Eminem strikes another win in digital royalties case
The ruling is in!
The US Supreme Court this week declined to hear an appeal from Universal Music Group, regarding how much it pays artists for digital music sales.
The case concerns whether the defendant record labels – UMG, Aftermath Records and Interscope Records – owed F.B.T. Prods, the outfit distributed by Interscope that discovered Eminem before he joined Aftermath Records, a higher royalty rate on music sold as digital downloads and ringtones or whether they are merely obligated to pay the same royalty rates traditionally used in physical sales.
The original district court first ruled against F.B.T.’s claims, but in September of last year, the Ninth Circuit held that the district court had improperly denied FBT’s motion for summary judgment and saw digital downloads as “licenses” rather than a traditional sale, which meant that FBT was owed as much as a 50% royalty rate instead of rates between 12 to 20% as is common with physical sales.
UMG tried to get the Ninth Circuit to rehear the case, but that motion was denied and so the record giant sought to bring the case to the U.S. Supreme Court, filing a writ of certiorari that petitions for a hearing. According to the petition, UMG wants the Supreme Court to consider the question of whether F.B.T. should have been allowed to appeal the district court’s summary judgment order after a full jury trial in the case.
This is in fact the first court ruling dictating how labels should pay digital royalties and since the issue has arisen, most new contracts have specifically outlined how much artists and labels make in digital royalties.
Note though that these legal arguments around the issue stems from older contracts, and other artists from Cheap Trick to Pink Floyd have also challenged how their old contracts apply to new methods of music distribution, so this is obviously a case that players in the record industry are following keenly.
