Supreme Court Won't Hear UMG-Eminem Royalty Case
March 22, 2011

The U.S. Supreme Court has declined to hear Universal Music Group's appeal of a lower court decision stemming from unpaid royalties to Eminem and F.B.T. Productions. According to the Detroit Free Press, the Supreme Court opting to pass on the case means that the previous lower court ruling stands, which could cost UMG between $40-50 million.

F.B.T. filed the suit in 2007, claiming that UMG's online deals are licensing agreements and the label should pay out 50 percent of net revenue on digital downloads. Universal argued that it owed F.B.T. the same royalty it pays on physical sales: 18 percent of the suggested retail price. The Detroit-based FBT administered Em's deal with UMG in 1998, and is still entitled to royalties from his music. Eminem himself was not a part of the suit.

"For us, this is probably a $40 million to $50 million issue," Joel Martin of F.B.T. told the Free Press. "Every artist who has this sort of language in their contract is now going to go back to their record company and say, ‘OK, so what do you want to do about [download royalties]?’"

There has been speculation that the results of this case could lead to changes across the industry when it comes to download royalties, with potentially higher payouts for acts whose contracts pre-date the MP3 era.

In a statement, Universal spokesman Peter Lofrumento said, "The case has always been about one agreement with very unique language. As it has been made clear during this case, the ruling has no bearing on any other recording agreement and does not create any legal precedent."

"We’ve been waiting for this from the Supreme Court, but we’ve been talking with the artists about it, and they’ve been very interested," Billy Wilson of the Motown Alumni Association told the Free Press."And it’s not just Motown artists, but many others in the same situation, who now have the same opportunity to renegotiate their contracts — and renegotiate the structure of the music industry, really."

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Jon Zellner
EVP/Programming Operations

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