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'Carpenters' Band Sues for Unpaid Digital Licensing Royalties

Richard Carpenter, the surviving member of his famous band, the Carpenters, knew exactly where to go after settlement negotiations broke down between him and Universal Music Group. Carpenter has filed a lawsuit against UMG on his own behalf, and on behalf of the estate of his dead sister and former bandmate, Karen Carpenter, for unpaid royalties. The lawsuit alleges that UMG owes over $2.3 million in unpaid royalties to the group, and that's only going back to 2008.

The bulk of the unpaid royalties come from digital downloads, which UMG allegedly handled as if it were the sale of a physical record or other album, rather than a type of license. In 2010, the Ninth Circuit ruled in a case for the artist Eminem that downloads should be treated as licensing deals. Unfortunately for UMG, the Carpenters' contract called for a much higher royalty for licensing deals than album sales.

Digital World Royalties

In today's digital world, where nearly any type of content can be instantly downloaded onto a digital device, entertainment publishers had to devise new ways to generate revenue and profits. Because digital content is more aptly licensed than sold, new artists are no longer given the same type of lucrative licensing deals like artists in the past. Particularly as the digital age was emerging, record labels changed their contract terms to specifically treat digital downloads more like physical record sales, in terms of royalty percentages.

However, prior the age of the internet, artists like the Carpenters were given deals with 50% licensing royalties, as was the case for many other artists of the pre-internet era. To their credit, the brother sister duo had countless hits, won three Grammy awards and sold more than 100 million records.

Before filing the lawsuit, Carpenter hired an accountant to audit the digital sales and royalties, and despite attempting negotiations, and the law seemingly being on their side, UMG refused to offer adequate recompense to avoid the lawsuit.

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