that this provision does not apply to "the leasing of the REO Masters."
     In July 2010, the band opted out of a class action brought in New York against Sony because of a settlement that Sony and REO Speedwagon entered into in March of that year. But the band says that the settlement was insufficient.
     Now, REO Speedwagon points to the 9th Circuit's decision in F.B.T. Products LLC v. Aftermath Records, which held that income from music downloads and mastertone providers, such as those provided by iTunes or eMusic, was "licensing income." The rockers say that means Sony should pay the band based on its income from those sales.
     But Sony might try and circumnavigate that decision, according to the complaint. REO Speedwagon says that in other cases brought against the company, Sony has made the "nonsense" claim that "leasing" masters is different than "licensing" masters.
     The band says "Sony's historical practice shows that it considers the leasing and licensing of master recordings to mean the same thing."
     The complaint claims that the band notified Sony around July 2012 of objections "to every royalty statement issued by Sony beginning Jan. 1, 2009 and continuing through the present," but Sony refused to pay up.
     The band demands at least $150,000 in royalties, plus a judgment ordering Sony to pay 50 percent of net receipts for leased music, including licensing for ring tones and downloads.REO Speedwagon is represented by Richard Busch of King & Ballow from Nashville, Tenn. and Kenneth Gordon of Gordon, Gordon & Schnapp from New York.