Eminem Loses Lawsuit Against Universal Music: Jury Says Digital Music Sales Are Like CD Sales

from the so-much-for-that-plan dept

A few years back, a few bands, including Cheap Trick and the Allman Brothers sued their record labels claiming their cut of iTunes sales wasn’t right. It was basically a contractual suit. Since there are a million and one different licenses to deal with, the record labels were treating digital sales the same way they treated CD sales — of which the artists get a tiny tiny percentage. However, these bands noted that it seemed like digital sales was much more similar to a deal where they were licensing their music for use in another product — such as a commercial or a movie. In those deals, the bands get a much bigger cut. A little while later, Eminem filed a similar lawsuit — though somehow (great lawyers there…) thought that it was all Apple’s fault and sued Apple. It looks like that got sorted out eventually, and Eminem refocused the lawsuit on Universal Music. And… didn’t get very far. Last week a jury found that Universal Music was right: a digital sale is just like a physical sale, and thus the significantly lower royalty rate applies. You can bet pretty much every major record label just breathed a huge sigh of relief (even though an appeal is likely), because a ruling in the other direction would take away a hefty chunk of margin from their digital sales.

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Companies: universal music

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Comments on “Eminem Loses Lawsuit Against Universal Music: Jury Says Digital Music Sales Are Like CD Sales”

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27 Comments
R. Miles says:

Re: By that logic...

Piracy is then the equivellent of shoplifting.
The hell it is!
When someone shoplifts an item, it’s GONE. No one else can get the item.

When someone COPIES an item, the original is still there for OTHERS to copy.

Understand this.

Whether or not you agree about music sharing, copying music is not stealing.

Anonymous Coward says:

Re: Re: By that logic...

I was referring to a simplistic representation the leagal ramifications. If, according to the law, there is no difference between the physical media and the digital media, why then are the penalties different? When was the last time there were civil penalties for shoplifting?

It seems that the record companies want it BOTH ways.

R. Miles says:

Re: Re: Re: By that logic...

Do you think they will be mad if I go into the store and make a copy of all their cds?
No, they won’t be, because the moment you open them, you bought them.

By the way, do CD stores still exist? With a shrinking market, I would say those still in business are probably looking at extinction.

David T says:

A matter of time?

Given the decline of CD sales and the ever increasing channels of digital distribution, I wonder how much longer middlemen will be able to trade on artist’s fame.

Sooner or later people are going to recognize that the (ever diminishing)value labels add to the artist’s work isn’t worth the price.

Anonymous Coward says:

Re: Re:

Apparently under a un-cited ppt I have, distribution of Physical CD revenue is as follows:
9% Creators
46% Record Company
45% Retailers

Digital:
8% Creators
68% Record Company
15% Digital Service Provider
9% Credit Card Processing

Another article, originally cited from the book “Confessions of A Record Producer” has this breakdown for Physical CD sales:
$0.17 Musicians? unions
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead

Sigh. WalMart gets paid more than the artist does in royalties.

Osno says:

UM once again protecting artists from pirates?

Easy solution: Eminem should not sell new records via Universal Music. CD sales are so not like digital sales. Most of the associated costs of the plastic discs are gone, and that should go to the label and the artist, not just the label.

Oh, and btw: happy 30th anniversary, CD!

MAtt says:

Re: UM once again protecting artists from pirates?

Interesting idea. I would extend it to say that artists should begin to embrace the Internet and sponsor their own music on their own web sites, and forgo the traditional licensing practices which ball-and-gag their music from open distribution. Rich enough bands could very easily help the little guys (like popular local bands creating a local label for new artists; they can create a local web site).

Contrived commercial acts will always be around for record execs to exploit for the enjoyment of teenagers. “Real bands” should combine their efforts to overcome the radio-tv monopoly of the entrenched industry.

Anonymous Coward says:

If CD sales are down that much, seems like a guy like Eminem has the cash on hand to set up his own file server. On his new album he could put them up on his file server and charge like $.75 per song and bypass the record labels altogether. Cut a deal with ITunes and whatever other digital distributor for $.99 per song and that way he doesn’t even have to worry about royalties on physical media sales. He’s plenty wealthy as it is and would make a perfect test case for bypassing D-bags like Universal for digital distribution.

Overcast says:

By the way, do CD stores still exist? With a shrinking market, I would say those still in business are probably looking at extinction.

Believe it or not a new one just opened up not too far from me – but they are selling other stuff, like T-Shirts, Posters, and such – they shouldn’t have any issues staying in business with as much as my daughter begs me to buy more there.

Anonymous Coward says:

I don’t know why the labels are breathing a sigh of relief. This just means that it will be more attractive to contract with iTunes through a more direct channel. The main thing the major labels have now is promotion and influence over radio playlists. But the labels want radio broadcast to be labeled “piracy” and get paid for it. That means they will have less influence over the music that gets played as radio stations look for cheaper off-label record deals.

When will the labels stop trying to saw off the branch it is sitting on?

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