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Eminem producer lawsuit could have big ramifications

By | Published on Wednesday 25 February 2009

Eminem

A long running and previously reported lawsuit between the production company who oversaw the early career of Eminem and the superstar rapper’s record company, Universal Music’s Aftermath, has finally reached the court room, and some big names are expected to be called to testify, including the boss of Universal’s Interscope division (under which Aftermath sits) Jimmy Iovine and maybe even Apple chief Steve Jobs. Eminem, who, despite what has been widely reported on the internet in the last 24 hours, is not directly involved in this lawsuit, is unlikely to appear.

FBT Productions is the company of production duo Marky and Jeff Bass, and it was they who arguably discovered the young Slim Shady at the start of his career, who negotiated his original deal with Dr Dre’s Aftermath label, and who actually produced many of the tracks that appear on the rapper’s first three albums. As early managers, deal brokers and producers for Eminem, the Bass brothers are due various royalty cuts on the rapper’s early catalogue, and the lawsuit is over allegations that Universal are not paying them their full share.

Royalty disputes between managers and producers involved in the early careers of superstar artists and said stars’ subsequent managers and labels are not uncommon, though this one possibly has wider ramifications, and could be more of a landmark case that we initially realised when the legal papers were originally filed. We knew the case centred on FBT’s claims that Aftermath was deducting ‘costs’ from their royalties which they argued they should not have to pay. It seems the disputed costs relate to Eminem’s digital sales – downloads and ringtones – which is why Apple representatives may be asked to testify, and why the case could have wider implications.

FBT seemingly claim that Universal is wrong to treat a digital sale like a CD sale, arguing that labels don’t distribute digital tracks to download stores like they distribute CDs to a record shop, rather they licence tracks to the download platform like they licence tracks to broadcasters and the like. The distinction is crucial, because more deductions are made by the label from distribution royalties (in theory because of the label’s costs) than from licensing royalties. If the label ‘licences’ rather than ‘distributes’ downloads, then artists and, in this case, FBT Productions would be due a bigger slice of the digital pie. The case is similar to that being pursued against Sony Music by the Allman Brothers Band and Cheap Trick, who make similar claims regarding digital royalties (that case, I think, is ongoing).

Obviously, if a court finds in FBT’s favour then the principle could be extended to many other artists (especially those whose recording contracts precede the internet age) who might, arguably, be due a considerably bigger slice of digital revenues than they currently receive. For record companies who are increasingly reliant on their digital revenues to make the books balance, having to hand millions more of those revenues over to their artists could be devastating.

Universal Music are reportedly telling reports they are confident they will win this lawsuit, though given the possible ramifications of losing, that might be wishful thinking as much as confidence.



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