Ricky Nelson Estate Launches Class Action Against Sony Music Over Streaming Royalties

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Ricky Nelson performs at the Grand Opening of Animals Crackers in Atlanta on Oct. 7, 1980. 

The estate of rock and roll "teen idol" Ricky Nelson has filed a class action lawsuit against Sony Music Entertainment, alleging the label violates contractual agreements with its artists by assessing an intercompany charge on international streaming revenue that deprives artists of accurate royalties from foreign sales.

The lawsuit, which was filed Tuesday in the U.S. District Court for the Southern District of New York, plainly states that Sony underreports revenue generated by artists abroad by adding a charge on revenues collected by region-specific subsidiaries such as Sony Music UK and Sony Music Australia. The suit argues that since SME has "total control" over its regional affiliates, it should not be taking a percentage off the top.

"By assessing an intercompany charge for international sales, [Sony] impermissibly takes up to 68 percent off the top of the international revenue earned from streaming sales, and bases the artist’s royalty rate on the remainder, which methodology directly violates the terms of the [artists' compensation agreements]," the Nelson estate alleges.

The Nelson estate's role in filing the class action is notable given that the singer's tenure on a Sony label (Epic, via Sony predecessor CBS Records) came during the tail-end of his career. Nelson signed with CBS/Epic in 1976, four years after his last big hit -- the country rock classic "Garden Party." A year after signing with Epic he released Intakes, which sold poorly. A followup for the label was recorded in 1978, though the tracks were shelved until after his death in 1985.

Nelson and his Stone Canyon Band perform "You Can't Dance," off Intakes:

The bulk of Nelson's career -- which included pop hits like "Poor Little Fool," "Travelin' Man" and "Hello Mary Lou" -- was spent with either Imperial, Decca or MCA, all of which fall (or fell) under the Universal Music Group banner. (MCA was phased out by UMG in 2003.)

The Nelson estate said it was "impracticable" to determine how many class members there are in the lawsuit, but that it could number into the thousands given the vastness of Sony's catalog. The estate put the total claims in the action in excess of $5 million.

"Each class member has been damaged and is entitled to recovery by reason of Sony Music’s improper practices," the suit explains. "Class action treatment will allow those similarly situated persons to litigate their claims in the manner that is most efficient and economical for the parties and the judicial system. The injury suffered by each class member, while meaningful on an individual basis, is not of such magnitude as to make the prosecution of individual actions economically feasible."

The lawsuit asks the court for a jury trial with hopes to compel Sony to remove the intercompany charge for international sales and include 100 percent of income in the accounting.

Sony Music did not immediately respond to request for comment on the suit.