Big Verdict for Funk Legend Sly Stone Puts Royalties in the Spotlight

Rock and Roll Hall of Famer Sly Stone has been awarded $5 million by a Los Angeles jury in a breach of contract case claiming that Stone’s former manager and business partners cheated Stone out of more than a decade’s worth of royalties. Stone is best known as the leader of the funk group Sly and the Family Stone, which he led to fame in the 1960s and 1970s with a number of big hits, including “Dance to the Music” and “Everyday People.”

Photo: www.slystonemusic.com

In 1989, a then-destitute Sly Stone was approached by manager Gerald Goldstein, who promised to revitalize Stone’s career. Goldstein proceeded to form Even St. Productions Ltd., of which Stone was made an employee and co-owner, and to which all royalties from Stone’s music were assigned. Although Sly Stone was supposed to receive a share of the royalties that Even St. Productions collected on his behalf, Goldstein and his attorney allegedly redirected and misappropriated the royalty revenue, and Stone received no royalty payments between 1989 and 2000. With evidence of alleged shady accounting practices coming out during trial, the defense’s argument that the royalty revenue went to paying off Stone’s IRS debt failed to convince the jury, who awarded Stone $5 million in damages.

This is an important verdict for artists, entertainers, and composers of all kinds; not only does it reinforce the importance of a creator’s rights to work generally, but also the strength of a creator’s rights to royalties specifically. This case also brings attention to the oppressive, one-sided deals many entertainers are presented with on a routine basis. In desperate times, the promise of a revitalized career sounds too good to pass up. However, it is certainly in every artist’s best interest to dig deeply into the terms of any management agreement to ensure that someone who promises you the world isn't trying to take the shirt off your back. A verdict of this size reminds us that, even in an age rife with music piracy and digital consumption, the public recognizes an artist’s right to profit from his or her work, and disapproves of those who would take advantage of the artistic community.

Frank Gulino is an award-winning composer and attorney with Berenzweig Leonard, LLP. He can be reached at FGulino@BerenzweigLaw.com.

Are You Pirating Music Without Realizing It?

To most people, music piracy means illegally streaming or downloading a copyrighted work without payment to its creator. In other words, there is a realization that each and every illegal download of a song deprives the creator of payments he or she would have otherwise received through legitimate sales. This type of music piracy is obvious, because perpetrators are aware they’re getting something for nothing.

But what about lyrics? If you ever used the Internet to look up lyrics to a song, you might not have felt like you were depriving its writer of revenue. But the truth is that most websites featuring the lyrics of popular songs are not licensed by the works’ copyright holders, and therefore constitute duplication of protected works without permission or compensation. “But,” you ask, “so what? How am I taking money out of anyone’s pocket by looking up lyrics that are passively posted on the Internet?” While it’s true that the website rather than the consumer would be responsible for paying licensing fees to the artists, there’s a less obvious source of funds that might be going into the wrong pockets every time you take to the Web in search of lyrics: advertising revenue.

Some lyrics sites are heavily monetized by advertising, especially if they contain the lyrics of popular songs by frequently searched artists. With Web traffic metrics so easily accessible and certain demographics searching more frequently for some types of music than others, advertisers see popular lyrics websites a way to predictably reach a sizeable targeted audience. This can result in tremendous revenue for these otherwise passive websites that don’t actually sell any products or services. You can bet that, in an overwhelming majority of cases, the artists whose lyrics are featured won’t see a dime of the ad revenue made possible by such web traffic.

If that sounds like a surefire business venture to you, guess again. The National Music Publishers’ Association has already won judgments in excess of $7 million on behalf of its members against websites that feature unlicensed lyrics. There are a few websites out there that do post licensed lyrics, including LyricFind and MusiXmatch. Cut down on unwitting music piracy by seeking out a licensed source the next time you find yourself struggling to recall the lyrics to that song you just heard on the radio.

Frank Gulino is an award-winning composer and attorney with Berenzweig Leonard, LLP. He can be reached at FGulino@BerenzweigLaw.com.