Court Rules That Allman Brothers Band Action Against UMG Recordings Will Proceed

Court Rules That Allman Brothers Band Action Against UMG Recordings Will Proceed

Rejects UMG's Motion to Dismiss Case Seeking Millions for Underpayment of Digital Download Royalties and Refusal to Re-Negotiate Terms in Good Faith

NEW YORK, Sept. 16 /PRNewswire/ -- Judge P. Kevin Castel of the United States District Court for the Southern District of New York recently ruled in favor of the surviving original members of the Allman Brothers Band -- Gregg Allman, Butch Trucks, Jaimoe and former member Dickey Betts -- denying a motion to dismiss the case filed by defendant UMG Recordings.

"We are pleased that the Allman Brothers Band will now have the opportunity to show the court how badly UMG has treated the band and to finally receive a fair share of the many millions of dollars UMG has made from the band's work," said band manager Bert Holman. "The band made these classic recordings in the 1960s and 70s for its first record label, Capricorn Records. That label took advantage of the band's inexperience at the time, failed to pay royalties to the band members and Capricorn eventually went bankrupt from mismanagement. Polygram, UMG's predecessor, acquired the recordings out of that bankruptcy. By that time, these classic albums were already established hits and had recouped any recording expenses many times over. Polygram and its buyer UMG had nothing to do with the creation of these recordings, incurred no risk or cost, and never had to spend a dime marketing them or promoting the band. It is outrageous that UMG refuses to honor its contract with the band and pay a fair share of the money it receives when it licenses the recordings to third parties like iTunes and simply sits back and collects a fee whenever iTunes licenses a download."

Rather than pay the Allman Brothers Band at the rate specified for such licenses -- 50% of the revenues received by UMG for third-party uses -- UMG has paid the band at a much lower rate negotiated in 1985 for vinyl albums manufactured and sold by UMG through brick-and-mortar record stores. UMG also failed to fulfill its contractual obligation to renegotiate royalty rates and other terms three years after each release of a compact disc, or other product in a new format, featuring an Allman Brothers Band recording.

UMG filed a motion to dismiss the band's claims asserting that sales of digital downloads by third parties like iTunes or Amazon were identical to sales of vinyl records in record stores as defined in the parties' 1985 agreement and that a renegotiation in 1994 extinguished UMG's obligation to ever renegotiate royalty rates again. The court rejected all of UMG's arguments. Judge Castel ruled that the band's allegations about UMG's deals with the digital services, if true, were sufficient to present a valid claim for underpayment of royalties and noted that the court must analyze the terms of UMG's agreements with the various digital services to decide whether the band's allegations were true. Judge Castel also ruled that the 1994 renegotiation did not extinguish UMG's obligation to renegotiate rates for releases in new formats.

The case is now proceeding through discovery and is presently scheduled to go to trial in early 2010. The docket number in the Southern District of New York is 08-Civ.-7113 (PKC).

First Call Analyst:
FCMN Contact:

Source: Mitch Schneider Organization

CONTACT: Todd Brodginski, toddb@msopr.com, for Mitch Schneider
Organization

Web Site: http://www.msopr.com/

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Profile: International Entertainment