Eminem's Universal/iTunes Lawsuit Could Cost Labels "Billions"

Eminem's Universal/iTunes Lawsuit Could Cost Labels "Billions"
Once again, rap superstar Eminem is making headlines, not because of his music but rather a lawsuit that could have huge financial implications on the entire music industry.

This week, the two-year-old lawsuit by Slim Shady's publishing company, FBT Productions, finally entered a California courtroom, seeking about $1.3 million from Universal in what the suit claims are unpaid royalties for songs and albums sold digitally through retailers such as iTunes. And while the case revolves around one unpaid bill it could affect what is meant by the term "digital royalties" or more specifically, if selling material through venues such as iTunes is part of a distribution deal or a licensing deal.

In a nutshell, if the jury sides with Universal's argument that such digital sales fall under the terms of distribution deals, then Eminem and FBT will have to accept that these agreements typically only pay artists roughly 30-percent of the sale price. However, if Slim Shady's work on iTunes is found to fall under the umbrella of licensing, then Eminem and other artists could see quite the substantial payday. Licensing deals typically find labels and musicians splitting royalties 50/50, meaning the trial could serve as a benchmark case that would force labels to pay out hundreds of millions - if not billions - of extra dollars to artists.

Universal Music Group head Jimmy Iovine and Apple CEO Steve Jobs are expected to testify at the U.S. District Court for the Central District of California; Eminem is not.

"This is a very significant case," entertainment lawyer Jay Cooper told The Wrap, which published a copy of Eminem's lawsuit on Tuesday (February 24). "A lot of people are going to be watching very closely because there's a lot of money involved."

Universal has since issued a statement denying Eminem has any involvement in the legal action.

"Eminem is not a party to this suit in any way, nor is his publishing company; in fact, we enjoy a very close, creative and productive relationship with him," the statement said. "The claims made by FBT Productions are completely baseless as a matter of fact and meritless as a matter of law, and we look forward to presenting our side in court."

Eminem is making headlines, not because of his music but rather a lawsuit that could have huge financial implications on the entire music industry at large.

This week the two-year-old lawsuit by Slim Shady's publishing company, FBT Productions, finally entered a California courtroom, seeking about $1.3 million from Universal in what the suit claims are unpaid royalties for songs and albums sold digitally through retailers such as iTunes. And while the case revolves around one unpaid bill, it could affect what is meant by the term "digital royalties," or more specifically if selling material through venues such as iTunes constitutes as part of a distribution deal or a licensing deal.

In a nutshell, if the jury sides with Universal's argument that such digital sales fall under the terms of distribution deals, then Eminem and FBT will have to accept that these agreements typically only pay artists roughly 30 percent of the sale price. However, if Slim Shady's work on iTunes is found to fall under the umbrella of licensing, then Eminem and other artists could see quite the substantial payday. Licensing deals typically find labels and musicians splitting royalties 50/50, meaning the trial could serve as a benchmark case that would force labels to pay out hundreds of millions - if not billions - of extra dollars to artists.

Universal Music Group head Jimmy Iovine and Apple CEO Steve Jobs are expected to testify at the U.S. District Court for the Central District of California; Eminem is not.

"This is a very significant case," entertainment lawyer Jay Cooper told The Wrap, which published a copy of Eminem's lawsuit on Tuesday (February 24). "A lot of people are going to be watching very closely because there's a lot of money involved."

Universal has since issued a statement denying Eminem has any involvement in the legal action.

"Eminem is not a party to this suit in any way, nor is his publishing company; in fact, we enjoy a very close, creative and productive relationship with him," the statement said. "The claims made by FBT Productions are completely baseless as a matter of fact and meritless as a matter of law, and we look forward to presenting our side in court."

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