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Posted on Friday, January 30, 2015

Big Verdict for Funk Legend Sly Stone Puts Royalties in the Spotlight

Rock and Roll Hall of Famer Sly Stone has been awarded $5 million by a Los Angeles jury in a breach of contract case claiming that Stone’s former manager and business partners cheated Stone out of more than a decade’s worth of royalties. Stone is best known as the leader of the funk group Sly and the Family Stone, which he led to fame in the 1960s and 1970s with a number of big hits, including “Dance to the Music” and “Everyday People.”In 1989, a then-destitute Sly Stone was approached by manager Gerald Goldstein, who promised to revitalize Stone’s career. Goldstein proceeded to form Even St. Productions Ltd., of which Stone was made an employee and co-owner, and to which all royalties from Stone’s music were assigned. Although Sly Stone was supposed to receive a share of the royalties that Even St. Productions collected on his behalf, Goldstein and his attorney allegedly redirected and misappropriated the royalty revenue, and Stone received no royalty payments between 1989 and 2000. With evidence of alleged shady accounting practices coming out during trial, the defense’s argument that the royalty revenue went to paying off Stone’s IRS debt failed to convince the jury, who awarded Stone $5 million in damages.

This is an important verdict for artists, entertainers, and composers of all kinds; not only does it reinforce the importance of a creator’s rights to work generally, but also the strength of a creator’s rights to royalties specifically. This case also brings attention to the oppressive, one-sided deals many entertainers are presented with on a routine basis. In desperate times, the promise of a revitalized career sounds too good to pass up. However, it is certainly in every artist’s best interest to dig deeply into the terms of any management agreement to ensure that someone who promises you the world isn’t trying to take the shirt off your back. A verdict of this size reminds us that, even in an age rife with music piracy and digital consumption, the public recognizes an artist’s right to profit from his or her work, and disapproves of those who would take advantage of the artistic community.

Frank Gulino is an award-winning composer and attorney with Berenzweig Leonard, LLP. He can be reached at FGulino@BerenzweigLaw.com.

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