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OCT
30
2 YEARS

UMG Reaches Settlement in Trendsetting Suit Over Digital Revenue from Eminem Songs

A 2010 ruling in this case led dozens of big-name musicians to sue such corporations as Universal Music Group to collect more money from iTunes sales, ringtones and the like.

Eminem
Jeff Kravitz/FilmMagic/Getty Images

Digital income. It's a topic that continues to cause fits in the music industry, and if there's one big moment when  record companies probably realized that a new day had dawned in their business, it was September 3, 2010, the day the 9th Circuit Court of Appeals handed down a huge decision in a path-breaking case involving the music of hip-hop superstar Eminem.

Two years after that appellate ruling, many other musicians have since brought claims over digital income.

Now, the case has settled. On Monday, FBT Productions and Universal Music Group informed a California federal court a resolution had been reached, putting to rest a dispute that has been closely followed throughout the industry.

If the birth of Napster pointed to change in the way songs would be distributed online, and if the rise of iTunes signaled that money could still be made in the selling of music, it was the 2010 appellate ruling in FBT Productions v. Aftermath that offered the fearsome prospect for many record labels that artists would soon be entitled to a much larger share of revenue generated by the exploitation of sound recordings.

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The case pitted Eminem's production team of Mark and Jeff Bass against Eminem's record label.

Originally filed in 2007, a jury verdict two years later was a defeat for the plaintiffs, but then the case went on appeal.

At the 9th Circuit, the judges ruled that a lower court had erred by not deeming the label's agreements with third-parties download providers as licenses instead of sales. For the music industry, the difference was enormous. Under typical licensing or leasing provisions of artist-label contracts, about 50 percent of collected revenue gets handed over to artists. Under sales provisions, it's usually not more than 15 percent.

After the ruling came out, the big question remaining in the FBT Productions case was the damages for improper royalty treatment. The case was remanded back to a district court as the parties, FBT Productions and UMG, continued to quibble with each other.

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After much delay over disputed packaging deductions, witness testimony and additional claims brought to the dispute, another trial was on track for April, 2013. The proceedings would have detailed the millions of dollars the Bass brothers felt they were owed plus the alleged way that a big music conglomerate like UMG apportions revenues between its foreign and domestic divisions before sharing the proceeds with revenue participants. In June, the judge in the case blasted UMG for attempting to "dupe" him.

But on Monday, the five-year-old lawsuit ended on private terms, and according to the plaintiffs' lawyer Richard Busch at King & Ballow, to the mutual satisfaction of the parties.

Other musicians continue to fight to apply the 9th Circuit ruling on "licenses" to their own contracts. Class actions from the likes of The Temptations and Rob Zombie are still being litigated. Other artists such as REO Speedwagon, Kenny Rogers, Sister Sledge, James Taylor and on and on have brought a barrage of lawsuits on this front. Some entities in the music business such as Sony Music have made class action settlements. Many others are fighting, pointing to contractual differences and recent agreements that could interfere with the hopes of artists attempting to put a bigger hand in the digital jar.

E-mail: eriq.gardner@thr.com; Twitter: @eriqgardner