Media Decoder: Getting a Slice of LimeWire’s Pie

The music industry scored a victory against online piracy last week by winning a $105 million settlement against the file-sharing network LimeWire. But where will that money go? And will any of it end up with the artists whose work was illegally downloaded?

According to the major record labels, which sued LimeWire along with their trade group, the Recording Industry Association of America, some of the LimeWire money — which the service’s creator, Mark Gorton, may have to pay personally — should and will go to artists’ accounts.

“We will share the settlement money with our artists,” the Warner Music Group said in a statement.

But artists’ lawyers and managers say they expect the process for retrieving that money to be difficult, and complain that although hundreds of millions of dollars have been collected through settlements with Napster, Grokster, Kazaa and other file-sharing services, little if any of that money has made its way to artists.

“I don’t remember any of my artists’ accountants ever saying, ‘Hey, guess what, we got a great bonus this month,’ ” Bob Donnelly, a longtime lawyer for artists, said about the previous settlements.

The most likely outcome for LimeWire’s money, according to lawyers and label executives, is that the record companies would divide the settlement according to their market share, and keep a large portion — perhaps half — of whatever remains after paying their considerable legal expenses (the case lasted five years). The remainder would be applied to artists’ accounts, probably according to their share of sales at the label. Artists who have recouped their royalty advances should receive checks.

But lawyers and managers say that it may take considerable effort for artists to recover their share, and some complain that even years after the Napster and Kazaa settlements, they have never been paid. Others suggest that artists with the most power over the labels — and the most powerful representatives — will have an advantage.

“It’s going to be the artists that make noise,” said Dina LaPolt, a lawyer for Steven Tyler, the
Tupac Shakur estate and others. “They are the ones that are going to get paid.”

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