Rock band Incubus signed a lucrative new pact with Sony Music Entertainment Inc. on Thursday, according to industry sources, ending a two-month legal battle that cast a spotlight on some of the record industry's more controversial compensation practices.
The Calabasas band in February asked a court for a release from a 1996 record contract, claiming the deal underpaid it. Sony countersued, saying the band owed four albums and had gone to court as a negotiating ploy.
Under Thursday's deal, Incubus -- which has received about $4.25 million for its hit recordings to date -- will get an estimated $8 million in advances for the delivery of its next album, sources said.
The pact requires the band to deliver two albums after that and provides Sony an option for a fourth, with an estimated $2.5-million advance due for each, sources said.
Sony also agreed to erase an estimated $3-million tab for unrecouped marketing costs, which the band owed before it could begin receiving royalty payments, according to the sources.
The agreement ends a standoff that had threatened to distract the new management of Sony Corp.'s giant music division as it undertakes a wide-ranging restructuring.
The company is in the process of laying off about 1,000 employees, or 10% of its staff, while it realigns executives under new music chief Andrew Lack and new head of U.S. operations Don Ienner.
The company and the musicians "have amicably resolved their differences, and will continue with their highly successful relationship," Sony and the band said in a joint statement.
Representatives for the company and the band declined to discuss the agreement, which was negotiated by Ienner, Sony Executive Vice President Michele Anthony, band attorney John Branca, and manager Steve Rennie.
Incubus, which signed a seven-album deal with Sony-affiliated Immortal Records in 1996, is one of the most popular rock acts on Sony's roster. Band members Michael Einziger, Brandon Boyd, Jose Pasillas, Alex Katunich and Chris Kilmore have sold an estimated 7 million albums and other recordings, generating some $75 million in revenue for Sony during the last seven years.
The band, which recently hired a new bassist after the exit of Katunich, has been writing songs and is expected to deliver an album for release on Sony's Epic Records label early next year.
The rockers are the latest stars to sue their label only to back down after receiving a hefty advance. Among those who have threatened or filed legal action are the Dixie Chicks, Beck and Luther Vandross.
The Incubus fight erupted after attempts to renegotiate the band's contract failed.
The band's lawsuit, filed in Los Angeles Superior Court, cited California's so-called seven-year statute, which says most entertainers -- including film, TV and sports stars -- generally cannot be tied to any company for more than seven years.
Major record labels secured an amendment that treats musicians differently. It allows the labels to collect damages for undelivered albums, a prospect that has kept many music artists bound to their labels for much longer than seven years.
To avoid testing the law in court, record companies have rewritten the contracts of some disgruntled stars, offering concessions in exchange for more albums.
In filing its lawsuit, the band claimed that it hadn't received fair compensation compared with the record giant. Sources estimated that the band's recordings since 1996 have netted Sony $35 million in profit, while the band had received only a little more than $4 million in advances, and no royalty payments.