Rick James Estate Files Class Action Lawsuit Against Universal Music Over Digital Revenue

05 Nov Rick James Estate Files Class Action Lawsuit Against Universal Music Over Digital Revenue

April 4, 2011

The estate of Rick James, best known for his song “Super Freak,” filed a proposed class action lawsuit on Friday against Universal Music Group over money owed from digital downloads and ringtones.

The new class action lawsuit comes in wake of the U.S. Supreme Court’s decision not to review a case initiated by Eminem’s former Detroit-based producing partners, F.B.T. Productions, which won a lower 9th Circuit ruling last September deeming digital music to be more akin to a license than a physical sale of music. The distinction is important: Copyright owners get a 50% share on royalties from licenses but only about a 12-20% royalty rate from sales.

UMG hoped the Supreme Court would reconsider one the first published appellate decisions to discuss how traditional music recording agreements should be interpreted with respect to the treatment of digital music distribution, and after the Supreme Court declined to weigh in on the topic, speculation turned to how much record labels would now owe artists. The Future of Music Coalition estimated potential unpaid royalties to artists from just iTunes sales would be around $2.15 billion.

In Friday’s filing, the plaintiffs say the 9th Circuit decision in the F.B.T. case compels UMG to treat income derived from iTunes, cellular phone carriers, and other third parties as licensing income. The plaintiffs are seeking to compel UMG to account and pay recording artists and producers their “rightful” share, which it estimates will be tens of millions of dollars or more per year.

In a statement given to the New York Times last week in connection with the F.B.T. case, UMG portrayed the dispute over Eminem’s music to be one over “very unique language” in the contract between distributor and producer. “The ruling has no bearing on any other recording agreement and does not create any legal precedent,” said the company.

This isn’t the first time, however, that artists and producers are pressing this issue. Others, including Cheap Trick and Pink Floyd, have also challenged how their old contracts apply to new methods of music distribution.

The Rick James estate says that UMG “continues to employ a host of unfair tactics and strategies in its dealings with royalty participants to minimize its exposure from the unlawful conduct at issue here” and asks for a judicial declaration requiring UMG to behave.

UMG responded with this statement:

“The complaint filed by the Estate of Rick James suffers from many infirmities, not the least of which is that the claims asserted are not appropriate for class treatment. We intend to vigorously defend against it.”