Judge Slams Universal Music For Trying To 'Bamboozle' Court & Producers Over Eminem Royalties

from the but-that's-how-the-labels-work... dept

We've had plenty of discussions about shady RIAA accounting, and more and more of that is coming out in public following a series of lawsuits that concern both how the major labels account for digital sales (is it a sale or a license?), but also in how they calculate overall royalties. One of the most high profile of these cases involves Eminem's producers, FBT Productions, which was the first of these cases to rule that digital/iTunes sales were "licenses" and not sales (and thus required Universal Music to pay much higher royalty rates: 50% as opposed to ~15%). Of course, as the case has moved on to other stages, it's increasingly revealing some of the many, many shady practices that Universal Music has been using to try to hide revenue from Eminem -- including trying to expense the cost of this very lawsuit against his earnings.

The latest news is that a judge has completely slammed Universal's latest attempt to hide money from FBT, after it came out that Universal had inserted what appeared to be a minor definitional piece into a summary judgment action earlier in the case, which it's now using to claim that FBT should only get a cut of 29% of revenue, rather than 100% or revenue. The details are a bit technical, but as THResq explains:
Last autumn, Universal brought a motion for summary judgment on the phrase "our net receipts" in the agreement in question. In response, the judge ruled that "our" referred to Aftermath. So Universal says the judge's ruling means FBT has to live with what Aftermath gets (29 percent) instead of what Universal gets (100 percent).
However, Universal also has some sort of tricky accounting going on for foreign receipts, in which Aftermath only gets 29% -- so now it's arguing that it only has to pay out the 50% on that 29%, rather than on the full 100%. The judge reasonably went ballistic at this obvious attempt to trick the court and FBT, and to effectively sneak through the provision defining "our net receipts" earlier:
"Furthermore, the Court is deeply troubled by Defendants’ argument. While it is hard to see what FBT could gain by feigning ignorance, it is now quite apparent what Defendants could hope to gain by bamboozling the Court and Plaintiffs on this issue. Defendants’ current stance makes it appear as though Defendants carefully inserted the issue into the motion for summary judgment before they had notified FBT or the Court of what percentage of the revenues from foreign sales of permanent downloads and mastertones would be paid to FBT. An attempt to dupe the Court into a premature ruling will not serve as the basis to deny FBT an opportunity to challenge Defendants’ accounting practices."
This does not bode well for Universal in this case, however it is yet another example of the tricky math that the RIAA labels like to use in screwing over artists. It's good to see more and more of this coming out in public, though it's really quite amazing the lengths that these labels (mainly the majors) will go to in order to keep money from artists, using all sorts of suspicious accounting and legal tricks. The deceptiveness here is clearly planned out, and they seem almost proud of how clever they are in screwing over artists. It's stunning. In an era where more and more artists are realizing that having a label is now an option not a requirement, publicly trying to screw them over on royalties is not exactly a path to success.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    MrWilson, Jul 2nd, 2012 @ 8:53am

    RIAA to pirates: "Stop stealing from artists. That's our business model!"

     

    reply to this | link to this | view in thread ]

  2.  
    icon
    Josef Anvil (profile), Jul 2nd, 2012 @ 8:55am

    Help is on the way

    Eminem should contract David Lowery as a consultant on ethics in the music business.

     

    reply to this | link to this | view in thread ]

  3.  
    identicon
    Anonymous Coward, Jul 2nd, 2012 @ 8:58am

    when will courts realise that they have been/are lied to at every turn by the entertainment industries? when will they learn that the people that are keeping money from artists is the entertainment industries? when are they going to realise that the so-called 'damage' down to the industries and the artists is by the industries themselves, not done through 'piracy'? when are they going to realise that the entertainment industries do nothing but lie, cheat and deceive anyone and everyone in order to maintain their hold over the artists and the public and they need to be made to stop? being prevented from continuously relying on the courts (using lies as evidence) for help would be a good place to start!!

     

    reply to this | link to this | view in thread ]

  4.  
    icon
    weneedhelp (profile), Jul 2nd, 2012 @ 9:01am

    Re:

    I guess if you actually buy the music on CD then the argument could be made you are receiving stolen goods.

     

    reply to this | link to this | view in thread ]

  5.  
    icon
    lucidrenegade (profile), Jul 2nd, 2012 @ 9:11am

    "We've had plenty of discussions about shady RIAA accounting"

    Wouldn't that be "slim shady" in this case? :0)

     

    reply to this | link to this | view in thread ]

  6.  
    identicon
    Anonymous Coward, Jul 2nd, 2012 @ 9:16am

    Re:

    Thanks! You went there so I didn't have to.

     

    reply to this | link to this | view in thread ]

  7.  
    identicon
    Anonymous Coward, Jul 2nd, 2012 @ 9:17am

    This is ultimately why some artists have stood up in support of services like megaupload. Ultimately the RIAA and big corporations like these are much more detrimental than piracy.

     

    reply to this | link to this | view in thread ]

  8.  
    icon
    Hephaestus (profile), Jul 2nd, 2012 @ 9:22am

    Re:

    A lot of them have. The problem is proof. With out that it is just speculation and can not be acted upon.

     

    reply to this | link to this | view in thread ]

  9.  
    identicon
    Anonymous Coward, Jul 2nd, 2012 @ 9:24am

    Re:

    I see what you did there

     

    reply to this | link to this | view in thread ]

  10.  
    icon
    Hephaestus (profile), Jul 2nd, 2012 @ 9:25am

    I wonder why no one has ever thought to file a class action lawsuit against the labels for the sort of accounting they do.

     

    reply to this | link to this | view in thread ]

  11.  
    icon
    The eejit (profile), Jul 2nd, 2012 @ 9:35am

    Re:

    The RIAA EULA strictly forbids it - they must negotiate directly with their label. And by "negotiate", I mean, "Bend over and take it".

     

    reply to this | link to this | view in thread ]

  12.  
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    Rob (profile), Jul 2nd, 2012 @ 9:36am

    What do the courts expect? They're artists not mathmeticians...

     

    reply to this | link to this | view in thread ]

  13.  
    identicon
    Anonymous Coward, Jul 2nd, 2012 @ 9:42am

    The Music Industry is Financed By Slavery

    RIAA ... "stealing from artists (is) our business model"

    If this weren't true (it has been an open secret for decades), it would be hilarious.

    Overt slavery is only dead if the determination of whom to enslave is based solely on race. Otherwise, it is alive and thriving in the old-school music industry (and many others).

     

    reply to this | link to this | view in thread ]

  14.  
    icon
    TtfnJohn (profile), Jul 2nd, 2012 @ 9:45am

    Like the major film studios as far as paying the creators goes Universal and other RIAA members all agree that 1+1 = -3 so that the artist ends up paying them!

    Kinda like income tax that way so it's gotta be legal.

     

    reply to this | link to this | view in thread ]

  15.  
    icon
    The eejit (profile), Jul 2nd, 2012 @ 9:54am

    Re:

    The only difference between the two is that, if you don't pay income tax, you don't get free stuff. Like education.

     

    reply to this | link to this | view in thread ]

  16.  
    identicon
    Anonymous Coward, Jul 2nd, 2012 @ 9:56am

    Re: Re:

    Uh, there is massive proof. More than you could possibly ever use. This is just one tiny little instance, and the overarching phenomenon is so universal that people simply can't see it for how big it is.

     

    reply to this | link to this | view in thread ]

  17.  
    identicon
    Anonymous Coward, Jul 2nd, 2012 @ 9:57am

    I think artists should get 50% of the royalties anyway and the rest should be divvied up among other parties. They do the hard work and record labels profit, how is that right or fair?

    If I were a musician I would sell my work independently, let's face it the Internet makes that piss easy.

     

    reply to this | link to this | view in thread ]

  18.  
    icon
    The Spork (profile), Jul 2nd, 2012 @ 9:59am

    I've said it a million times

    the RIAA/MPAA are lying, cheating, greedy bastards. for their crimes against artists, they should burn at the stake or some other painful punishment.

     

    reply to this | link to this | view in thread ]

  19.  
    identicon
    bigpicture, Jul 2nd, 2012 @ 10:13am

    Re: Help is on the way

    Ethics - Music Industry = oxymoron

     

    reply to this | link to this | view in thread ]

  20.  
    identicon
    Anonymous Coward, Jul 2nd, 2012 @ 10:41am

    Re: Re: Re:

    Everyone can see it but it costs to much to litigate proof. I know and you know it but we need enough proven incidences to say "this is a huge problem lets fix it". Until we have enough tiny instances to lay side by side so they paint a nice big picture the industry just waves away our complaints and says, "Us? No we care about the artist."

     

    reply to this | link to this | view in thread ]

  21.  
    identicon
    Anonymous Coward, Jul 2nd, 2012 @ 10:53am

    Re: Re:

    if you don't pay income tax, you don't get free stuff. Like education.

    No, unfortunately that's not true. Those who do pay taxes foot the bill for everyone who underpays or don't pay at all. If your tax-evading parent's kid does not show up at his public school, they will haul him in because that hurts their bottom line.

     

    reply to this | link to this | view in thread ]

  22.  
    identicon
    Anonymous Coward, Jul 2nd, 2012 @ 10:56am

    Can we make it 'sales' on the supply side and 'licenses' on the consumer side? That would be sweet, thanks yer honer.

     

    reply to this | link to this | view in thread ]

  23.  
    icon
    Rick Smith (profile), Jul 2nd, 2012 @ 11:51am

    Re:

    I think you ask the wrong question. I believe most people already know this. But enforcement will continue until the laws change. And it’s very profitable and easy for the entertainment industry to buy themselves the laws. Certainly much cheaper than paying the actual artists since the number of people they have to payoff is small when compared to the number of artist they ‘employ’.

     

    reply to this | link to this | view in thread ]

  24.  
    icon
    Anonymous Coward of Esteemed Trolling (profile), Jul 2nd, 2012 @ 11:51am

    There is too much oxy in that collection of words.


    moron - Ethics = Music Industry

    There.... fixed it for ya !

     

    reply to this | link to this | view in thread ]

  25.  
    identicon
    Digler99, Jul 2nd, 2012 @ 1:58pm

    Re:

    RIAA: veracity is slim and accounting is shady.

     

    reply to this | link to this | view in thread ]

  26.  
    icon
    DanZee (profile), Jul 2nd, 2012 @ 1:58pm

    Great news

    Great news. Another example of a record company using the old shell game to NOT pay their artists exposed!

     

    reply to this | link to this | view in thread ]

  27.  
    identicon
    Anonymous Coward, Jul 2nd, 2012 @ 2:10pm

    It's a vampire industry, surely you can't expect them to just walk away with out a taste? Of course the tasting becomes the whole meal...

     

    reply to this | link to this | view in thread ]

  28.  
    icon
    That Anonymous Coward (profile), Jul 2nd, 2012 @ 4:11pm

    Re: I've said it a million times

    The labels/studios are lying cheating greedy bastards.
    The RIAA/MPAA are just the lobbyists paid to support the positions of the cartel members.

    I wonder if one could use kickstarter to fund bringing a former head of the RIAA/MPAA out of "retirement" to argue how horrible the business practices are.

    If you pay them, they will say anything.

     

    reply to this | link to this | view in thread ]

  29.  
    identicon
    Anonymous Coward, Jul 2nd, 2012 @ 10:19pm

    C'mon, googlypants! I'd like to see you defend this label!

     

    reply to this | link to this | view in thread ]

  30.  
    icon
    Niall (profile), Jul 3rd, 2012 @ 5:29am

    Re: Re: Re:

    No, because it's the law that everyone is educated. I don't know a single 'public' school that reckons "hey, I'm going to miss out on juicy government grants if little Johnnie doesn't come in today".

    There are always free-loaders in any system - the trick is to minimise them. Sometimes, they are 'allowed' free-loaders. Sometimes, the free-loaders are taking advantage of others. No system is perfect, so all you can do is decide which forms you don't mind, and which forms you want to campaign against.

    It would be a wonderful world (libertarian utopia?) if you only had to pay taxes for those services that you particularly want, or if everyone had a decent standard of living as an absolute minimum with no taxes. Sadly, we don't live in Star Trek's Federation, and we have to deal with the real world.

     

    reply to this | link to this | view in thread ]

  31.  
    identicon
    Anonymous Coward, Jul 3rd, 2012 @ 5:57am

    What do you expect lol they're trying to make as much as they can before they're obsolete.

    Their days are numbered and they have no place on this planet anymore.

    If I was the president I would round them all up and send their ass to Gitmo. They're the real terrorist lol.

     

    reply to this | link to this | view in thread ]


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