Sony Claims ‘American Idol’ Stars Overpaid, Wants Money Back

The American Idol brand was once a juggernaut. Enough that record labels would pay out the wazoo for one of its stars. But that was then. Now? Not so much: Sony is filing a lawsuit for a return on their investment.

On Tuesday, Sony Music filed a breach-of-contract suit against 19 Recordings, claiming to have overpaid at least $2 million in royalties for such American Idol stars as Carrie Underwood, Kelly Clarkson, and Clay Aiken. In the lawsuit, Sony demands its money back, and although this might seem a bit hostile, the label has a good reason for lashing out at 19 Recordings.

Sony’s suit is a counterclaim to the lawsuit filed over a year ago by 19 Recordings, in which the organization claimed its American Idol stars were being robbed through shady accounting. Basically, it boiled down to 19 accusing Sony of withholding proper payment on everything from royalties on streaming services (i.e., Spotify and Pandora), to “bonus royalty escalators” from iTunes. This latter part of the suit would eventually be thrown out, along with the assertion that 19 deserved a piece of the piracy settlement Sony won. However, it was declared 19 still had a case against Sony for misrepresenting plays on streaming services as “sales” instead of “broadcasts” or “transmissions,” the latter of which would lead to increased royalties over regular sales. In response, Sony is now out for blood.

Basically, this is where Sony’s counterclaim starts trying to deconstruct the assertion that 19’s American Idol stars are even stars at all:

For example, Sony denies that over 15 million copies of Kelly Clarkson’s album Breakaway have been sold worldwide, and that “Since U Been Gone” has been certified “multi-platinum” by the RIAA.

Sony has its own math, and besides responding to each of 19’s allegations, it’s now using the legal tactic that can be best summed up as, “You say we underpaid you. Oh yeah? We actually overpaid you!”

There are three alleged means of overpayment. The first deals with compilation albums. Sony states that, “[the] royalty overpayment resulted from the incorrect application of the royalty rate associated with sales of Albums to these sales of Compilation Albums. … The royalty rate associated with sales of Records other than Albums should have been applied to these sales of Compilation Albums.”

Second, Sony claims that it has handed over too much royalty on digital downloads under the agreements concerning Aiken, Clarkson and Underwood. The music giant says it applied a “rate associated with sales of Albums” rather than the “rate associated with sales of Records other than Albums.” The allegation appears to reignite examination of how to account for consumers buying individual 99-cent album tracks off of iTunes.

In another claim that’s less on the opinion side and more on the factual end of things, Sony apparently paid an advance to 19 on a new album from Kellie Pickler. However, Sony is alleging that the money they paid in December 2011 “failed to account for applicable reserves.” Thus, Sony once again feels it overpaid on an album that didn’t deliver.

While I can’t say the lawsuit is all that peculiar, it certainly is a bitter one. I suppose you could argue the exact numbers on Kelly Clarkson and Carrie Underwood’s sales, but I’m not sure how it could be argued that either one isn’t a mainstream star. Maybe Kelly’s new album hasn’t been doing as great as it should be doing, but she still delivered a No. 1 debut, and just had an entire night dedicated to her on American Idol. Sure, they could have done an alum night for almost anyone, but I doubt the song list for that week would have consisted of as many hits as Clarkson’s songbook.

Then again, I’m not sure how much of this lawsuit comes down to conjecture vs. facts. It all depends on what the hard numbers say. If the album sales show that Clarkson, Underwood and Aiken justified their money through sales, then Sony won’t have much hope of getting their money back. But if they can prove that they significantly overpaid under false pretenses, then 19 Recordings might have to shell out a LOT of dough to make up for it. It’s an interesting suit, if nothing else, even while it grows more acrimonious by the day.

But what do you think? Who’s side do you fall on: Sony or 19? Sound off in the comments!

Sony Claims 'American Idol' Stars Overpaid, Wants Money Back

Credit: RCA

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