Universal Music Group is close to settling a court case that states the company cheated artists out of digital royalties.
“The putative class action from artists including Chuck D. of Public Enemy, Rick James (by way of trust), Dave Mason of Traffic, Whitesnake, Andres Titus of Black Sheep, Ron Tyson of The Temptations, among others, alleges that record labels should be treating digital download income off of venues like Apple’s iTunes as ‘licenses’ rather than ‘sales,’” The Hollywood Reporter says. “By accounting the other way, the artists get about 15 percent of collected income rather than 50 percent they allege is due.”
UMG is to submit a settlement for approval by April 10. If the settlement goes through, UMG will be added to the list of major labels who have had to pay out.
“Following settlements by Warner Music and Sony, UMG’s deal if approved would mean that all of the record majors have resolved claims following the 2010 appellate ruling in F.B.T. Productions v. Aftermath — dealing with Eminem songs — which suggested that ‘licenses’ rather than ‘sales’ were the more appropriate accounting treatment in an era where record labels no longer spend huge amounts on packaging physical CDs,” The Hollywood Reporter says.
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The distinction between licenses and sales was in question during an a case involving Eminem’s producers and Aftermath.
“A 2010 ruling made a distinction between a licensing and a sales provision when determining royalty payments from digital downloading services such as Amazon.com and iTunes,” HipHopDX reported in 2010. “According to sources familiar with the case, those small changes in language could add up to tens of millions of dollars in royalty payments.”
The size of the UMG’s settlement has not yet been commented on.
