Eminem has his judgment day - and will walk away with millions
REVOLVER: BRIAN BOYD on music
A RULING THIS week by the US Supreme Court is going to cause a lot of multi- million-dollar headaches. It’s all to do with iTunes and whether downloads count as “sales” or “licences”.
The case is being taken by Eminem and his management team against the rapper’s record label, Universal Records. They argued that because there was no contractual provision for iTunes sales when Eminem first signed his contract, all of his sales on iTunes should be regarded as licences.
It’s a crucial distinction. For a sale, a musician can expect to be paid between 10 and 20 per cent of the revenue (as in the price of a CD). For a licence (such as when the same music is used in a TV show or in a film) they typically receive 50 per cent of the revenue.
Eminem took the case after he found out that his many millions
of iTunes sales were only being paid as sales. Mr Mathers and his legal team successfully argued that, under the terms of his contract, these sales should now be paid as licences. Now that the Supreme Court has refused Universal’s appeal of this decision, Eminem is looking at an extra $20 million or so coming his way.
It’s almost a metaphysical argument as to whether an iTunes download is a sale or a licence, and it’s all to do with the nature of new technology. The court came down on the side of an iTunes download being a licence because, strictly speaking, you don’t own it, you’ve just bought the rights (that is: the licence) to play it as much as you want.
Don’t expect a rush of massive payouts as result of the ruling. This case was all to do with how Eminem’s original contract was worded. He originally signed to Interscope (a Universal label) back in 1998, years before there was ever an iTunes. It simply wasn’t spelled out how he should be paid for future downloads or whether these should be regarded as sales or licences. Since the inception of iTunes, all standard recording contracts explicitly state that iTunes downloads are sales and not licences.
But there is still trouble ahead. A good lot of iTunes album downloads are of the “classic” variety, and the bands involved would have signed their record deals way before the internet era. Most bands have since renegotiated, and clauses have been added in dealing specifically with digital sales, but again the semantics here are proving a problem.
Pink Floyd have just settled a huge barney with their record label, EMI, over iTunes sales. The Floyd claimed that their original contract (signed way back in the 1960s) stipulated that none of their songs could be released as individual tracks because their albums were “seamless” works.
EMI argued that the band’s contract stipulation only applied to physical releases of their work (LPs, CDs) and not to digital releases, for which no provision was ever made. After much finger-pointing and name-calling, an out-of-court settlement was made and you can now download individual Pink Floyd songs on iTunes. It’s no coincidence that the band are rumoured to have the highest iTunes royalty rate ever struck between label and artist.
While today’s musicians have their hands legally tied over iTunes payments – these are all sales, not licences – expect a lot of still-big- selling acts from the 1960s, ’70s and ’80s to be rummaging around trying to find their original contracts – and wondering if they should renew their subscription to Private Jet Monthly.
http://www.irishtimes.com/newspaper/theticket/2011/0506/1224296187280.html
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