A court in Amsterdam has ruled in favor of Dutch artist Mr. Probz (aka Dennis Stehr) and his record label Left Lane Recordings in summary proceedings filed against Sony Music Netherlands.
The court ruled that Sony failed to fulfil its contractual obligations regarding license agreements entered into in 2013 and 2014 by Mr. Probz and his label with Sony Music and Ultra Records.
The ruling follows last week’s news that Sony Music has agreed to pay $12.7 million to artists in a class action lawsuit in the US brought by the estate of 1950s pop star Rick Nelson.
Stehr (Mr. Probz) is the founder and owner of Left Lane Recordings.
His global breakthrough came in 2013 with the hit Waves and the Waves-Remix by EDM German EDM producer Robin Schultz. The two tracks have over 800m streams between them on Spotify.
Friday’s ruling concerned these two songs and others, for which Mr. Probz’ label owns the rights.
According to the preliminary judgment filed on Thursday (September 10), obtained by MBW and which you can read in full here, Left Lane Recordings and Sony Music NL entered into an exclusive licence deal for Waves and the Waves remix on 1 November 2013.
Sony Music NL then released the Waves remix at the start of 2014 and the track became a No.1 hit in various European countries including the UK and Germany and also reached No.1 on the Billboard Hot Dance/Electronic Songs.
In May 2014, Sony Music NL, Left Lane Recordings and US-based, Sony-owned dance label Ultra Records signed an addendum to the Waves license deal – outlining various amendments, including royalty increases.
Last week’s judgment notes that in March 2018, Mr. Probz’ then manager sent an email to Sony Music in which he “reported a number of alleged breaches on the part of Sony Music NL”.
These alleged breaches included a failure to apply agreed royalty increases included in the 2014 agreement between Mr Probz, Sony Music NL and Ultra in respect of Waves.
Sony was also accused of a lack of reporting of all neighbouring rights.
The manager, adds the judgment, requested a soft audit from Sony Music NL to see to what extent all income had been received from abroad.
In October 2019, accountancy firm Grant Thornton executed an audit of Sony Music NL’s books, “with regard to the statements furnished by Sony Music NL in the period January 2016 through June 2019”.
During the audit, Grant Thornton found that “Sony was unable to provide information relating to their international divisions at the time of the review although they were able to provide information held in Netherlands”.
Added Grant Thornton: “During the review, we were unable to verify revenue and deductions reported by Sony relating to their affiliate Ultra Records LLC (Ultra).
“Sony explained that the review should be addressed to Ultra directly while Ultra explained that the review should take place via Sony. We were therefore unable to establish whether revenue and deductions relating to Ultra are complete or valid. ”
“For many years, I thought I may have been wrong, but now the judge confirms that Sony Music has indeed acted wrongfully.”
Mr Probz and his label Left Lane argued that Sony Music NL had “an independent obligation to present a statement of all sales of the recordings, to apply the royalty agreements and to furnish half-yearly statements thereof”.
Sony Music argued that it has no control over other Sony affiliates such as Ultra Records and can only ask them for information.
In addition, Sony Music stated that it does not have to verify statements and payments from foreign affiliates and only has to advance the payment as soon as Sony Music actually receives the money from these affiliates.
However, the court ruled that ensuring a correct and complete settlement and timely payment of worldwide royalties is a core obligation of Sony Music’s and that the major therefore failed to meet its obligations by refraining from doing so.
The court ruled that Sony Music did not provide and execute correct, clear and timely payments of royalties owed to Mr. Probz.
Furthermore, the court ruled that Sony Music did not provide the artist with sufficient access to source data (“at source”) of other Sony affiliates.
As a result of the ruling, Mr. Probz was allowed to terminate the agreements with Sony Music and Ultra Records earlier this year and regains full control of his music. Sony Music is required to terminate its exploitation of the tracks as soon as possible.
“We dispute the claims made in this case and believe we have fulfilled our obligations to Mr. Probz in good faith. We are disappointed by the court’s ruling and we are in the process of reviewing all available legal options in response to this decision.”
Mr. Probz said: “For many years, I thought I may have been wrong, but now the judge confirms that Sony Music has indeed acted wrongfully.
“This ruling indicates that a record company that wishes to hold a worldwide license from an artist also has an obligation to be able to substantiate the worldwide revenues and has its own active obligation to make those revenues available transparently, to monitor them and settle them in a timely manner.”
A Sony Music spokesperson told MBW: “We dispute the claims made in this case and believe we have fulfilled our obligations to Mr. Probz in good faith. We are disappointed by the court’s ruling and we are in the process of reviewing all available legal options in response to this decision.”Music Business Worldwide