Well, well, well. A hardly any years back, we noted that Eminem’s publisher was upset about the royalty divide they were getting from sales on iTunes, and they eventually sued <a href=”http://www.techdirt.com/articles/20070731/144136.shtml”>both Apple and Universal Music</a> over this (though, I’m still confused why Apple is involved). The issue is a contractual one: as is average in lots of recording industry <a href=”http://www.techdirt.com/articles/20100712/23482610186.shtml”>deals</a>, musicians constitute very small money from each album sold. However, when their music is “licensed” for other things — such as a commercial, movie or video game, they constitute a much larger percentage. The reasoning, of direction, is that there are a abundance more “costs” that go into making and selling a CD, which the mark is taking on.
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However here’s where it gets tough: what is a sale via iTunes? Is that a “sale” like a CD (meaning a small percentage royalty)? Or is it a “license” like for a movie (meaning a much larger royalty)? Conceptually, you can constitute a reasonable argument for either side. After all, from the consumers’ perspective, it’s very much like buying a CD. However… from a technological perspective, it’s really a abundance more like licensing, since you don’t have the same production, physical goods, shipping and distribution costs. A jury originally <a href=”http://www.techdirt.com/articles/20090306/2311384027.shtml”>sided with Universal Music</a>, saying that it’s really just like a CD sale, and thus, the lower royalties should apply.
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However, the 9th circuit appeals court has just ruled the opposite path, saying that the contract is “unambiguous” that iTunes sales count as a license, for which the higher royalties apply:
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This could have a major impact on how much Universal has to pay outside to musicians for iTunes sales. Of direction, Universal Music is <a href=”http://www.thewrap.com/media/column-advertise/breaking-eminem-wins-royalties-universal-appeal-20615″ target=”_blank”>downplaying the ruling</a>, saying that it’s unique to Eminem’s contract, and that the corporation plans to fight the ruling. However, Universal Music (and others, potentially) may be in larger distress than they attention to admit over this ruling. There are other, <a href=”http://www.techdirt.com/articles/20090917/0420056224.shtml”>alike cases</a> underway as well. While I’m certain its more recent contracts are quite specific on this mark, for large segments of the back catalog, Universal could be looking at really having to pay outside significantly more in royalties. Of direction that assumes they have accurate records somewhere — which certainly is <a href=”http://www.techdirt.com/articles/20091201/1957497156.shtml”>no given</a>.<br /><br /><a href=”http://www.techdirt.com/articles/20100903/15093610898.shtml”>Permalink</a> | <a href=”http://www.techdirt.com/articles/20100903/15093610898.shtml#comments”>Comments</a> | <a href=”http://techdirt.com/article.php?sid=20100903/15093610898&op=sharethis”>Email This Tale</a><br />
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</div><img src=”http://feeds.feedburner.com/~r/techdirt/feed/~4/sXgCyR-xHkM” height=”1″ width=”1″/> More information: Sony
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