'Eminem case' settles digital dispute

Rapper Eminem performs onstage on January 31, 2010 in Los Angeles, Calif. The end of a long-running battle between the rapper's producers and Universal Music could mean a payoff for lots of artists.

You know the rapper Eminem? Well, his producers scored another win for musicians this week. They’ve been embroiled in a lawsuit with Eminem’s label at Universal Music Group.

The case revolved around one big question: Are digital music stores like iTunes “buying” music from Universal, much like a brick-and-mortar record store, or is they “licensing” it?

That distinction determines how much money an artist gets. If it’s a sale, depending on the musician, they get a 5 to 20 percent cut. But if it’s a license?

“Then the provision of a vast majority of contract says we pay the artist 50 percent,” said Jay Cooper, an entertainment attorney in Los Angeles.

Universal, and most major music companies, have argued that that digital downloads are sales. Eminens producers claimed otherwise, said Richard Busch, their attorney.

Busch argued that unlike physical product that is sold by a record label -- digital music sales don’t have incremental costs like the jewel cases, the physical CDs, the record cover art and such.

“Just like other licences, record labels have no incremental costs. They have provide a digital file to iTunes and iTunes then does the work,” Busch said.

The courts agreed and this week Universal and Eminem’s producers reached a settlement.

And that could be good for older artists, whose contracts were written up before the digital age, said David Given, an attorney representing musicians like Dave Mason, Traffic and the late Rick James in a class action lawsuit against the Universal Music Group.

“Good news as far as that goes, to the extent that it sorta sets the bar for anything we do in our case,” Given said.

About the author

Queena Kim covers technology for Marketplace. She lives in the Bay Area.

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