There are lessons to be learned by fledgling NYC businesses from the recent legal battle over royalties between Blue Man Group and a collaborator.
If you are a New Yorker, or a tourist visiting New York City, then you probably know of Blue Man Group, a troupe of street artists that have grown into a global brand. The group has entertained millions annually. Recently, a collaborator and songwriter has sued them for breach of a royalty agreement.
Ian Pai’s lawsuit contends that the parties agreed he was entitled to a fixed percentage of box office revenue from performances allocated into a “pool” for composer royalties for 20 songs used in the original Blue Man Group show. Pai alleges that, over time, he noticed a significant decrease in the percentage allocated to the royalty pool and that he is entitled to more money for his songs.
Royalties are paid to legal owners of intellectual property, such as music used in musical compositions and performances. Often, the amount of payment is based on sales. For instance, when a record label distributes a song either by CD or online, a royalty payment is due as compensation to the owner of the property, patent, copyrighted work or franchise by those who wish to use it to generate revenue. In most cases, royalties are legally binding.
Mr. Pai also alleged that there exists an “industry standard,” or a criteria generally accepted within the field of song writing followed by the members therein, for royalties not lower than 6 percent. We believe Mr. Pai is referencing commonly-accepted arrangements for Broadway shows.
But, there’s another lesson to learn from this situation. It appears, given the statement regarding “industry standards,” that there may not be a written agreement between the parties in place in this case. This is a common mistake when friends enter into a business arrangement – always reduce your agreements into a written document to protect everyone involved.
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