MUMBAI: In a potential landmark case, rapper Eminem’s production company, FBT Productions, and his label, Aftermath Records have agreed to settle a lawsuit over royalties with major label Universal Music Group (UMG) over payment for downloads. The terms of the settlement weren’t disclosed but in their request for a dismissal, FBT told the Los Angeles federal court that “this action has been settled to the satisfaction of all parties,” report said.
FBT initially sued Aftermath and its parent company, Universal Music Group, in 2007, with the production company claiming that song downloads should be considered licensed songs instead of physical sales (as the latter commands a much higher royalty rate). As such, the case has been closely watched by the music industry, as it will likely affect how labels and artists work together in the digital era.
In 2009, a jury rejected arguments by FBT Productions LLC that Eminem is entitled to half the net receipts the record company gets for the downloads, rather than his standard royalties from record sales. The producers, who first signed Eminem in 1995, get 40 percent of the royalties.
A federal appeals court in 2010 reversed the verdict, saying the trial judge had incorrectly denied a request by the producers for a pretrial ruling that the ‘masters license’ agreement for the recordings clearly applied to downloads and not the records-sold provision.
In the later part of 2011, FBT filed a motion saying it was seeking $1.5 mn in damages; the motion, however, was rejected by federal judge Philip Gutierrez, who said at the time that new damages would have to be calculated.
The case has the potential to radically change the business in the age of digital sales. According to Eminem’s contract – and many others drafted before digital sales were realistic – it is the difference between the artist being paid 50 per cent of royalties for a license or 12 per cent for a sale.
In the wake of Eminem’s lawsuit, many other musicians have sued their labels for millions of dollars in revenue for downloads and ringtones. Back in March, the band Toto sued Sony BMG over unpaid royalties, as did the Temptations with their label, Universal Music Group; other artists like Kenny Rogers, Peter Frampton and Public Enemy have filed similar suits against their respective labels.
Eminem, whose real name is Marshall B Mathers III, wasn’t a party in the case.
FBT Productions, owned by brothers Jeff and Mark Bass, signed Eminem to an exclusive recording deal in 1995. In 1998, they made a deal with rapper Dr Dre’s Aftermath Records, a unit of Universal Music, which released Eminem’s breakthrough album, ‘The Slim Shady’ LP.