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Eminem case may have huge impact on artist royalties for online distribution.


Mudcat007

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This court decision has HUGE implications on artist royalties for downloads. The key point driving the ruling is the distinction between the sale of a recording and the licensing of a recording. Mr. Mathers and his producers are due millions in royalties (as will be the case with a bunch of other artists if the ruling stands).

 

http://www.tennessean.com/article/20100904/BUSINESS01/9040348/Eminem+award+of+digital+royalties+could+set+precedent

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On the surface of it, as presented in that brief article, the ruling seems to make practical sense, treating licensing to an online distributor in much the same way -- and at the same split -- as licensing to a third party domestic or foreign label (the record label incurs no further production costs from the licensing).

 

Of course, the real sticker for the parent labels is promotional costs.

 

In the past, international licensing was presumed to carry its own promotional costs in-country for the licensees -- and in the case of domestic re-release labels, the parent label had already exploited their promotional efforts by maximizing primary sales, only releasing material to the re-release labels when it was perceived that the bulk of the initial profit-taking was done.

 

 

But in today's marketplace, where online sales are becoming the single biggest factor, that model really doesn't make much sense any more, since the parent label is pumping a presumably enormous amount of money into promotion both above board, and through 'indepenent' promoters who spread 'street money' around in the form of kickbacks, bribes, and payola in order to get airplay, promotional space, and other considerations for the targets of their promotional efforts. It takes a lot of street money to get a no-talent like Taylor Swift to the point where she can win a Grammy for best country vocalist, after all (particularly since she manifestly cannot carry a tune without vocal retuning) -- at least that's my thinking.

 

 

So this may actually be one of those rare cases of the artist using the fine print to screw a label.

 

Still, to be frank, it's nonetheless pretty tough for me to gin up any much sympathy for the big labels on this. But I could imagine some smaller labels that essentially copied their artist agreements from those of the majors getting kinda screwed.

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