Eminem Wins Appeal Over Universal Music: iTunes Downloads Should Be Accounted Differently Than CD Sales
from the uh-oh-universal dept
Well, well, well. A few years back, we noted that Eminem’s publisher was upset about the royalty cut they were getting from sales on iTunes, and they eventually sued both Apple and Universal Music over this (though, I’m still confused why Apple is involved). The issue is a contractual one: as is standard in lots of recording industry deals, musicians make very little money from each album sold. However, when their music is “licensed” for other things — such as a commercial, movie or video game, they make a much larger percentage. The reasoning, of course, is that there are a lot more “costs” that go into making and selling a CD, which the label is taking on.
But here’s where it gets tricky: what is a sale via iTunes? Is that a “sale” like a CD (meaning a small percentage royalty)? Or is it a “license” like for a movie (meaning a much bigger royalty)? Conceptually, you can make a reasonable argument for either side. After all, from the consumers’ perspective, it’s very much like buying a CD. But… from a technological perspective, it’s really a lot more like licensing, since you don’t have the same production, physical goods, shipping and distribution costs. A jury originally sided with Universal Music, saying that it’s really just like a CD sale, and thus, the lower royalties should apply.
However, the 9th circuit appeals court has just ruled the opposite way, saying that the contract is “unambiguous” that iTunes sales count as a license, for which the higher royalties apply: