Kenny Rogers' Lawsuit Shows The Many Ways That A Major Label Screws Artists (Even The Big Ones)

from the here-we-go-again dept

Tue, Feb 21st 2012 9:36am — Mike Masnick

We've seen this many times before, where famous musicians are totally screwed over by the major labels. A bunch of folks have sent over a summary of Kenny Rogers' lawsuit against Capitol Records (EMI), which highlights the levels to which Capitol Records went to not pay Rogers. The central facet of the lawsuit is similar to that of lawsuits that a number of artists have been filing, concerning whether or not iTunes transactions are sales or licenses -- for which massively different royalty rates apply.

However, there's plenty of other crazy things in the lawsuit, most of which involve an "audit" that Rogers requested from Capitol in April 2007... and which took until March 2009 to complete. Yes, it took two years. For a basic audit just to make sure he was getting the money he was owed. Oh, and the audit showed that he was not getting the money owed. From there, things got worse... with all sorts of stalling and foot dragging, finally resulting in the lawsuit. That stalling included repeated promises to resolve the problems and pay up. Rogers was told at times that the company was "still ironing out a few things," and then later found out that the people he'd been negotiating with were no longer at the company -- replaced by a lawyer who just told Rogers that he would be happy to work with Rogers to "promptly try to resolve the Rogers audit" -- nearly two years after the audit was completed and four years after it was requested.

Among the problems in the audit are a bunch of unprocessed royalties that were put into a "suspense" file for no reason. These kept $76,956 from Rogers. There were also actions in foreign territories where Capitol appears to have ignored the royalties it's supposed to pay Rogers. There were also things as simple as just not reporting royalties on money from record club sales. The company is also accused of playing some tax games to double count taxes to avoid paying royalties. There's also the fact that Capitol charged Rogers the full amount for a video production to his own expenses (i.e., money they'd "recoup" out of his portion of royalties), but they ignored their own contractual agreement that only 50% could be expensed that way.

Then there's the fact that Rogers wants his cut from the money Capitol has received in various lawsuits -- those against Napster, Kazaa, AudioGalaxy, Grokster, BearShare and others. As we've noted in the past, the labels have bent over backwards to avoid paying out such money to the actual artists -- but Rogers wants his piece:

Such lawsuits have resulted in Capitol Records receiving monies from entities such as Napster, Kazaa, Audiogalaxy, Grokster, BearShare, and others. Capitol Records has refused to provide Kenny Rogers with an accounting regarding the amounts actually received. A portion of the monies received by Capitol Records is attributable to the Masters and Kenny Rogers is entitled to that portion of Capitol Records‟ receipts. Capitol Records‟ refusal to account to and pay that money to Kenny Rogers has resulted in Kenny Rogers suffering direct financial harm in an amount that cannot be determined until Capitol Records provides a full, fair, and accurate accounting.

There are a few other charges as well, but those are the big ones. None of this, of course, is to say that it's "ok" to infringe because the major labels are somehow "bad." But it does show just how ridiculous it is if anyone assumes the majors represent the best interests of artists in any way.

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Filed Under: copyright, kenny rogers, lawsuits, record labels
Companies: capitol records, emi

68 Comments

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Anonymous Coward, 21 Feb 2012 @ 9:39am

Why?
Why is Kenny Rogers pro-piracy?
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Pixelation, 21 Feb 2012 @ 9:50am

Cheats
This is why it is very difficult to have any compassion for the major labels when they whine and cry about piracy. They seem to be bald faced liars and greedy cheats.
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gorehound (profile), 21 Feb 2012 @ 9:55am

Re: Cheats
Yes they are and always have been.I will never buy a single thing from any Big Label, RIAA, or any Artist who signs with either.
Boycott the Big Content Industry !!
They are the thieves.
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blaktron (profile), 21 Feb 2012 @ 9:55am

As corporations the label's first (and only) responsibility is to their shareholders, this is clearly set forth in common law. Why they get away with pretending any different is beyond me. This responsibility puts them at direct odds with artists they represent, and makes it a corporate responsibility to withhold monies from artists.

This is the world we live in...
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Machin Shin (profile), 21 Feb 2012 @ 9:57am

This is awesome, I really hope he goes after them for everything they owe him and more. Maybe we will get lucky and other artists will follow his example.

These moronic companies cannot hope to survive if they try to sue customers, bribe politicians, and defend themselves from paying artists. With artists tieing up their lawyers and large sums of money maybe they will be forced to drop some of these stupid laws.
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Pixelation, 21 Feb 2012 @ 10:01am

Re: Re: Cheats
This also makes me wonder why every artist they "represent" isn't demanding an audit. It would be interesting to see just how deep the rabbit hole goes...
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Thanatossassin (profile), 21 Feb 2012 @ 10:02am

They must've used the money to fund the interior remodel of the Capitol records building. The executive floor is coming out very nice, much nicer than the other floors.
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Anonymous Coward, 21 Feb 2012 @ 10:03am

How to defeat piracy:

1. Be a decent human being.
2. See 1.
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Anonymous Coward, 21 Feb 2012 @ 10:05am

can you please make sure you pass this article on to Congress, please Mike? it can be something else they can either ignore or blame file sharers for.

and we are supposed to expect to get everything for free? we are supposed to be the ones ruining the industries? we are the ones that are stopping artists from being able to afford to eat? yeah, right!
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Anonymous Coward, 21 Feb 2012 @ 10:12am

Re:
You can only get away with disrespecting your clients and your customers if you are large enough to have limited/eliminated most/all competition. And even then you can do so for only so long, unless you have some sort of legal mandate than locks in your competitive advantage (which is what SOPA/PIPA, ACTA, and TPP are really all about), before competition builds enough momentum to displace you.
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Robert (profile), 21 Feb 2012 @ 10:13am

"You see, we RIAA members needs draconian laws to kill internet infringement!"

"For the artists?"

"Who?"
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Anonymous Coward, 21 Feb 2012 @ 10:17am

Re: Why?
I think its hilarious that Mike has his own, special, dedicated Troll.

Mike, I hear that fire prevents trolls from regenerating. If you dump some lamp oil on them and then light them it will permanently kill them. At least that's how it works in D&D
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jupiterkansas (profile), 21 Feb 2012 @ 10:18am

--- this is the real piracy, folks.
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Machin Shin (profile), 21 Feb 2012 @ 10:18am

Re:
Well you know what the RIAA would tell you.

"If it wasn't for the filthy pirates then the record companies would have enough money to pay their artists. All of this is the fault of the filthy pirates!"
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MadCow (profile), 21 Feb 2012 @ 10:18am

Where are the shills?
I find it very interesting none of them have come out of the woodwork to comment on this. Interesting indeed...
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Anonymous Coward, 21 Feb 2012 @ 10:22am

I see this and the only thing I see is vultures trying to eat each other.
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ChurchHatesTucker (profile), 21 Feb 2012 @ 10:25am

Well, duh.
Among the problems in the audit are a bunch of unprocessed royalties that were put into a "suspense" file for no reason.

It's right there on the name of the file. Will he get the money, or won't he? Tune in next decade!
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Killercool (profile), 21 Feb 2012 @ 10:25am

Re: Where are the shills?
They're trying to figure out how to change the meaning of "None of this, of course, is to say that it's "ok" to infringe..." into "...it's "ok" to infringe...".
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Anonymous Coward, 21 Feb 2012 @ 10:26am

Re:
You leave Kenny Loggins alone!
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MadCow (profile), 21 Feb 2012 @ 10:30am

Re: Re: Where are the shills?
Lol, I can't wait to see if they're successful at that!
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Anonymous Coward, 21 Feb 2012 @ 10:38am

Re: Well, duh.
Maybe!?
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Chuck Norris' Enemy (deceased) (profile), 21 Feb 2012 @ 10:59am

You're Wrong, Mike!
No! The labels are all about the artists...scam artists, that is.

Poor management of accounting is part of the labels business model. Hell! Maybe all the "losses to piracy" were actually forgotten in some file...just sitting there all along because it was under the executives blow satchel.
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Anonymous Coward, 21 Feb 2012 @ 11:00am

Re: Why?
Funny, Mike Masnick is ready to convict and sentence Capitol for every charge alleged here, but gets really upset when pirates or the pirate sites they use are accused of wrongdoing- even with far more obvious evidence.

Why is that?

Because Mike Masnick loves piracy. It's why he runs this pro-piracy blog.
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Rich Kulawiec, 21 Feb 2012 @ 11:04am

The only difference between this and a thousand other stories...
...is that Kenny Rogers can afford expensive attorneys.

For every case like his, there are many (MANY!) more that never came to light, because the musicians involved couldn't afford to pay even cheap legal counsel. They just had to throw up their hands and walk away in resignation, while the fat, bloated, greedy pigs at the record companies pocketed the money. Or they died -- an outcome I'm sure these executives cheered, since it greatly diminished the probability that litigation would be brought or would succeed.

"Vile" does not even begin to describe these people.
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Anonymous Coward, 21 Feb 2012 @ 11:12am

Re: Re: Why?
http://www.techdirt.com/articles/20120220/04491417812/kenny-rogers-lawsuit-shows-many-ways-that-majo r-label-screws-artists-even-big-ones.shtml#c117
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artp (profile), 21 Feb 2012 @ 11:12am

I sent a copy to my Senator
I wrote a comment to my Senator, Chuck Grassley of Iowa, from his Webpage. I forgot to have it send me a copy, or I'd share my talented prose with you. ;-)

As you might remember, Grassley was one of the sponsors of PIPA.

I suspect that Kenny Rogers material will soon become as hard to find as James Garner is currently. It just doesn't pay to sue Hollywood.
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Anonymous Coward, 21 Feb 2012 @ 11:17am

Re: Re: Why?
Mike isn't ready to convict or sentence anyone. He's just pointing out what was brought up against them, per Kenny Rogers' own legal counsel and through his (Kenny's) own efforts to seek and get what was owed to him, something that took years to achieve. Thanks in part to all the stalling on the part of the label.

You know, one of those same labels that claims piracy is actually stealing from the artists? A label who itself seems to be doing more harm to this one artist in this instance than any pirate.

Oh, but it's funny because you of course try and spin this into "Mike loves pirates". While not saying a word in defense of the artist who is literally getting cheated here by his own goddamn label. Yeah, the hypocrisy is strong in you young shill-awan.

If they give awards to "Best Industry Shill", I think you deserve the top honor (whatever it may be). You tow that party line and dismiss anything that should normally shut you up like a true champ. Kudos to you.
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Josef Anvil (profile), 21 Feb 2012 @ 11:19am

Troll this!!!
How many times has a troll said..."You pirates just want free stuff!"

Well Capitol Records obviously understands the value of free stuff....

"The Audit also revealed that Capitol Records has distributed �FREE goods�
containing the Masters in foreign territories without accounting for or paying royalties for those FREE goods. The Recording Agreements specifically state that FREE goods distributed in foreign territories shall not be reduced from calculations of the total number of foreign sales used to determine the royalties due Kenny Rogers. Capitol Records has failed to provide documentation regarding the exact number of FREE goods upon which Kenny Rogers is due royalties. However, Capitol Records has provided information which indicates it has underpaid Kenny Rogers by at least $17,754.52, by not properly paying royalties for free goods distributed in foreign territories."

So it's ok to give away someone else's content when you agree to pay them for it and then its ok to not pay them for it.

Why isn't the RIAA on top of this? It sure as hell seems like piracy. Capitol took content that wasn't theirs and distributed it for FREE. Isn't that piracy???
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Glen, 21 Feb 2012 @ 11:21am

Re: Re: Why?
Kinda pathetic for a troll. You really need to step your game up and be a bit more creative. Please?
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Larry, 21 Feb 2012 @ 11:41am

Re:
That remodel was just completed. They ripped KR off years ago. Where did the $ come from to support (bribe) Senator Dodd while in office and then pay his (paltry, I'm sure) salary now?
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harbingerofdoom (profile), 21 Feb 2012 @ 11:42am

Re: Re: Re: Cheats
calling this a rabbit hole is like calling bingham copper mine a small pothole.
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Atkray (profile), 21 Feb 2012 @ 12:20pm

Re: Re: Re: Re: Cheats
Actually by Utah road standards it is.
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Anonymous Coward, 21 Feb 2012 @ 12:32pm

Re: Re: Why?
DO NOT feed the trolls.
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Anonymous Coward, 21 Feb 2012 @ 12:40pm

Re: Re: Why?
I will respond to this troll comment within 4 years. Please check daily.
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Anonymous Coward, 21 Feb 2012 @ 12:43pm

Re: Re:
and if that doesn't work, "Well, we could pay Kenny or I can take you for golfing and tiger hunting on my private island, your call."
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Baldaur Regis (profile), 21 Feb 2012 @ 12:57pm

This is what happens...
...when you pay artists enough to hire lawyers. Poor and dumb make better profits than smart and rich.

/sarcasm
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mike allen (profile), 21 Feb 2012 @ 1:12pm

love this case to be in the UK with massive news coverage may get the essage out how artists are screwed
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mike allen (profile), 21 Feb 2012 @ 1:20pm

Re: Re: Why?
Funny why the trolls are always saying that pirates are against artists but as we all know its really the labels that are against artists.
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Anonymous Coward, 21 Feb 2012 @ 1:50pm

Re: Re: Why?
TAM cannot read.

Why is that?
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btrussell (profile), 21 Feb 2012 @ 2:06pm

"Among the problems in the audit are a bunch of unprocessed royalties that were put into a "suspense" file for no reason."

No reason? It has kept Kenny in suspense for years!
They can't make a movie that good.
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vastrightwing, 21 Feb 2012 @ 2:31pm

What's the benefit?
If Kenny Rogers gets anything from the big labels, they will become targets from other artists. Therefore, they can�t afford to give any concessions what so ever.

Moral: don�t sign a contract with a big record label. They are in fact a huge liability. So exactly what value do they provide today?... I can�t think of anything. Nope, still can�t think of any benefit of the big labels.
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Anonymous Coward, 21 Feb 2012 @ 2:46pm

Come in here, dear boy, have a cigar.
You're gonna go far, you're gonna fly high,
You're never gonna die, you're gonna make it if you try;they're gonna love you.
Well I've always had a deep respect, and I mean that most sincerely.
The band is just fantastic, that is really what I think.
Oh by the way, which one's Pink?
And did we tell you the name of the game, boy
we call it Riding the Gravy Train.
We're just knocked out.
We heard about the sell out.
You gotta get an album out,
You owe it to the people. We're so happy we can hardly count.
Everybody else is just green, have you seen the chart?
It's a helluva start, it could be made into a monster
if we all pull together as a team.
And did we tell you the name of the game, boy
we call it Riding the Gravy Trail.

Good to see that nothing has changed since 1975.
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The eejit (profile), 21 Feb 2012 @ 3:04pm

Re: Re: Re: Why?
But they start out as cute little Gizmos....
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The eejit (profile), 21 Feb 2012 @ 3:06pm

Re: Re: Re: Re: Re: Cheats
Okay then...

Calling it a rabbit hole is like calling Chris Dodd a little dishonest.
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The eejit (profile), 21 Feb 2012 @ 3:09pm

Re: Troll this!!!
I'll give you three guesses who paid for the last 30 year's worth of Senators.

...OKay, it was Kenny Rogers' royalties.
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DOlz (profile), 21 Feb 2012 @ 4:58pm

Re: Re: Re: Why?
He can read, he just has a short attention span. Right after he reads the headline ... squirrel
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DOlz (profile), 21 Feb 2012 @ 5:02pm

Re:
Yes, their first responsibility is suppose to be to their stockholders. Nowadays the heads of these companies only feel responsible for themselves and everything else be damned.
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DOlz (profile), 21 Feb 2012 @ 5:05pm

Re: I sent a copy to my Senator
If you like James Garner, then good news. Their releasing the 1st season of Maverick.
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DOlz (profile), 21 Feb 2012 @ 5:09pm

Re: Troll this!!!
"So it's ok to give away someone else's content when you agree to pay them for it and then its ok to not pay them for it. "

I like it! Ok RIAA & MPAA I'll never "pirate" anything again. You'll get paid right after it gets processed through a copy of YOUR accounting and disbursement model.
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artp (profile), 21 Feb 2012 @ 5:21pm

Re: Re: I sent a copy to my Senator
And "releasing" is the exact right word, since "Maverick" has been held hostage since I was a teenager. And that is a very long time! ;-)
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Anonymous Coward, 21 Feb 2012 @ 5:25pm

Re: What's the benefit?
The funny thing is how darryl and the trolls will always jump in to say that major labels are the only way for artists to be heard - but if the artists get screwed over, all negative feedback must be redirected to the artists for being idiots.
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Anonymous Coward, 21 Feb 2012 @ 5:34pm

Re: Re: Why?
Obvious evidence? You mean like Viacom vs. Youtube?
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That Anonymous Coward (profile), 21 Feb 2012 @ 6:31pm

Re: Re: Re: Why?
I tried to write an Afterschool special about it, but I had to abandon the project...
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That Anonymous Coward (profile), 21 Feb 2012 @ 6:35pm

If only....
Kenny had access to the money owed to him he might have been able to afford a plastic surgeon who had actual skill.

*turns and looks into the camera*

Only labels can prevent horrible face lifts.
Pay the artists what you owe them, and stop these terrifying visages from attacking.
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Anonymous Coward, 21 Feb 2012 @ 7:45pm

List of People who had to sue
Can you list the people who have sued their label to get what was owed? I saw the Dixie chicks on 60 minutes. It wasn't long after they were asked how much they had made they filed a lawsuit.

Did Prince?
Others?
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Josef Anvil (profile), 21 Feb 2012 @ 11:42pm

Re: Re: Re: Cheats
Not every artist is demanding an audit, but Eminem and Chuck D (Public Enemy) have both filed suit. Eminem won his.

http://rapfix.mtv.com/2011/03/22/eminem-victorious-in-lawsuit-against-record-label/

http: //www.billboard.com/news/public-enemy-s-chuck-d-files-100m-lawsuit-1005477392.story#/news/public-ene my-s-chuck-d-files-100m-lawsuit-1005477392.story

http://www.hollywoodreporter.com/thr-esq/univers al-music-lawsuit-rob-zombie-rick-james-256662

Floodgates open
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Chargone (profile), 22 Feb 2012 @ 2:23am

Re:
i always figure no corporation should be granted liscence (charter? whatever the word is) to exist without a greater reason than that, and if they fail it they should pay out and cease to exist.

sadly, i don't get to make the decisions on these things.
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Paul Keating, 22 Feb 2012 @ 5:31am

criminal prosecution !!!!!!!!!! ??
What is the difference between:

downloading without payment AND
copying and distributing without payment?

One is a pirate and the other a theif?

Seems to me that this type of stuff should be criminalized no?

"Artists' And Children's Family Protection Act" anyone????
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Anonymous Coward, 22 Feb 2012 @ 8:05am

Re: criminal prosecution !!!!!!!!!! ??
Stop spamming your stupid website asshole.
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TaCktiX (profile), 22 Feb 2012 @ 9:00am

Re: criminal prosecution !!!!!!!!!! ??
It'll never work, the acronym (ACFPA) is too hard to say.
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Heretic, 22 Feb 2012 @ 9:03am

Y'know....
You do realize that the business model that Kim Dotcom and Megaupload was working on before they got taken out would have pretty much automatically ensured that artists got their fair share of the proceeds.

Yep, a real victory for justice was had the day Megaupload was taken down.....
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PaulT (profile), 22 Feb 2012 @ 9:07am

Re: Re: Re: Why?
He can read. He just has a hard time comprehending anything that might make his think, opposes his pre-conceived assumptions or - gasp! - agree with Mike on a basic logic point.
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Overcast (profile), 22 Feb 2012 @ 9:33am

So it's ok to give away someone else's content when you agree to pay them for it and then its ok to not pay them for it.

Why isn't the RIAA on top of this? It sure as hell seems like piracy. Capitol took content that wasn't theirs and distributed it for FREE. Isn't that piracy???

Yes indeed, and Roger's should press charges that they are violating his copyright - I mean, if they aren't complying with the contract, then how is it binding anymore?

He should get all rights to his music back, period.

In these situations, why aren't the contracts considered null and void with all rights returning to the original creator?
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adamj (profile), 22 Feb 2012 @ 9:41am

And this is why I have no problem pirating stuff. Even if you did buy legit, the artist will STILL not get their money and I refuse to add to the RIMDOJ (RIAA\ICE\MPAA\DOJ) "politician buying fund". This type of behavior is not just limited to the recording industry. Until RIMDOJ creates a business model that is fair to both the consumer and the artist, they will not see a single dollar from me.

http://www.techdirt.com/articles/20110912/13500315912/hollywood-accounting-darth-vader-not-getti ng-paid-because-return-jedi-still-isnt-profitable.shtml
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Anonymous Coward, 22 Feb 2012 @ 4:23pm

Re: Cheats
Therefor Jews
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Anonymous Coward, 22 Feb 2012 @ 9:26pm

On the one hand, labels screw over artists. They do this in an insane number of ways - controlled composition clauses that ensure they never have to pay artists the STATUTORY royalty rate and get free songs on every record if the artist puts more than ten songs on it, ensuring that they own the masters for the recordings typically forever, this kind of crap that breaks the contracts once they get signed... The list goes on. On the other hand, record labels are businesses that exist solely to make money and in an industry where that vast majority of products released fail to make a profit and where the smash hits aren't generating nearly as much as they used to these companies are obviously going to try whatever they can to save their own bottom line at the expense of whoever they need to. Does that make it ok? Hell no. But we shouldn't be surprised when they try this kind is stuff and act like it hasn't been going on since the music industry began. Piracy is illegal. Ultimately it hurts the artists you love and makes it that much harder for them to do what they do. Not only because it takes money directly out of their royalties because it means that units don't get silks, but that in turn forces record labels to do things like 360 deals (unthinkable a few decades ago) and to sign fewer artists and to give less support to those they do sign and to step up their money grubbing even further. But obviously that ship sailed a long time ago frankly through the industry's failure to adapt to changing technology and market demands which has chronically afflicted the industry since the late 90s. Also, don't think this kind of thing is limited to major labels. This crap also happens on Indie labels all the time but the majors do have a lot more leeway and legal clout. The ignorance of a lot of artists and assigning bad deals and not paying attention to business stuff like they should plays a big role as well. Its a complicated issue and the solution is definitely not pirate whatever the Hell you want. I don't see many people out there saying "well since I pirated this album but I really like this artist but I object to their record label I'll just send them money directly!" So the artist gets hit twice - first by you and then by the label. The system is set up to ensure that the last person to make money is the artist, which is usually pretty ugly thing, but the label takes the financial risk of putting up money for the artist to record their albums - money that in most cases they won't get back from royalties they recoup. So yes, they screw over artists and its deplorable, but piracy doesn't really solve that problem or help the artists. But the overall picture of what goes on is more complicated than that. Also, the free goods thing is because the free goods are promotional materials that get debt out usually to radio stations and aren't counted as sales the artist can get royalties on
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Anonymous Coward, 22 Feb 2012 @ 9:31pm

Response to: Anonymous Coward on Feb 22nd, 2012 @ 9:26pm
Because its in the artist's best interest to get radio promotion and airplay and so free goods are typically excluded from royalty accounts with good reason. Unless the laws operate differently on foreign territories to prevent that kind of thing the label didn't really do anything wrong in that instance. But overall major labels really do take advantage of artists and do really reprehensible stuff. I just think its important to understand how this stuff actually works when looking at cases like this
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TechNoFear (profile), 15 Mar 2012 @ 10:01pm

Re: Re: Re: Cheats
I wonder how much the record companies charge the artist for an audit?

Probably a multiple of the amount of royalties owed to the artist, plus costs.
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