"There is no contest. Kesha has no case in regards to her contract but they can't afford the Adeles of the world out in the streets calling the label unsupportive," a source told TheWrap, who first reported the news. "The fact that this hasn't already been taken care of with Luke is confusing, especially from people in the building."
However, a rep for Dr. Luke tells PEOPLE, "This is not true. Luke has an excellent relationship with Sony. His representatives are in regular contact with executives at the highest levels at Sony and this has never come up."
A rep for Sony Music declined comment.
Last month, a judge denied Kesha's request for a preliminary injunction that would allow her to record and release music without Sony and Dr. Luke, whom the singer claims raped and drugged her.
The producer denied the allegations on Twitter, saying, "Kesha and I were friends for many years and she was like my little sister. It's sad that she would turn a contract negotiation into something so horrendous and untrue." Luke's lawyer has also denied Kesha's claims.
Reporting by JEFF NELSON and GILLIAN TELLING