Universal Music Settles Key Fight Over Eminem Royalties... With Secret Agreement
from the of-course dept
For years, we've been covering a key legal fight in the music business, involving Eminem's producers, FBT, and Universal Music, over how much was owed on iTunes sales. The key issue: is an iTunes purchase a "sale" or a "license." Older music contracts that predated the internet era tended to focus on sales, in which artists tend to get about 15% royalties. "Licenses," on the other hand, tended to be for things like commercials or movies, but commanded around 50% royalties. But when you talk about iTunes songs, you can make somewhat compelling cases that it's either a sale or a license, depending on which details you focus on. Universal Music, of course, insisted that it was just like a CD sale. FBT argued it was just like a license. There are a ton of other similar lawsuits ongoing, but after losing at the district court level, FBT won on appeal. That resulted in a somewhat insane and contentious fight over how much Universal would have to pay up, with a judge slamming Universal for hiding revenue with tricky funny money accounting, and even trying to expense the cost of this very lawsuit back against what they owed.However, the damages phase of the case was set to go to trial in the spring, and it would have (1) revealed an awful lot about the blackbox of Universal Music's accounting practices and (2) given a roadmap for the many other similar lawsuits against Universal Music (and the other major labels). Given that, it should come as no surprise that Universal Music scrambled to come up with a way to get FBT to settle... with the terms of the settlement being secret. This almost certainly means that UMG paid through the nose, with the hope that it makes it more difficult for other artists to get similar rewards, and while allowing Universal to keep its secrets secret... for now.
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Filed Under: eminem, license, royalties, sale, settlement
Companies: fbt, universal music
Reader Comments
The First Word
“Licence vs Sale
For all those claiming its a Sale and this is a ridiculous law suit, please keep this in mind:Universal (and the other majors) say it's a Sale when thay are paying Artists (giving them the 10%), but still say its a License when the idea of selling your iTunes collection (or part-there-of) comes up. So when the majors make two contradictory arguments in the hope of maximising their profit they deserve to get burnt in a case like this.
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Re: Re: Licence vs Sale
Let me make this simple: the only way a seller gets to dictate what you can and cannot do with what you just purchased is if said purchase is not a sale, but merely a licensing agreement between seller and buyer.
With a sale, the seller loses all control of the product as soon as the buyer receives it, and can, at most, declare that they are in no way responsible for any harm that might occur due to miss-use of their product
Now that we've gotten the terms listed, the problem here is that the *AA's are trying to have it both ways. They are trying to treat a purchase of a CD or .mp3 as a sale when it comes to determining what percentage of the purchase price that the artist gets paid, but a license when it comes to being able to determine what the purchaser can and cannot do with the CD/mp3 they just paid for.
It. Can. Not. Be. Both.
This is not a difficult concept. If they want it treated as a sale, with the drastically smaller cut going to the artist, then they lose any control over the product as soon as it's purchased.
If, on the other hand, they want it treated as a license, with the drastically larger cut going to the artist, then, and only then, do they get to have any say in what the customer can do with their purchase once it's been paid for.
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