press release
Universal digital downloads case set to open Pandora’s box
26 February 2009
The decision by Eminem’s publishing company,
FBT Productions, to sue record label Universal for over £1m in
unpaid royalties for songs and albums that were sold in digital
formats could open a ‘Pandora’s box’ according to music industry
lawyers at Browne Jacobson.
Lawyers for FBT Productions stress that
digital downloads should be governed by "licensing" agreements
whilst Universal Music Group argue they should be subject to
"distribution" arrangements which pay lower royalty rates.
Nick McDonald, a music law expert at Browne
Jacobson LLP said
“It appears Eminem's lawyers are trying to
imply meanings into definitions in his licensing agreement with
Universal that were written before downloads became such a
major source of revenue. However, a digital download
would seem to fit more neatly within the definition of a licensing
agreement than a distribution agreement. After all, one doesn't
need to package and ship a download because nothing physical is
being sold.
“In a sense, this is a simple contractual
dispute but the implications for the music industry could be more
wide-ranging. The sums of money involved in this particular case
are relatively modest, but it could open Pandora's box for the
majors. A ruling that forced them to pay a much higher percentage
to artists generally would hit them quite hard at a time when
they least need it."
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