It might seem like ages ago but once upon a time American Idol winners and contestants regularly hit the Top 10 with their songs and become big stars and major moneymakers. Those days of almost assured hits out of Idol may be waning but there is still money on the table from those who hit the tune jackpot. Which is why the music company affiliated with Idol producers 19 Entertainment today took Sony Music to court for royalties that it alleges Kelly Clarkson, Carrie Underwood, Chris Daughty, Clay Aiken and other Idol alumni are owed – especially in the digital realm. In the breach of contract compliant (read it here) filed today in federal court in NYC, 19 Recordings are seeking compensatory damages of more than $7 million, pre and post-judgment interest of “at least $3 million” plus legal and organizational costs and whatever else the jury will give them. ”It was very important to my clients to protect their artists, and we look forward to pursuing this,” attorney Richard Busch told me today after the suit was filed. The Nashville-based lawyer at King & Barlow is representing 19 Recordings in the matter.
“Sony has failed to comply with the terms of the Recording Agreements, and failed to fulfill its obligations under the Recording Agreements, by failing to properly account to and pay 19 royalties for licensing, sales, and other exploitations of the … Read More »
Nearly a year after Sony Pictures and the PlayStation Network faced targeted hacking attacks, it has emerged that Sony Music had its own breach in the US in 2011. Two British men appeared in a UK court on Friday over charges they illegally downloaded more than 50,000 Sony Music files – most of them by the late Michael Jackson. The duo was arrested last May, just a month after Sony faced a massive breach to its PlayStation Network and a month before website Lulz Security claimed it had broken into SonyPictures.com. The alleged British hackers are said to have stolen the Jackson music, including many unreleased songs, and works by other artists. In 2010, Sony and the Jackson estate signed the biggest recording deal in history giving the company the rights to sell the singer’s entire back catalog along with previously unreleased tracks. Sony is said to have realized the songs had been compromised during routine monitoring of Jackson fansites and hacking forums. The Britsh men have denied the allegations and are due to stand trial next January.
With 350M Sony networked devices including TV sets and PlayStation game consoles expected to be in the market over the next two years “right now that integration has never made more sense,” Sony Corp Of America CFO Rob Wiesenthal told investors at the UBS Annual Global Media and Communications Conference. ”The momentum is there and the capability is there. …You want to maximize the value of all these assets by keeping them together.” He says that the company is approaching $1B in revenue this fiscal year from its PlayStation Network and Sony Entertainment Network. He’s also optimistic about the recent Sony/ATV deal to pay $2.2B for EMI’s music publishing operation which includes rights to 1.3M songs. The plan is still a little mysterious. “We’re coming up with a structure that we haven’t disclosed yet” to make music publishing a separate company. Still, he notes that “music publishing rights are a critical element of any music business” — with revenues that can come from just about any show or device that plays tunes. He also says that he’s encouraged by prospects for the overall music industry, even though it’s just a shadow of its former self. He says that music video site VEVO “is worth a fortune” and adds that “you’ll see music companies incubate new services.” He notes that “a lot of our business now is related to TV” through shows such as The X Factor and America’s Got Talent. In addition to … Read More »
Apple made a major improvement to its digital music service today as it introduced iTunes Match. For $24.99 a year, iTunes will scan a user’s mobile gadget or hard drive, identify its recordings — including those copied from a CD — and then make them available on iCloud for streaming to any Web-enabled device running iTunes software. The company says iTunes already has 20M songs, and will upload “only what it can’t match.”
The announcement precedes Google’s expected unveiling tomorrow of its own music store. It will enable buyers to download tunes, and stream them from remote servers. The company also has been lobbying record companies to make it possible for members of the Google+ social network to share tunes with their online friends. EMI has agreed to offer songs from its catalog on the music store, and Vivendi’s Universal Music “may be signed as early as tomorrow,” Bloomberg reports. The other two majors, Sony and Warner Music, are holding back until pricing and privacy concerns are resolved.
Sony Pictures’ strong performance in the quarter that ended in June stood out as the corporation reported a net loss of $191M on revenues of $18.5B, down 10% vs. the same period last year. Sony attributed the decline to the effects of this year’s earthquake and tsunami as well as lower-than-expected sales of TV sets and other consumer electronics. As a result, Sony lowered its net profit forecast for the year ending March 2012 by 25% to $771M.
Home video sales for The Green Hornet, Battle: Los Angeles, and Just Go With It as well as television ad revenues from India contributed to the $1.78B fiscal 1Q for Sony Pictures. The company says that the unit delivered $53M in operating profit, up 50.4% vs. the same period last year. Results were somewhat muddled at Sony Music due to currency exchange issues. Its profits were 61.4% to $149M on sales of $1.35B, down 0.6%. But the company says the slight drop is largely due to the appreciation of the yen vs the U.S. dollar. Factoring that out, the music operation’s sales were up 7%. Best sellers for the quarter included recordings from the TV show Glee, Adele’s 21, Beyonce’s 4, and Foo Fighters’ Wasting Light.
Based on the company’s generally disappointing financial report this morning, it looks like Sony CEO Howard Stringer will have to keep waiting to see a big payoff from the strategy to meld entertainment hardware and software. For the quarter that ended in March, Sony says the industrywide decline in DVD revenues and the lousy results for its Jim Brooks film How Do You Know partly accounted for the 11% drop in movie and TV sales, which came in at $2.1 billion. But operating profits at the segment were up 8%, to $433 million, due largely to belt tightening and a one-time $325 million gain from its revaluation of its 40% stake in the Game Show Network. That will come back to bite Sony next year: The company projects that movie and TV revenues will improve in 2012, but profits will be down without the one-time benefit.
At Sony Music, the company says the continuing slide in CD sales mean that revenues will fall once again in 2012 after dropping 13% to $1.3 billion in the first quarter of 2011. But the operation’s cost-cutting efforts enabled it to report a $46 million operating profit, up from a $7.4 million loss last year.
Sony warned this week that a $4.4 billion charge to account for costs from this year’s tsunami and earthquake, as well as the recent cyber-attack on its PlayStation Network, would trash earnings for the the fiscal year that ended in March. The company says it wound up with a $3.1 billion loss on revenues of $86.5 billion, down about half a percent. Read More »
American Idol host Ryan Seacrest’s fat contract with CKX — the quirky company that owns the rights to the show — seems to have done a number on Idol’s profits. Despite all the upbeat talk about Idol’s ratings resurgence so far this year, the show’s 1Q operating profit for CKX of $13.6 million was down 17% vs. the same period last year on revenues of $28.4 million, down 2%. Publicly traded CKX breaks out results for Idol because it accounts for about 53% of the company’s revenues, which also include licensing income for Elvis Presley and Muhammad Ali. The report is as good a barometer as you’ll find for Idol‘s economic performance: CKX collects a license fee from Fox, as well as revenue for Idol-related syndication, sponsorship deals, merchandise and its concert tours. But CKX’s 48% operating profit margin for Idol in the three months that ended in March was the lowest 1Q result for the show since 2006, when CKX began reporting the show’s finances. CKX says that its Idol-related expenses came to $14.8 million. That’s up 17% from last year — and 260% from two years ago. The biggest change appears to be the $45 million employment contract that CKX struck with Seacrest in 2009 that locks him in through 2012. CKX has already paid Seacrest $33.5 million; Fox, in turn, pays CKX $5 million a year for Seacrest. Read More »
As expected, Sony Corp announced that Doug Morris is the new chairman of Sony Music, replacing Rolf Schmidt-Holtz.