Universal Music Wins Eminem Royalty Lawsuit

The Los Angeles Times reported that a jury sided with Universal Music in saying that the company does not have to pay a higher royalty on songs.

“They argued that the songs Universal provided to online and mobile services amounted to music “masters,” from which infinite digital copies could be produced. As such, F.B.T. (the music producers) said it was entitled to a higher royalty rate (i.e. 50%) than the 12% they would otherwise receive on the sale of a song or music CD.

The jury sided with the music company’s interpretation that a song purchased online is no different from one bought in a store.
“It’s saying that the digital download is the modern version of a record sale,” said music attorney Fred Davis, founder of law firm Davis, Shapiro, Lewit, Montone & Hayes in New York, who was not involved in the lawsuit. “And the economics to the artist are the same for a digital download as they were for the sale of a single, back in the glory years.” (source: Los Angeles Times)
This case reminded me of a situation at a publisher whose standard contract provided for a 50% royalties on subsidiary rights and non-book sales. This meant, according to the publisher’s own lawyer, that he had to pay a 50% royalty on eBook sales.
It also brought to mind another case in which one publisher’s contract called for a higher royalty rate on bulk sales without defining what consituted a bulk sale. The author argued that a bulk sale was any sale of 10 or more copies.
The Eminim lawsuit against UMG (Universal Music Group) and the two cases that I mentioned above highlight the importance of defining what the terms stated in a royalty contract actually mean.

Eisner LLP Royalty Audit Services

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Author Wins Round In Royalty Dispute

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