WMG Settles Digital Royalties Lawsuit
January 3, 2014

Warner Music Group has settled a class action lawsuit over unpaid royalties for ringtones and digital downloads. The Wrap reports that WMG will pay out $11.5 million in the settlement, for past damages as well as future royalty rates for the parties involved in the suit.

The musicians who filed the suit claimed that Warner Music had classified its payments as sales instead of licenses, shorting them in royalty payments by using a lower rate.

WMG agreed to a settlement, while still denying the original charges, because the company believes there was no evidence of wrongdoing. The Wrap notes that WMG had argued that when a download is purchased, it is the same type of purchase as buying a physical copy of a song. However, the plaintiffs argued that due to DRM in the digital files, WMG retains ownership of the original material and is creating a new license every time someone legally downloads their music.

In the settlement, WMG noted there is no precedent to support the case, but it would rather settle now than enter into what could be years of litigation. However, Eminem notably won a similar suit in 2010 against Universal Music Group, where the court ruled digital downloads were licenses.

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Jon Zellner
EVP/Programming Operations

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