In a decision of major consequence to the music industry, a California judge ruled on September 28 that the estate of singer and actor Ricky Nelson can pursue a case against Capitol Records over the amount of royalties due from digital downloads of his songs. In the case which is pending in a Superior Court of State of California in Los Angeles, captioned as “The Rick Nelson Co. LLC v. Capitol Records LLC,” case number BC470812, the estate alleges that Capitol Records breached Nelson’s 1958 contract by underpaying royalties for music he recorded. The contract between Ricky Nelson’s estate and Capitol Records provides for a 10% royalty rate. However, the estate argues that the contract, dating back to 1958, does not apply to digital distributions of the music because it only referrs to “physical copies” of Nelson’s music. Attorneys for Capitol Records disagree, arguing that even if the 1958 contract only governs “physical” uses of a master recording, “We can still make reproductions of it in whatever format we like. That’s what digital distribution is.”
Although Judge O’Donnell did not make a final ruling on the issue, she tentatively ruled the estate could proceed with their case. According to Dr. Dariush Adli, the President of the Los Angeles based Adli Law Group, whose firm has handled many copyright matters, including a high profile case against Angelina Jolie that is currently pending in Federal Court in Los Angeles, “the issue of digital royalties has not been addressed in this context before. As such, this could be a very important and precedent setting decision.”
Nelson, who died in a plane crash in 1985, was a teenage superstar in the late 1950s to early 1960s and is known for such songs as “Hello Mary Lou” and starring in movies such as “Rio Bravo.”
The 1958 contract between Nelson and Imperial Records, which was later acquired by Capitol, defines a master recording as “any original recording, whether on magnetic recording tape or wire, a lacquer or wax disc, or on any other substance or material, whether now known or unknown” and gave Imperial the right to reproduce a master “by any method now or hereafter known.” According to Dr. Adli, “the issue is whether the parties to the contract reasonably foresaw the hugely different landscape of music production and distribution that we face today. The answer to that question will be determinative here.”

Dr. Dariush Adli
PRESIDENT/FOUNDER
Adli Law Group P.C