In breaking news today, George Gershwin’s heirs are suing Warner Music for $15 million. According to the article, the Gershwin estate conducted an audit of Warner in 2007 and found fault with Warner’s licensing and registration practices in regards to the Gershwin catalog. The full article gives an example from the suit complaint as to how various commissions were taken off the top by foreign agents.
These types of issues come up often. A good attorney will know to build certain precautions into the contract language to limit many of these commissions and make sure you have adequate audit rights. Audits are expensive, but they can often be worth it by revealing accounting discrepancies and getting artists the money they are due.
If you are considering signing a contract involving payments and royalties, make sure you have a music or entertainment attorney review it carefully and keep tabs on the companies! Contact me if you need assistance with a matter like this.