Counting Crows Sues UMG for $1 Million+

     LOS ANGELES (CN) - Counting Crows claims in court that UMG Recordings owes it more than $1 million in royalties for downloads, ring tones, and third-party licenses.
     In its Superior Court lawsuit, the band claims UMG paid it only a "fraction" of royalties due from licensing agreements.
     Cheating musical artists is standard industry practice, the band says in the complaint: Record labels conspire to stiff musicians and producers by disguising licensing agreements with retailers as sales agreements.
     "(T)his conspiracy among the record companies could not have been accomplished if anyone label correctly accounted for and paid licensed download royalties. The actions of all major record companies, including defendant, have affected potentially hundreds of thousands in the general public as a result," the lawsuit states.
     After a 2010 appeals court ruling in F.B.T. Productions, Inc. v. Aftermath Records, companies must treat income from downloads and ring tones licensed to third parties as licensing income and pay royalties to artists, according to the complaint.
     Counting Crows claims that record labels' practice of shortchanging artists costs musicians and producers $2 to $5 for each download and ring tone.
     And, the band says, UMG knew it was underpaying royalties after 27 music industry attorneys gave it notice in a March 2004 letter.
     Even after UMG commissioned a report on the subject, it continued to duck its obligation to recording artists, the band claims.
     UMG "engaged in purposeful actions in order to avoid its royalty obligations. Defendant did so by creating out of whole cloth a phony 'business model' by which it is supposedly 'selling' downloads to music download and master tone providers, who are 'reselling' them to consumers. To that end, defendant's lawyers sought to delete the word 'license' from proposed agreements with these providers," according to the lawsuit.
     Counting Crows claims UMG cheats artists by paying them a lower rate based on sales agreements rather than licensing income.
     "Defendant carried over this fiction into its accounting to its artists, which deliberately and systematically miscategorized and misrepresented the nature of this income to them, classifying it as 'sales' income instead of 'licensing' income, and failing to disaggregate this licensing income or to identify it by source," the complaint states.
     The band claims UMG owes it more than $1 million in royalties for licenses to Apple iTunes, Amazon, Verizon, T-Mobile and others.
     It seeks declaratory judgment that is entitled to 50 percent of net receipts from licensing of its sound recordings, an accounting, damages for breach of contract, unfair competition, and breach of faith dealing, and costs.
     Formed in Berkeley in 1991, Counting Crows has sold more than 20 million albums worldwide.
     The band is represented by Paul Duvall with King & Ballow of San Diego.
     Cheating musicians is a long-established, ignoble practice, dating back to Egyptian classical times. More recently, Fats Waller allegedly sold the rights to his hit tune "Honeysuckle Rose" for a plate of hamburgers.