19 Recordings, home to Kelly Clarkson, Carrie Underwood, Daughtry, Jordin Sparks and other former American Idol contestants, is suing its distributor, Sony Music, for what it claims has been a systematic underpayment of artist royalties.
The crux of the lawsuit is the rate paid for streamed music. Sony has been paying artists for streams at the much lower sales/distribution rate, as opposed to the transmission/broadcast rate 19 claims it should be paying. 19 is asking for $10 million in damages, although the actual discrepancy in what the artists would receive is closer to $3 million. 19 also claims other shady accounting practices, such as claiming that compilation albums are not albums and that Sony is "gaming" iTunes sales.
Although Sony distributes 19 Recordings for many of the earlier Idol contestants, music by more recent artists such as Phillip Phillips, Scotty McCreery and Candace Glover is distributed by Interscope, which is not involved in the lawsuit.
Source: Hollywood Reporter