Pre-digital era record contracts come back to bite labels
Chalk it down as another victory for the old-timers. A court case winding its way through the US legal system may result in a big pay day for thousands of acts who haven’t released a new album in years.
The case was taken by FBT Productions, the company that first signed Eminem and continues to make money from his work. They sued Em’s record label, Universal Music Group, over the issue of whether an online song was viewed as a sale or a licence.
While this may seem like semantics at first glance, there’s a sizable difference between the two in the small print of an old-school record contract.
In Eminem’s case, the difference is between 50 per cent of royalities for a licence and 12 per cent for a sale. According to FBT’s Joel Martin, “five or 10 years from now, it could easily be a
$40-$50 million issue.” Last week’s decision by the US Supreme Court not to allow a Universal Music appeal to proceed means an earlier decision – that digital music should be treated as a licence – now stands, which is good news for FBT and for Eminen.
But while Universal say this decision only applies to the rapper, some lawyers reckon otherwise and believe that acts who signed pre-digital era recording contracts may be quids in. As with so many aspects of the record business, older contracts failed to recognise just how much technology would shake things up.
But there are not going to be any crumbs from the table for newer artists, as their record contracts would have taken new digital realities into account. For them, it’s more proof that they won’t make a living by relying on how things once were.
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Eminem: a good day in court