Business Matters: Sony Music UK Sees Turnaround in 'Two to Three Years'
Business Matters: Sony Music UK Sees Turnaround in 'Two to Three Years'

Meat Loaf's "Bat Out Of Hell" was released in 1977 and has sold approximately 43 million copies, making it the fifth best selling album of all time. The album continues to sell well, but Sony Music's control over this album as well as other hit albums is now under threat thanks to a lawsuit filed on Wednesday by the estate of a recently deceased record executive, Stephen Popovich, who was quite successful in his time.

Sony is alleged to have engaged in massive accounting failures and ignoring the warnings of past lawsuits. As a result, Sony has purportedly forfeited rights to the album.

Popovich was an American record executive who was particularly active in the 1970s as former vice president of Columbia Records and CBS. He is credited as signing acts such as Michael Jackson, Boston, The Charlie Daniels Band, and REO Speedwagon. In 1977, he founded Cleveland International Records, whose biggest success was signing Meat Loaf.

A two-time Grammy Award winner, Popovich passed away on June 8.

Now comes a lawsuit in Ohio federal court from Popovich's estate which claims that Sony has violated the terms of agreements with Cleveland International Records.

The estate alleges that Sony has had a long history of underpaying royalties. As a result, Popovich and Sony have been in court on and off for the past fifteen years.

The first lawsuit was filed in 1998 and then dismissed after the parties came to a settlement which purportedly required the record label to pay tens of millions of past due royalties. properly account for future royalties, and add the Cleveland International Records logo to all master recordings sold to the public.

Sony allegedly didn't comply with the last provision of the agreement so Popovich filed a second lawsuit in 2002. The dispute is said to have resulted in a jury verdict of more than $5 million.

"Despite having previously been sued for failing and refusing to accurately report and properly account to Plaintiff royalties owed on Plaintiff's Masters, Defendants have deliberately and knowingly continued to fail and refuse to pay the proper amounts due to Plaintiff," says the latest complaint.

Specifically, Sony is alleged to have used a variety of fraudulent devices to understate what is owed, including failing to calculate proper royalties by deducting "packaging costs" and charging "blanket license fees" on Internet music sales, charging a "license fee" on foreign sales, taking deductions on excise taxes, giving away excessive amounts of purported "free goods" to dealers and distributors, applying incorrect royalty rates on foreign sales, etc.

Popovich's estate believes the understatement has cost them in excess of $3 million, but isn't sure due to an alleged refusal to allow an audit.

The plaintiff wants an accounting and damages but goes much further in alleging breaches of fiduciary duty and the contract. So now, Popovich's estate maintains that all rights in and to the master recordings have reverted to them. A declaratory judgement and a permanent injunction requiring delivery of all master recordings and the prohibition of future distribution is being requested.

The albums at issue include Meat Loaf's "Bat Out of Hell," "Dead Ringer," "Midnight Lost and Found," and "Hits Out of Hell."

Sony Music declined comment.

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