On a claim that they were not informed of, two former members of the 1970s rock band Orleans have filed suit against Warner Music Group and its subsidiary label Warner Records.
In the 1970s, Orleans had singles including "Dance with Me" and "Still the One," both of which are still in use today.
A class action lawsuit was launched last week by two longtime members of Orleans, John Hall and Lance Hoppen, who claim Warner Music Group has been withholding royalties from them through "intercompany costs," where Warner's international subsidiaries cut into the label's payments to musicians.
There's some dispute over whether or not Hall and Hoppen were aware of this cost when they assumed their income would be split 50/50. It's alleged in the action that Warner, through illegal ccounting methods, attempted to reduce the amount of money given to plaintiffs and class members for digital streaming.
Warner was allegedly given a royalty statement from the previous year, which includes an area for marking deductions, but this section was blank.
Digital music distribution is far more convenient than physical music distribution, hence such deductions are no longer warranted. According to the complaintants, this reflects Warner's ability to control certian foreign affiliate practices with no commercial reason, except to enrich himself.
Older recording contracts, which are more likely to contain provisions that are no longer relevant in today's music industry, may have contributed to Orleans' action. When it comes to music consumption, physical sales were the primary driver before to the digital era, but streaming is now the primary source of revenue. As a result, Orleans' contract didn't specify how streaming would be handled for the band because such technology didn't yet exist. There was no mention of further terms in the contract, according to the lawsuit.
While many of Orleans' royalties come from other countries, the vast bulk originate in the United States. About 93% of the nearly $68,000 in sales from Orleans' catalog came from the United States over the six-month period from July to December. Unless the hidden international fees were astronomically large, most of Orleans' sales are likely to have come from the United States. A big sum of money could be collected if Warner used the same policy to a large number of legacy artists.
According to Complete Music Update, singer Lenny Williams sued Warner in 2021 over identical claims, but his case was denied class action status. It's unclear at this time whether this suit will progress as a group lawsuit.
Fraud and contract violations are among the accusations in the lawsuit. WMG is yet to provide an answer.
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