Petition Hearing Denied In F.B.T. vs. Aftermath Digital Download Lawsuit

On September 7, after losing a lawsuit initiated by one-time Eminem producers F.B.T. Productions, Universal Music Group filed a petition for a rehearing in a case disputing the royalty rate artists are given for digital downloads. At the time the lawsuit was filed, artists were given roughly 12 percent from each work downloaded in digital formats such as iTunes or Amazon.com. The original 2004 lawsuit charged Apple and Aftermath (a subsidiary of UMG) with unauthorized distribution of 93 of Em’s songs in downloadable formats via iTunes. The suit called for both an increased royalty rate on the songs, and a share of Apple’s iPod profits since Eminem’s “Lose Yourself” was used in an iPod advertisement.

“The denial of rehearing is effectively the last word from the Ninth Circuit,” F.B.T. appellate counsel Daniel Asimow, told DigitalMusicNews.com. “We are very pleased with the Court’s decision as it vindicates our position that the agreements between record labels and iTunes and other digital music services are licenses, and record companies have to pay Eminem and F.B.T under the royalty provisions governing licenses of their products.”

Many newer contracts were written to give the 12 percent rate to signed artists, however if a legal precedent is set, artists under older contracts could file suits similar to the one won by F.B.T.

“After the year 2000, after iTunes got going, all the new contracts were revised,” explained former Sony lawyer Steve Gordon. “The new contracts say, ‘We don’t care if iTunes is a license or a sale. Whatever it is, you’re only going to get your 10 percent.’ All of the artists that are big sellers on the Internet are from more than 10 years ago. And that stuff is all subject to the older contracts. I think the Eminem case is going to have a profound effect in terms of getting more money from the record companies into the pockets of the artists.”