Eminem Sued UMG, Ruling Could Give Veteran Artists More $

Eminem has sued his record label, the Universal Music Group. The issue is whether digital music is considered a licensing of his music and if so, he should be paid 50% in royalties as his contract stipulates. According to Ben Sisario in “Eminem Lawsuit May Raise Pay for Older Artists”, the contract is from 1995 and gives 50% of royalties for license and 12% of royalties for sales. So far, the lawsuit has ended with a ruling stating, “digital music should be treated as a license”. This is based on the argument that…

“…record companies’ arrangements with digital retailers resembled license more than it did a sale of a CD or record because, among other reasons, the labels furnished the seller with a single master recording that it then duplicated for customers.”

The significant point of the lawsuit is before digital music most music contracts gave artists large percentages of royalties for a license. Contracts did not evolve to include digital music until it’s rise in the 2000s. The lawsuit doesn’t affect new artists or contracts within the 21rst century. But for contracts that did not evolve, Eminem’s lawsuit could mean that many artists could reap more in royalties. This includes the vast amounts of artists with contracts, as the article suggests, before the mid-90s.

Universal Music Group responded: “The case has always been about one agreement with very unique language… As it has been made clear during the case, the ruling has no bearing on any other recording agreement and does not create any legal precedent.”

It seems Universal Music Group is attempting to tame the belief that many artists whose contracts state a 50% royalty agreement for licensed music and their digital music is selling might be calling to ask for their money. We won’t know the true effect of Eminem’s lawsuit until more artists and articles come forward about royalty disagreements. This lawsuit exhibits the very reason that changing business practices to evolve with technology is smart and if a business is able to intuitively assume the movement of technology, they could eventually save themselves from future trouble. Could the record industry foresee a move from CDs to MP3s? Maybe. But did they think a 50% royalty agreement would bite them in the behind? No. And now they might have to pay up.

So, the lessons are 1 try to move forward with technology and make moves to cover your ass(ets) as technology advances; 2 don’t make false promises in a negotiation or contract assuming a situation will never happen in which the promise can be fulfilled; and 3 as things change always refresh your memory by rereading a contract because you may find a golden opportunity as Eminem did.