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FBT court papers suggest Universal may owe $4 million in unpaid digital royalties

By | Published on Monday 27 February 2012

Eminem

Figures prepared by reps for Eminem collaborators FBT Productions as part of their legal squabble with Universal Music suggests that the production outfit could be due in excess of $3.8 million in extra digital revenues from just 2005 to 2009 thanks to their victory in court over a long running royalties dispute.

As previously reported, FBT have a stake in the early Eminem recordings, and sued Universal’s Interscope over the way digital royalties are paid out. It’s common for artists to earn a higher royalty on licensing revenue than record sales, so labels treat download revenue as the latter, but some artists reckon it should be classified as money stemming from a licensing deal. When heritage artists sued on this issue a few years back the courts sided with the labels, but in this case FBT won.

The US courts will review the case in April to decide what extra money the FBT guys are now due, and last week the Hollywood Reporter published some of the figures submitted to court by the production company’s lawyers, focusing on US revenue from 2005 to 2009. It seems FBT will claim they are due an extra $3.8 million for this period alone, meaning their overall claim for extra royalties could top $5 million.

While as an isolated case that won’t break the bank (and the major will almost certainly dispute FBT’s figures and argue for a lower pay out), this story will be much more significant if the precedent set in this legal dispute regards treating download sales as licensing revenue can be applied to other pre-internet record contracts. As previously reported, the major’s lawyers say not, but an assortment of American artists are now suing, between them, Universal, Warner and EMI to put the principle set out in FBT v Interscope to the test.

Meanwhile, back to the figures revealed by the Hollywood Reporter last week, and some have noted that it looks like Universal might have set its costs incurred in fighting this lawsuit – $2 million – against the royalties it pays FBT. The money for legal costs are apparently listed as ‘legal hold’ on FBT’s royalty statement from the major.

It’s not 100% certain exactly what that sum is really for, and even if it is for fighting this lawsuit the major may well be contractually entitled to recoup its legal costs in this way, though many in the artist community will be simultaneously amused and disgusted if it turns out a major record company really can charge legal fees back to any act who chooses to sue it.



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