16 Apr Universal Music Group Settles With Rick James' Estate For Over $11 Million
Forbes.com
Hugh McIntyre
APR 14, 2015 @ 1:04 PM
After a several year-long court battle, it looks like Universal is finally ready to settle with the estate of Rick James and several other musicians in another in a series of legal cases that sought to redefine how the music industry categorizes digital downloads.
The case looked at the difference between buying a single (as people used to do in physical form) versus downloading one from a service like iTunes. The plaintiffs argued that such an action was not a traditional sale, but rather a licensing transaction, which comes with different royalty rates. Universal argued otherwise, but after several years of the case stretching out, they agreed to settle—though they maintain that they were paying fairly and according to the contracts they had signed with their artists.
The major label has agreed to pay $11.5 million to the plaintiffs, which could possibly number in the thousands. The case was fronted by bigger names like Rick James and Chuck D from Public Enemy, but there were over 14 artists that took part. After attorney’s fees and a certain amount that will be paid to the 14 artists who took pains to see this case through, the remainder of the $11.5 million will be pooled and split amongst all eligible acts.
The number of artists who may be able to take a piece of the settlement is huge, with parties involved estimating it at around 7,500. That number includes every singer, musician, and band that signed a deal with the label before 2004, as all contracts after then specifically stipulate how much every party is paid per digital download.
“For the older contracts and those artists known as ‘legacy’, there is now a clear answer to how much they’ll be compensated for past downloads, and they will now know how much they’ll be paid for them moving forward” said Len Simon, a lawyer that helped represent the plaintiffs.
The idea that digital downloads might actually qualify as licensed products began a decade or so ago when a company that owned much of Eminem’s early catalog sued the label, arguing that the structure under which the label and Eminem were being paid for iTunes sales was not fitting or fair. After losing the case but then winning on appeal, the entire industry took notice, and since then, suits have been brought against Warner and Sony, both of which also settled. Universal is the last of the major labels to close out a legal entanglement like this.
It’s interesting that this settlement comes about now, as digital downloads wane and streaming is quickly becoming king. The music industry seems to change and grow much faster than the American legal system, and often times legislation or court decisions come years after they are needed. The industry is likely gearing up for many years of streaming-related cases, the beginnings of which are just forming now.