Orleans Members Sue WMG Over Royalty Deductions

Two members of 1970s rock band Orleans have sued Warner Music Group and its subsidiary label Warner Records over a dispute regarding royalty deductions the companies instituted that the members claim weren’t disclosed to them.

Still active today, Orleans saw its mainstream success in the mid-1970s with hits including “Dance with Me” and Still the One.” Longtime Orleans members John Hall and Lance Hoppen filed their class action lawsuit last week, alleging that Warner has been deducting royalties from them through International “intercompany charges,” where Warner’s foreign affiliate companies cut into what the label pays the artists.

Hall and Hoppen claim they weren’t aware of this fee and believed their royalties were a complete 50/50 split. Warner, the suit alleges, “sought to minimize the revenues paid to Plaintiffs and Class Members for digital streaming by engaging in improper accounting practices for earnings generated outside the United States.”

Along with the suit, Hall supplied a royalty statement he got from Warner last year, which as the suit notes, includes a section that would mark royalty deductions, but that section was left blank. Aside from the alleged lack of disclosure, Hall and Hoppen’s suit criticizes the actual fee itself, referring to foreign fees as “a relic of the days when the collection of revenues from foreign record sales entailed significant labor.”

Today, digital music distribution is much easier than shipping and hawking physical product, making such deductions less justifiable. The practice, according to the suit “reflects [Warner’s] ability to manipulate their foreign affiliate practices with no commercial justification beyond self-enrichment.”

Part of the origin of Orleans’s suit comes from how old their recording contract is and how much the music business has changed since then; older record contracts are more likely to have outdated terms. While music consumption was driven completely by physical sales before the digital age, today, sales are almost entirely from streaming. Such technology didn’t exist and therefore wasn’t stipulated in Orleans’ contract, leaving it less definitive for how streaming would be handled for the band. The suit states Warner told the band they’d be getting digital royalty statements and didn’t specify any extra terms.

As Hall’s royalty statement shows, a large majority of Orleans’ royalties come just from the U.S. In the six-month period from July through December, of the nearly $68,000 Orleans’s catalog brought in, about 93% came from U.S. sales. While it isn’t clear exactly how much was deducted through the hidden foreign fees, unless they were dramatically high, most of Orleans’ sales likely came from the States. But if Warner enacted a similar policy across a significant number of legacy artists, the fees would likely add up to a large sum.

It isn’t immediately clear if this suit will proceed as a class action lawsuit; as Complete Music Update reported last year, singer Lenny Williams sued Warner over similar claims in 2021, but his case wasn’t granted class action status.

Among the counts listed in the suit are fraud and breach of contract. WMG declined to comment on the suit.

Additional reporting by Seamus Hughes 

Source link

Share this post