Last week Eminem’s lawsuit against Universal Music Group went to trial. Eminem claims that Universal is underpaying royalties on digital downloads through third-party distributors such as iTunes. Many record labels treat a music download like the sale of a physical CD which means that the record label pays the recording artist a royalty of about 12 to 16% of download revenue. Recording artists argue that a download is equivalent to a license meaning that the record label should split download income fifty -fifty with the recording artist. While this is the first time this issue has gone to trial, it is not the first time a recording artist has pursued the issue. The Allman Brothers Band and other recording artists pursued the issue in a New York federal court lawsuit against Sony BMG. The Allman Brothers-Sony BMG case did not make it to trial for consideration on the merits of the "is downloading more like a license or a physical product" questions. The Allman Brothers lost on technical contractual grounds.
The contract required them to object to royalty statements within two years from the date rendered and to commence a lawsuit with respect to any royalty statement within three years. The Allman Brothers lawsuit against Sony BMG did not comply with those deadlines and their suit against Sony BMG was dismissed. Refusing to let that first obstacle get them down, the Allman Brothers have another pending suit against UMG Recordings with similar royalty claims. The UMG lawsuit seeks payments from record sales from the group’s first label, Capricorn Records.
Here’s the Issue. . .
Not the First Time