Eminem Wins Digital Royalty Case Against UMG, Mulitple Artists File Similar Suits

November 3, 2011

A court has ruled in favor of Eminem and FBT Productions in their case against Universal Music Group over digital royalties. The California ruling has opened the doors for multiple other acts to file against UMG, including a $100 million class action lawsuit led by rapper Chuck D.

According to The Tennessean, a federal court in California ruled that UMG could not deduct for digital royalties for the same reasons as physical releases, such as packaging and shipping. Labels instead should split their digital profits 50/50 with artists and producers, whereas previously acts were receiving roughly 12 percent of profits, following any deductions going to retailers.

The judge also shot down UMG's attempt to exclude Eminem’s most recent albums, Recovery and Relapse, from the case. Em and FBT could potentially be due millions in royalty payments from Universal.

UMG commented on the ruling in a statement to The Hollywood Reporter, saying, "The court has simply stated that the motion, which addressed a small part of the case, is more appropriately decided at the summary judgment stage rather than at the motion to dismiss stage. We believe that once the court addresses the merits of this case, we will prevail."

Following this decision, it was announced that Chuck D. was leading a class action suit against UMG, alleging that the label owes artists "hundreds of millions of dollars in royalties," according to TheWrap.com. The suit backs up the court decision that digital profits should be split 50/50 from digital music sales and ringtones.

According to the class action suit, under UMG's current accounting, artists and producers receive $80.33 for every 1,000 downloads, when the correct amount should be $315.85 per 1,000. For ringtones, it is currently $49.89 per 1,000 ringtones sold, when it should be $660 per 1,000 ringtones.

A similar class action suit has also been filed by rocker Rob Zombie and the estate of the late "Superfreak" Rick James, essentially making the same demands.