‘American Idol’ Lawsuit Claims Label Shorted on Kelly Clarkson, Carrie Underwood Royalties

'American Idol' Lawsuit Claims Label Shorted on Kelly Clarkson, Carrie Underwood Royalties

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19 Entertainment wants more than $10 million from Sony for alleged “underpayments”

Sony Music Entertainment has hit a bum note with the “American Idol” record label 19 Recordings.

The label, which signs “Idol” contestants to exclusive contracts, has slapped Sony with a massive lawsuit, claiming that it's been shorted on royalties for “Idol” faves such as Carrie Underwood and Kelly Clarkson.

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The complaint, filed in U.S. district court on Thursday, alleges “a wide array of underpayments by Sony, including systematically incorrect calculations, which resulted in significant underpayments.”

How significant? All told, 19 is asking for compensatory damages “in excess of” $7 million, and interest of “at least” $3 million.

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According to the complaint, 19 entered into licensing agreements with Sony starting in 2002, with Sony agreeing to pay 19 Entertainment under a “certain royalty structure”, which would grant 19 the right to inspect the books and records. However, the suit alleges, Sony has blocked access to necessary books and records, and engaged in a variety of tactics to underpay 19 Entertainment.

Among the myriad tactics that 19 accuses Sony of employing: Underpayment of streaming royalties by wrongfully characterizing streaming services’ use of the music as “sales” or “distributions”, rather than “broadcasts” or “transmissions”; incorrectly deducting television advertising costs; charging 19 Entertainment for costs of music videos above approved amounts; and paying incorrect royalties for for joint venture compilation albums.

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19 claims that it has made several attempts to settle with Sony, but to no avail.

“We did not want to have to file this lawsuit, but Sony left us no choice, so this became necessary to protect our artists,” 19 Entertainment's worldwide head of music Jason Morey told TheWrap on Thursday.

Sony had no comment on the lawsuit.

Pamela Chelin contributed to this report.