“The Eminem Case” May Affect How Much Money Other Artists Make

October 31, 2012  |  

It was called the “Eminem case” but the outcome can affect hundreds of other musical artists. It may also have an impact on pending lawsuits involving royalties for downloads and ringtones, says Variety.

As the New York Times explains it, producers who discovered Eminem sued his record label, the Universal Music Group (UMG), because of the way UMG calculated the artist’s royalties for digital music. The argument was over “whether an individual song sold online should be considered a license or a sale. The difference is far from academic because, as with most artists, Eminem’s contract stipulates that he gets 50 percent of the royalties for a license but only 12 percent for a sale,” the article says.

Now a resolution has been reached. F.B.T. Productions filed to dismiss its case against Universal Music Group and Aftermath Records after reaching a settlement agreement with the two music companies. This was most likely unwelcome news for artists who were hoping F.B.T, would prevail, which could have resulted in higher royalties to artists for digital sales and usage.

In September 2010, the Ninth Circuit Court of Appeals overturned a 2009 jury verdict favoring UMG in F.B.T.’s suit, filed against Aftermath and UMG in 2007.

“The F.B.T. case had been closely watched, for several class actions and individual suits had been launched in the wake of the appellate decision by artists – – most of them heritage acts with contracts dating in many cases back to the ’70s — who claimed they were also entitled to higher digital royalties. In nearly all cases, the actions cited the appellate decision as a precedent,” reports Variety.

Why all these suits? The plaintiffs claim that they are entitled to a royalty rate of 50 percent of net receipts, granted for masters licensed to third parties. As in the F.B.T. case, the plaintiffs have claimed that they were paid at a far lower royalty rate, according to the music business magazine.

Eminem isn’t the only artists wrapped up in a digital royalties case. There are acts that have been filed which include such artists as James Taylor, Peter Frampton, Chuck D of Public Enemy and the estate of Rick James. And all the major label groups have been sued.

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