updated 03:45 pm EST, Thu February 26, 2009
Eminem iTunes trial begins
A lawsuit filed by rapper Eminem's production company, FBT Productions, has achieved the unusual status of reaching trial, writes The Wrap. The company is targeting Universal Music Group, which it accuses of improperly sharing revenues earned from the sale of tracks through online services, specifically iTunes. The nexus of FBT's argument is in the difference between a distribution deal and a licensing agreement; while Universal considers iTunes just another sales venue, FBT suggests that because downloads are restricted by special licensing, it de facto constitutes a licensing agreement.
If the iTunes deal is ruled to be a licensing agreement, it could entitle Eminem to an equal split of the revenues labels receive from each iTunes track, normally about 70 cents in total. Eminem would receive 35 cents on average, whereas most artists distributed on iTunes receive only 20; such a victory could set a legal precedent however, making music downloads a more viable means of survival for musicians.
Speaking in court, plaintiff attorney Richard Busch has noted that the current scheme is especially lopsided, as while CD and vinyl releases incur costs like duplication, packaging and sales teams, there is very little label overhead for downloads. A former Universal commerce executive is said to have acknowledged the fact when questioned. "Generally, that's true," he responded. "But it has costs. You donít call them manufacturing costs the way that term has been used traditionally. Manufacturing costs are for physical costs, and that has gone away."
The executive added that Apple has been inconsistent in paying Universal fees for the files it sells through iTunes. "We asked them to pay a service charge for that [sales right], but we didnít always manage to collect it," he said.