Singer Michael McDonald has joined the digital royalties fray with a suit alleging that Warner Bros. Records grossly underpaid him for downloads and ringtones.
McDonald, who performed with the Doobie Brothers and Steely Dan before launching a successful solo career with Warner Bros., is only the latest artist to allege massive shortchanging by his label on the digital side.
According to McDonald’s action, filed Monday in federal court in Nashville, Warner Bros. undertook such underpayment with a great degree of calculation.
“Warner has employed and continues to employ a host of unfair tactics and strategies in its dealings with McDonald and other royalty participants to minimize Warner’s exposure from the unlawful conduct at issue here,” the suit claims.
McDonald is the first Warner Bros. act to file an individual suit against the company. Tower of Power and Ronee Blakely both filed class actions against parent Warner Music Group earlier this year (Daily Variety, Feb. 6 and April 2).
Like nearly all of the more than a dozen acts suing their labels, McDonald claims he was entitled to a higher royalty rate of 50% of net receipts to be paid for licenses of “non-disc records.”
The suit specifically cites the 2010 appellate decision in the case of F.B.T. Prods. v. Aftermath Records, which said royalties for digital downloads and ringtones should be paid at the far higher level due for licenses. More than a dozen lawsuits launched in the wake of that ruling are pending.
In McDonald’s case and others, the action alleges, the label deliberately conspired to pay the musician and others at the lower royalty rate.
The suit claims that Warner Bros. “systematically eschewed its obligations to McDonald, similarly situated artists and others after Warner vetted applying policies and practices at issue in this matter at its highest corporate levels, analyzed internally the financial consequences of its misconduct in terms of additional profit to be made by Warner by avoiding its contractual obligations and formulated an opaque and artificial method for accounting for and paying its royalty participants for income derived from non-disc records.”
A WMG spokesman did not immediately respond to a request for comment.