April 18, 2024

Media Decoder: Suit Seeks Higher Royalties From Universal Music

Two months after Eminem’s producers won a case against the Universal Music Group over how royalties are computed for digital music, more artists have followed with complaints that they are owed what may amount to millions of dollars in unpaid earnings.

Last month, the estate of Rick James sued Universal, and on Wednesday, Rob Zombie, White Zombie, Whitesnake and Dave Mason — four prominent rock acts whose work spans decades — filed a class-action suit against Universal in United States District Court in San Francisco.

In all of these cases, the artists or their associates say that their record company violated their contracts by counting a digital download as a sale instead of a licensing, which would result in a substantially higher royalty. Recording contracts vary, but most artists get a royalty of 10 to 15 percent for the sale of a CD, minus many deductions, while licenses pay a royalty of 50 percent and may not be subject to the same deductions.

The class-action suit accuses Universal, the world’s largest music company, of unfair business practices by knowingly miscalculating royalties. The suit claims the label “analyzed internally the financial consequences of its misconduct and cast it in terms of the additional profit to be made by UMG by avoiding its contractual obligations.”

A spokesman for Universal said in a statement: “This complaint suffers from serious flaws and weaknesses, not the least of which is that the claims asserted are not appropriate for class treatment. We will vigorously defend against it.”

Entertainment lawyers say that more suits may be coming against Universal and other labels.

The cases reveal a contractual technicality of little concern a decade ago that is now significant with the growth of digital music.

In contracts signed before the early 2000s, there was often no provision for digital sales, and in these and other suits, lawyers have argued that sales from iTunes and other retailers should fall into the category of a license. Last year, in the Eminem case, a federal court agreed; in March, the Supreme Court refused to hear an appeal, letting the lower court’s ruling stand.

The class-action suit filed this week seeks unspecified damages, although it also includes some estimates of how much more it wants Universal to pay.

“A decent rule of thumb is that for every dollar UMG actually accounts for and pays,” the complaint says, “it should be accounting for and paying or crediting anywhere between two and three (or more) dollars.”

The suit claims that Universal could owe its artists “tens of millions of dollars or more each year.”

Article source: http://feeds.nytimes.com/click.phdo?i=37e7b2ddfefad8f1dc83a53c13e70e16

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