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Digital royalties dispute is brewing in Europe too

By | Published on Monday 28 October 2013

Universal Music

The digital royalties debate could soon go legal in Europe, according to a report in The Guardian. A number of Swedish artists are reportedly threatening to sue Universal Music and Warner Music if they don’t agree to more favourable splits on digital and especially streaming royalties, the latter already being a primary rather than periphery revenue stream for the record industry in Sweden of course.

As much previously reported, this is an issue that has already gone legal several times over in the US. Record contracts that pre-date iTunes obviously make no reference to digital music services, which poses questions regards the labels’ right to distribute recordings digitally and, more importantly, on the share of the money generated they should pass back to artists.

Most classic record contracts gave artists a much bigger cut of “licensing” or “other” revenue as opposed to “record sales” income, partly because the label took less risk in generating that money, and partly because until recently non-record sale money was a very small part of the pie. The question with digital income, which comes from “licensing deals” agreed with the digital firms, is should artists be getting the bigger or smaller royalty share. In the main the majors have gone with the latter.

Various lawsuits have been rumbling on for sometime on this issue Stateside, though the landmark case is that between Eminem collaborators FBT Productions and Universal Music, regards the producers’ cut on the early Slim Shady catalogue. The claimants prevailed and forced the mega-major into paying them a higher cut of digital income. Numerous lawsuits are now pending that will test whether that precedent should apply across the board.

But what about in Europe? Various managers of heritage artists over here who earn from their catalogue, but who haven’t renegotiated their legacy deals since the arrival of iTunes, have been watching the American cases very closely.

And now, according to Helienne Lindvall in her latest piece for The Guardian, “a number of Swedish artists are threatening to sue Universal and Warner Music over the paltry royalties they get from people streaming their music”. And, citing Swedish Musicians’ Union lawyer Per Herrey, she adds: “If record labels don’t agree to increase the share of the royalties distributed to artists from services such as Spotify, the artists will start demanding that their music is removed from the service”.

While Universal Music in the US has insisted that the FBT Productions case doesn’t set a general precedent regards artist royalties, behind the scenes Sony Music has been negotiating with affected artists. It remains to be seen how this pans out in Europe, though if further cases go in the artists’ favour in the US, European acts are going to be pushing for a new deal on digital income too.