June 04, 2012 1:56pm PT by Eriq Gardner
Eminem Royalties Case: Producers, Record Label Argue Over Who Got Luckier
Coming soon to a California federal courtroom will be a trial where music producers Mark and Jeff Bass fight for tens of millions of dollars in compensation from Aftermath Records over digital downloads for Eminem recordings.
The case is one of the most closely watched in the music business, but what the trial will look like is far from clear.
At the moment, both sides are debating the witnesses and type of testimony that will be heard, and the conversation has moved from a discussion purely on the substantive legal questions at issue to an entertaining sideshow about Eminem's career, including who deserves credit for helping the rapper attain his superstar success and who was merely lucky enough to be along for the ride.
The dispute over whether the Bass brothers were cheated out of digital revenue first got to trial in 2009. The plaintiffs lost.
But in 2010, the 9th Circuit Court of Appeals ruled that the lower court judge had erred by denying summary judgment to the plaintiffs that a "licensing" provision of a contract applied instead of a "sales" provision when calculating royalties on downloads from outlets like iTunes.
The distinction potentially meant that the Bass brothers were owed a much larger percentage of royalties than they had received. The case was remanded down to the district court level to figure out what Aftermath owed -- here was one suggestion -- and since then, lots of other musicians have brought similar claims against their record labels.
A second trial will commence as early as this month, and in preparation, both sides are showcasing some of their sensitivities.
The dispute is first and foremost about boring ol' contractual interpretations and accounting calculations. But the plaintiffs want to give the jury some context, including the historical background of the case.
Aftermath doesn't believe that a trial is necessary at all, saying there are no facts in dispute. Despite the 9th Circuit decision, widely seen as a victory for musicians in digital royalty claims, Aftermath is basically declaring victory in this case, pointing to a judge's order that it is permitted to deduct distribution fees.
But if the case does get to trial, Aftermath fears that the proceedings will become another opportunity for the plaintiffs to go about "painting themselves as 'struggling musicians and producers' who 'discovered' and 'groomed' Eminem and who have had to persevere against the big bad record company trying to cheat them out of royalties."
The record label asks the judge to exclude "background" evidence as "irrelevant, prejudicial and (a) time-wasting sideshow" and specifically wants the plaintiffs' first witness, Joel Martin, who manages Eminem's publishing, to be forbidden from reprising for the jury's ears the "David vs. Goliath" tale.
All that said, Aftermath says that if a judge permits "background" evidence, it should be allowed to provide its own -- which, according to the company's court papers, means a jury would hear testimony that:
"Eminem is responsible for Eminem’s talent, and that Defendants have been responsible for (and have paid for) the marketing and promotion that has helped to sell Eminem’s records. The fact that Plaintiffs have been able to passively share in revenues generated by Eminem’s talent and Defendants’ marketing and promotion efforts rightly puts into perspective Plaintiffs’ exaggerated claims about their contributions."
Aftermath says it should also be allowed to introduce evidence that the Bass brothers aren't "struggling musicians" but have received tens of millions of dollars in royalties already and will continue to get more, "all because of the happenstance that they signed Eminem to an exclusive contract when he was an up-and-coming artist."
This, of course, drew an angry response from the plaintiffs.
"The jury will need to understand some background -- who Plaintiffs are, what their relationship is to Eminem, and the history of Plaintiffs’ dispute with Defendants culminating in the Ninth Circuit’s decision in favor of Plaintiffs -- but it will not need to determine whether Plaintiffs are deserving human beings or whether Plaintiffs have made enough money. Defendants do not explain -- because they cannot -- how the types of evidence about Plaintiffs’ wealth and supposed luck that featured so prominently in Defendants’ case last time around could be at all relevant to the remaining issues in the case. To the contrary, it would result in a distracting sideshow in which Plaintiffs would be called upon to present evidence about Defendants’ wealth and the extent to which they deserve it."
So there you have it. Both sides are accusing the other of making a prejudicial sideshow and are threatening to one-up the other with evidence about their adversaries' enormous wealth and luck. It's up to a judge to step in here and declare some order. Otherwise, the trial is going to devolve into an affair where the parties debate who is more useless in the music industry -- record producers or record labels.