UMG face more artiste digital royalty claims

June 2011

Artistes, record labels

Hot on the heels of FBT’s appellate court victory determining the Eminen producers a share of licensing income from digital sales, and another action launched in the same basis launched by the estate of Rick James, Universal Music Group has been hit with a class action lawsuit, filed by artists Rob Zombie, White Zombie, Whitesnake and Dave Mason, who allege they are owed what may amount to millions of dollars in additional digital music royalties, All of the lawsuits argue that record labels violated their contracts by considering a digital song a “sale” rather than a “license” of the recording and therefor arguing to move the accounting away from the labels preferred calculation of a percentage paid on the sale price (subject to royalty reducers) to the far higher rate of a 50% cut of profits for artists. The new lawsuit against Universal alleges 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. The first action in this area we saw was the Allman Brother action against Sony BMG which again alleged that the record label were not paying over royalties correctly – with the artistes claiming 50% of the net licensing and leasing income received from digital download stores, as the Allman Brothers believe they are contractually obligated

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