Sony Music just recently filed a lawsuit against Rdio Executives over the Pandora deal. The major label alleged that Rdio executives induced content licensing extensions with misrepresentations, false statements, and concealment of an impending bankruptcy.
According to Billboard, in its newest court proceeding, Sony Music claimed that it was defrauded of millions of dollars after the on-demand service Rdio took an agreement with Pandora. It subsequently filed a Chapter 11 bankruptcy last November.
The lawsuit was filed in the New York City federal court. It pointed out Rdio Chief Executive Officer Anthony Bay, Rdio's General Counsel Elliot Peters, and Rdio Senior V in-charge of content licensing Jim Rondinelli.
Variety reported that one of the many reasons behind filing the bankruptcy was that Rdio was indebted of millions of dollars with the creditors. A few of Rdio's unsecured creditors included technology companies such as Shazam and Roku, as well as the music industry's major labels like Sony Music and Waner Music Group.
The bankruptcy filings at the time pointed out that Rdio owed Sony Music alone $2.4 million. However, the court case accused that the record label was actually owed $5.5 million in total.
Rdio Executives reportedly told Sony Music that the company was in the process of raising the new funding. It even sought the record label for a little more time to pay the owed royalties.
But it was said that the company did not disclose its negotiations with Pandora. Pandora even allegedly paid former Rdio CEO Anthony Bay and two other senior executives.
Sony Music alleged that Rdio purposely kept the Pandora negotiations secret and its impending bankruptcy. This was to hold back Sony from asking immediate payment of the $5.5 million and reminding of the extensions, as well as restructuring of payment obligations. Sony also claimed that a day before Rdio made its deal with Pandora, a renewal amendment was made, which gave Rdio the right to sound recordings up until March 31, 2017, as noted by The Holywood Reporter.
Meanwhile, Sony representatives Jonathan Sperling at Covington & Burlington, is now asserting the complaints of fraudulent inducement and unjust enrichment. The major music label also expressed its disappointment that the $5.5 million from the 2010 deal was not yet received, as well as the $2 million not received under the renewal agreement.
