Universal Music Group To Pay $11.5 Million To Settle Royalties Lawsuit
As the music world delves even farther into an era of digital distribution, there are still details to be sorted out with regard to how songwriters are properly compensated. Now, a landmark case is likely to stand as a benchmark, setting precedents for how royalties will be split in the future. According to The Hollywood Reporter, a class action lawsuit headed up by several high-profile musicians, including Public Enemy frontman Chuck D, has been settled for some $11.5 million. The suit alleged that Universal Music Group was shirking some of its financial responsibility by classifying digital downloads from outlets such as iTunes as sales, rather than licenses. The latter distinction usually comes with substantially more compensation for an artist, as songwriters usually stand to make roughly 50 percent of the money in a licensing agreement. On the other hand, sales generally come at a much lower rate--The Hollywood Reporter notes it at 15 percent, although even that may be optimistic.
Universal did not, however, admit any wrongdoing. Said the company: “Although we are confident we appropriately paid royalties on digital downloads and adhered to the terms of contracts, we are pleased to amicably resolve this matter and avoid continued legal costs.” The $11.5 million settlement comes in the wake of an identical figure paid out by Warner Music. The money in the Universal case will be divided a number of ways, with $3 million dedicated to attorneys' fees and related costs, $200,000 to each of the named plaintiffs (including the estate of Rick James), and the rest being split among Universal artists who stood to receive royalties in a 40-year period beginning in the mid-1960s. Going forward, Universal will issue an across-the-board 10 percent bump to artists' royalties on sales, meaning those who were previously taking home 15 percent will now be in the 16.5 percent range.