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Eminem iTunes lawsuit goes to trial

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 don't 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 didn't always manage to collect it," he said.




by MacNN Staff

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Comments

  1. testudo

    Joined: Dec 1969

    +3

    What??

    making music downloads a more viable means of survival for musicians.

    What, are musicians now an 'endangered species'? But, seriously, as long as chicks dig musicians, there will be musicians, even if they make nothing at all...

    And this sounds good, but I'm sure the labels have their lawyers and accountants all working on a plan such that the labels will end up receiving only 5 cents in revenues, which they'll have to split, and another 65 cents as surcharges, usage fees, service charges (hey, it looks like they're already wanting those), promotional fees, etc., which isn't revenue and, as such, won't have to be shared.

  1. Guest

    Joined: Dec 1969

    -7

    As if you forgot....

    Apple is greedy too...

    "Never underestimated the other man's greed"

    Famous quote

  1. gor3don

    Joined: Dec 1969

    +4

    Yes

    As Apple makes soooooo much from music sales.

  1. testudo

    Joined: Dec 1969

    -9

    Re: Yes

    Yes, yes they do. Which is why they don't want you to know how much they make from music sales.

  1. nat

    Joined: Dec 1969

    +5

    so

    "Which is why they don't want you to know how much they make from music sales."

    so profit means mystery? because they actually make money they don't want you to know how much? if they lost money it would be ok to tell? what if they only make a small amount? that should be a mystery as well or only if it's a lot?

  1. Jittery Jimmy

    Joined: Dec 1969

    0

    Boring contract dispute.

    The production company's claim is that the label's agreement with Apple represents Apple sharing revenue with the label.

    This might make sense, in the light that each sale provides revenue to Apple. However, in a similar light, it could be construed that Apple is merely a service provider that charges "per unit" that they move.

    It seems to me that Apple is merely a service provider in this case. iTunes is a simple fee-for-service model.

    Regardless, this is a contract dispute between the production company and the label. Apple would seem to have no involvement.

    If this suit goes against the label, then the music falls off of iTunes and won't be sold in the on-line space anywhere. Otherwise, everything stays the same.

    It seems that the production company wants to invalidate the existing contract and renegotiate its terms - that seems unlikely, but I'm unfamiliar with the contract.

  1. Jittery Jimmy

    Joined: Dec 1969

    -2

    Boring contract dispute.

    The production company's claim is that the label's agreement with Apple represents Apple sharing revenue with the label.

    This might make sense, in the light that each sale provides revenue to Apple. However, in a similar light, it could be construed that Apple is merely a service provider that charges "per unit" that they move.

    It seems to me that Apple is merely a service provider in this case. iTunes is a simple fee-for-service model.

    Regardless, this is a contract dispute between the production company and the label. Apple would seem to have no direct involvement.

    If this suit goes against the label, then the label takes the music off of iTunes and won't be sold in the on-line space anywhere. Otherwise, everything stays the same.

    It seems that the production company wants to invalidate the existing contract with the label and renegotiate its terms - that seems unlikely, but I'm unfamiliar with the contract.

  1. Jittery Jimmy

    Joined: Dec 1969

    -3

    Boring contract dispute.

    As I understand it, the production company's claim is that the label's agreement with Apple represents the Label sharing profits with Apple. And the Production company deserves a cut of ALL profits.

    This might make sense, in the light that each sale provides revenue to Apple. However, in a similar light, it could be construed that Apple is merely a service provider that charges "per unit" that they move.

    It seems to me that Apple is merely a service provider in this case. iTunes is a simple fee-for-service model.

    Regardless, this is a contract dispute between the production company and the label. Apple would seem to have no direct involvement - Apple's only agreement is with the label, not the production company.

    If this suit goes against the label, then the label takes the music off of iTunes and won't be sold in the on-line space anywhere. Otherwise, everything stays the same.

    It seems that the production company wants to invalidate the existing contract with the label and renegotiate its terms - that seems unlikely, but I'm unfamiliar with the contract.

  1. Jittery Jimmy

    Joined: Dec 1969

    -3

    Boring contract dispute.

    As I understand it, the production company's claim is that the label's agreement with Apple represents the Label sharing profits with Apple. And the Production company deserves a cut of ALL profits.

    This might make sense, in the light that each sale provides revenue to Apple. However, in a similar light, it could be construed that Apple is merely a service provider that charges "per unit" that they move.

    It seems to me that Apple is merely a service provider in this case. iTunes is a simple fee-for-service model.

    Regardless, this is a contract dispute between the production company and the label. Apple would seem to have no direct involvement - Apple's only agreement is with the label, not the production company.

    If this suit goes against the label, then the label takes the music off of iTunes and won't be sold in the on-line space anywhere. Otherwise, everything stays the same.

    It appears to me that the production company wants to invalidate its existing contract with the label and renegotiate its terms - that seems unlikely, but I'm unfamiliar with the contracts in place.

  1. Jittery Jimmy

    Joined: Dec 1969

    -3

    Boring contract dispute.

    As I understand it, the production company's claim is that the label's agreement with Apple represents the Label sharing profits with Apple. And the Production company deserves a cut of ALL profits.

    This might make sense, in the light that each sale provides revenue to Apple. However, in a similar light, it could be construed that Apple is merely a service provider that charges "per unit" that they move.

    It seems to me that Apple is merely a service provider in this case. iTunes is a simple fee-for-service model. A customer buys a song through iTunes, and iTunes takes a part of the sale price. Simple retail.

    Regardless, this is a contract dispute between the production company and the label. Apple would seem to have no direct involvement - Apple's only agreement is with the label, not the production company.

    If this suit goes against the label, then the label takes the music off of iTunes and won't be sold in the on-line space anywhere. Otherwise, everything stays the same.

    It appears to me that the production company wants to invalidate its existing contract with the label and renegotiate its terms - that seems unlikely, but I'm unfamiliar with the contracts in place.

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