Record Labels May Owe Artists Close To $2 Billion; Lawsuits Ramp Up With Rick James In The Lead

from the i'm-rick-james... dept

With the Supreme Court rejecting the appeal of Universal Music concerning how much it owes Eminem for iTunes sales, we expected a bunch of lawsuits to be filed, and that’s starting. The estate of Rick James has filed a class action lawsuit on behalf of other artists who also believe that Universal incorrectly paid them for similar digital sales.

If you don’t recall, the key question is whether or not digital “sales” are really “sales” or “licenses.” That’s because old record label contracts (the newer ones, not surprisingly, have been changed) gave artists a very small percentage of royalties on “sales,” which was supposed to be about CDs, vinyl and tape, and a much higher percentage on “licenses,” since there’s not much involved in a license. Eminem and some other musicians have been suing the record labels pointing out that iTunes and ringtones appears to be a lot more like a license than a sale, and thus they should get the (much) higher royalty rates, and the appeals court agreed with Eminem. I’m not sure the status of some of the other lawsuits in this space, but with this new class action, I’m sure we’ll be hearing about plenty of these lawsuits soon.

While Universal Music keeps insisting that the Eminiem contract was “unique” and had special language that makes the ruling only applicable to Eminem, clearly these other musicians do not agree. David Kusek has done some (ha ha) back of the iPad calculations to estimate the potential liability for the record labels at close to $2.15 billion.

Even if the estimates are a bit off, the record labels should be pretty worried about all of this. Of course, I can’t wait until the next time they want to insist that they’ve really only “licensed” the music you have rather than “sold” it to you, since they were arguing exactly the opposite of that in court…

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Companies: universal music

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Comments on “Record Labels May Owe Artists Close To $2 Billion; Lawsuits Ramp Up With Rick James In The Lead”

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57 Comments
Hephaestus (profile) says:

Boned I Tell You, Totally Boned !!! We're all gonna die ... okay maybe just the labels ;)

No matter what happens in this case the record labels are boned. They win, they lose artists. They lose, they lose almost half their profits from online sales.

Time to revise my prediction of when the labels will fail downward again … maybe I should just go with Thom Yorke’s its “only a matter of time — months rather than years — before the music business establishment completely folds” and be done with it.

Anonymous Coward says:

Re: Charlie is just whining

Please the artists are actually winning. Charlie is just whining.

The labels have backed themselves onto long narrow bridge with an Army of lawyers on either side and a river of boiling lava beneath. The only question is to whether either Army makes a deal with the labels and turns on the other Army.

Anonymous Coward says:

Record label exec: You know what? I am hurt. It hurts to be betrayed by artists like this.

Do you know how hard it is to spin numbers around to NOT pay you guys? I mean, we had to put the accounting and legal department into overdrive for three months to come up with creative ways not to pay you guys.

And now, after all we’ve done for you, you artists actually want to be paid? You think we are made of money? Lobbying is expensive!

Bunch of ungrateful *%$+#!

Anonymous Coward says:

Re: Re:

Agreed those ungrateful artists, 2.5 billions is an years worth of salaries for all those that support those ungrateful people, did they not think about all those sound engineers, secretaries, managers, publicists, video people who depends on us to pay them, who is going to hire those people now, those jobs are lost forever.

xs (profile) says:

Re: Precedent?

I don’t think you even need to wait for them actually arguing it all. If we can get their financial record showing how they are paying the artists on the online sales, and those records show the artists were been paid as though the online music were “sales”, then by implication, it means record labels were defining online music sales as “sales”.

At least that’s my shallow knowledge of law tells me.

G Thompson (profile) says:

Re: Re: Re:

Ah but then if they get money from lost sales/license costs from ‘the filthy pirates’ then the artists will be able to show that that money must also go to them too.

Which I predict will be the next lawsuit by artists no matter which way this current appeal goes/

Whatever way the labels are screwed, since it seems that the labels have been engaged in a major theft from Artists. A theft that is a real theft in the legal sense, though it is also called by its other legal name… Fraud

MrWilson says:

And yet despite lawsuits like this and a bunch of other scandals involving the labels screwing over the artists, the RIAA will still spread propaganda under the guise of “think of the artists!” They still pretend they represent the artists when nothing is further from the fact.

That’s like saying that corporations represent their workers or politicians represent their voters. Regardless of the process that involves these people coming to power, whether it be the illusion of voting or fronting the initial investments, it’s all a farce. These types of people only ever represent the interests of the greedy and power-hungry.

It’s like the labels are parents who starve their kids but then turn around and tell others in society that when they don’t give them money, those others are taking food out of their children’s mouths.

Anonymous Coward says:

Re: Re: Re:2 Re:

Record Label Executive: We must sue Limewire for…

**Camera zooms in**

R.L.E.: One Million Dollars!

**Whole world bursts out laughing**

R.L.E: What the…oh right. What I meant was, we’ll sue Limewire for…

**Camera zooms in**

R.L.E.: One Trillion dollars!

**Whole world bursts out laughing again**

WW: Oh, wait. Are they serious?

Another possible variant could be:

WW, after bursting out laughing: This is 2010. After the economic meltdown, that amount of money doesn’t even exist anymore!

So, in short, that is a joke.

MrWilson says:

Re: Re: Re:

Not paying billions of dollars to the people who actually make the music and for whose sake the labels have argued that they should exist.

I was also referring to all the previous scandals relating to the non-payment of royalties, payola schemes, and royalty fund embezzlement.

Also, I’ll be quite surprised if Limewire actually hands a big check over to the labels anytime soon.

Anonymous Coward says:

Re: Re: Re:2 Re:

Oh wait is Limewire and LLC’s?

Just do what any decent label or studio would do, abandon ship NOW!

ps: Is not for nothing all movies produced today have their own companies created as LLC’s, if anything goes wrong they just live that virtual company to sink and clean their hands off of it.

Quote:

Limited liability, meaning that the owners of the LLC, called “members,” are protected from some or all liability for acts and debts of the LLC depending on state shield laws.

Source: Wikipedia LLC

There is always a way around liability laws.

UPDATE:
Yup, Limewire is an LLC.
Lime Wire LLC

So Limewire has no money and it all has been transferred through payments to other parties, that ship can sink now and people can start a new LLC somewhere else LoL

I hope that LLC is in Texas that have some of the more liberal LLC regulations in the world, you can’t even find who is being one there.

Anonymous Coward says:

“Oh, don’t get all excited. Win or lose the entertainment industry will figure out some way to screw over the consumer.”

Joke’s on them. I stopped being a consumer of their crap a long ago. I buy 2nd hand CDs off of Amazon or Ebay if I really want anything they’ve produced. Most of my entertainment dollars goes to indy local talent.

Ken (profile) says:

Copyright as a commodity defeats the purpose of copyrights

Creators of works and copyright holders are increasingly becoming two different things. No one faults creators of works for being protective of their creations but when the copyright holder and the creator are separated it completely defeats the purpose of copyrights being an incentive to create. It may be time to make copyrights no longer a commodity that can be sold and assigned but a right like freedom of speech which only applies to the originator.

sam sin says:

same old crap. when the labels do the stealing, it is fine. when anyone else is accused of stealing (file sharing) all hell breaks loose with ‘the artists are losing out, they wont be able to produce anything new, cant afford to eat’. gimme a break!! if there really are rules, dont apply them at certain times only when it suits, to certain people only when it suits or under certain circumstances only when it suits. and definitely dont condemn people for doing something that you (the industries) are actually doing, and to their own people as well!

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