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Eminem producers sue over digital royalties

By | Published on Tuesday 22 May 2007


Lawyers representing two companies that worked with Eminem – FBT Productions and Em2M – have begun legal proceedings against Universal and its Aftermath and Interscope divisions over a royalties dispute which has, at its heart, the previously discussed issue of what royalty artists should receive on digital sales of their music.

The new lawsuit, which doesn’t involve Eminem personally, is seemingly similar to that being pursued by The Allman Brothers, Cheap Trick and Elmo & Patsy against the Sony labels, and by The Youngbloods against the BMG labels, in which the claimants say that revenues generated from digital sales (downloads and realtone ringtones) should be treated more akin to revenues generated by licensing music to broadcasters rather than revenues generated by traditional record sales – which is an important distinction because artists receive a much bigger share of broadcast revenues than record sale revenues.

The cases against SonyBMG primarily involve recording contracts that didn’t foresee the sale of digital music and therefore don’t really state what the deal is with digital revenues. However, the new lawsuit claims that the 1995 recording contract between the claimants and Universal Music provides for a 50% royalty on digital revenues, although that claim does rely on an “other uses” clause, which may or may not stand in court. But if it does stand, FBT and En2M reckon they have been under paid royalties to the tune of $650,000 for the period 2002-2005 alone.

The SonyBMG lawsuit, which is still working its way through court, has become a class action suit, ie the artists pursuing it claim to represent the wider artist community which, of course, means a judgment in the artists’ favour would have a widespread impact on SonyBMG, and possibly all record companies. FBT and Em2M don’t seem to have any plans to go the class action route with their lawsuit, but if they are successful in winning a bigger royalty payment from Universal for digital sales a precedent will be set that could have a dramatic impact on the increasingly digital focused record companies’ bottom lines.

All of which means all these cases should be interesting to see, if and when they get to court.