It is looking more and more like the big music companies may be in for some huge payouts to their artists. Kenny Rogers has become the latest of a long list of musicians suing their labels over royalties sold on digital sites.
At issue is the percentage in royalties that are paid to the artists when their music is sold. In the eras of records and CDs, that amount was normally in the 10 to 15% range; however, if an artist's music was licensed (e.g., to a TV show or movie), the royalties increased to sometimes 50%. A court recently sided with Eminem, saying that a digital download was a license and not a sale, sending a landslide of artists after their current and former record companies looking for their own digital sales to be reclassified.
Rogers' case is even more clear-cut. He was to be paid "one-half of company's net royalties from each source." The key word in that clause is net royalties so, after taking out the cost of pressing a record or CD, producing the packaging, shipping and distribution, etc., Rogers would receive 50% of what was left.
For a digital sale, the costs of production and distribution are very low with the biggest cost being the cut for the digital retailer. That should leave Rogers' 50% much larger, but evidently it wasn't.
The suit calls out the company, saying that "the actions of Capitol Records was part of an ongoing and deliberate attempt by record labels to deprive artists, like Kenny Rogers, in California, and elsewhere of their rightful royalties for music downloads, ringtones, and mastertones."
Rogers estimates he is owed around $400,000, but the accuracy of that number is unknown as he claims Capitol has not provided the proper records for a proper calculation. He is looking for the royalties, interest, compensation and attorney's fees.