The lawsuit between
19 Recordings and Sony Music Entertainment enlightens us on the importance of
clearly expressing our terms of agreement with other parties and constituents
of a contract. Evidentially, unambiguous language grants parties the opportunity
to take advantage of operating words with broad definitions. In particular
these words permit backdoors in a contract. In the case of 19 Recordings vs.
Sony Music Entertainment , SME has been accused of “violating the licensing agreements revenue structure”. At
the same time 19 Recordings is suing SME for breach of contract and breach of
covenant of good faith and fair dealing. Ultimately SME is being sued for
intentionally not using the
“correct operating words” in its agreement with 19 Recordings.
Apparently, the SME is racking up revenue from streaming sales that should be considered broadcasts, and not sales with streaming companies. At the same time Sony Music Entertainment made an album sales agreement with 19Recordings. However, Sony Music Entertainment took it upon them to start selling songs individually from the album without 19Recordings consent. In the end, generating a profit for themselves underpaying 19Recordings and their artists.
Apparently, the SME is racking up revenue from streaming sales that should be considered broadcasts, and not sales with streaming companies. At the same time Sony Music Entertainment made an album sales agreement with 19Recordings. However, Sony Music Entertainment took it upon them to start selling songs individually from the album without 19Recordings consent. In the end, generating a profit for themselves underpaying 19Recordings and their artists.
After reviewing this situation ,it is
critical that artist’s and managers mean what they say, and say what they mean.
At the same time, its important to anticipate consumers buying behavior and
technology trends. During the time this agreement took place albums were being sold as fully packaged albums.
19 Recordings probably didn’t
expect for album sales to break down into each song individually being sold.
Therefore the option of selling’s songs individually allowed Sony Music
Entertainment to take advantage of
19Recordings terms of agreement.
In short, read
your contracts. As important as it is to build a brand you also want to protect
it. The money that we take off the table is just as important as the money we
leave on the table. To avoid leaving money on the table be precise and
clear. In doing so we lock all
back doors.
References:
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