Billboard.biz says the case against Sony argues that download sales by a digital store like iTunes is a licensed arrangement and should be treated like other deals where music is licensed to third parties rather than CD sales.
The former sees 50% of net proceeds paid to the band whereas artist royalties for CD sales are generally in the range of 12-20% of wholesale.
The lawsuit has been filed in the US District Court for Southern New York on behalf of Toto, claiming that Sony has failed to account and pay 50% of net receipts from leasing Toto's masters to third parties, including music download and mastertone providers.
It also seeks a declaration that Sony is obligated to pay Toto 50% of net receipts for those uses and damages in excess of $605,000, according to the report.
Toto joins a list of artists suing the labels over online royalty payments including Sister Sledge Kenny Rogers, Peter Frampton and perhaps most famously, Eminem.
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