The Notice is only a summary of the proposed settlement. The complete terms of the proposed settlement are set forth in the formal Stipulation and Agreement of Settlement (the “Stipulation”) which is on file with the Court and is also available on the Important Documents page.
The Court did not decide in favor of Plaintiff or Defendant. Instead, both sides, with the assistance of a mediator, agreed to this settlement. Settlement avoids the costs of a trial, and assures that settlement benefits go to Class Members. The Class Representative and its attorneys think the Settlement is in the best interests of the Class.
The Settlement is summarized below.
- The $12.7 million fund for foreign streams through June 30, 2019 (Past Settlement Relief)
$12.7 million, less certain deductions as may be approved by the Court, is available for Class Members on behalf of whom a timely and valid Claim Form has been submitted (“Authorized Past Claimants”). Authorized Past Claimants will be paid or credited their pro rata share of this fund based on the calculation described in FAQ 9.
- Additional Royalty for Foreign Streams as of July 1, 2019 (Prospective Settlement Relief)
For Class Members who qualify for Prospective Settlement Relief as set forth below, Sony Music Entertainment ("SME") shall add an additional royalty for Subject Recordings (as that term is defined in the Stipulation) equal to 36% of the royalty currently paid or credited to the Class Member (“Additional Royalty”) for foreign streaming of such Subject Recordings. This Additional Royalty is available only to Class Members who are party to a Class Contract (“Authorized Future Claimants”), provided that such Class Members shall not be Authorized Future Claimants—and thus the Additional Royalty shall not apply—with respect to any Class Contract for which another party to that Class Contract has timely submitted a valid Request for Exclusion, and with respect to any recording:
- for which such Class Member was paid a Foreign Streams At-Source Royalty as of the period ended June 30, 2019, or
- that is subject to an express contractual provision for a Foreign Streams At-Source Royalty that was in effect on or after July 1, 2019.
Authorized Future Claimants shall not be entitled to the Additional Royalty for Subject Recordings for any period for which such Authorized Future Claimant has provided a release with respect to royalty accountings for such Subject Recordings, nor shall the Additional Royalty apply to territories for which royalties on Foreign Streams were paid or credited as a Foreign Streams At-Source Royalty for the royalty period ended June 30, 2019.
Commencing no later than the application of the Additional Royalty for all Authorized Future Claimants, SME shall report royalties on Foreign Streams for all Class Members on a New Effective Rate basis. As detailed in the Stipulation, the New Effective Rate will be equivalent to the Effective At-Source Rate already being paid to each Class Member, plus any applicable Additional Royalty (see FAQ 9 below).
The Additional Royalty shall apply to the Authorized Future Claimants’ “all-in rate,” and thus SME (unless directed otherwise by an Authorized Future Claimant) will continue to pay third parties under so-called “Letters of Direction” based on the same proportion of an Authorized Future Claimant’s “all-in” royalty on which they are currently paid. Specifically, if an Authorized Future Claimant has, before July 1, 2019, requested SME pay a portion of the royalties attributed to a Subject Recording under a Class Contract to a third party (a “Letter of Direction”), then unless the Authorized Future Claimant directs SME otherwise in writing, a portion of the Additional Royalty attributed to such Subject Recording (“the Letter of Direction Deduction”) shall be deducted from the amount paid or credited to the Class Member’s royalty account, and will be paid or credited pursuant to such Letter of Direction. The Letter of Direction Deduction shall be a fraction of the Additional Royalty equivalent to the fraction in which (x) the numerator is the amount paid or credited under such Letter of Direction for foreign streams attributed to each such Subject Recording for the royalty period ended June 30, 2019, and (y) the denominator is the total amount of royalties for foreign streams attributed to each such Subject Recording for the royalty period ended June 30, 2019. Similarly, the Additional Royalty payable to “guest artists,” or other similar royalties payable to a Class Member that are deductible from the royalty payable to another Class Member shall continue to be deductible from the royalties payable to such other Class Member.
The Prospective Settlement Relief will be applied by SME regardless of whether a Claim Form is submitted. However, if a Class Member does not submit a timely and valid Claim Form, SME has one additional year to apply the new royalty rate (although the date from which that new royalty amount will be calculated will be the same even if a Claim Form is not returned).
In exchange for these benefits, Class Members agree to release SME and various affiliated U.S. entities, divisions, and joint ventures from all claims they in the past had, now have, or might in the future have against the Released Parties or any of them on the basis of, connected with, or in any way arising out of royalties credited or paid under Class Contracts with respect to foreign streams up to and including June 30, 2019. Except as expressly provided in connection with the Prospective Settlement Relief, nothing in this release shall be deemed to terminate, modify or cancel any provision of any Class Contract, each of which shall otherwise continue in full force and effect in accordance with its terms. See the Stipulation for the precise release language.