As we anticipated, Universal’s loss earlier this year (see here) has opened up the flood gates for older artists whose music contracts pre-dated iTunes. The issue was whether a digital download was a sale or a license. Eminem claimed it was a license, and prevailed.
What’s the difference? Generally speaking, a music artist got a royalty of between 10%-20% on net sales of CDs, for example, with 12% being the norm. Licenses (say, a TV production company licensing a recognizable melody for a commercial) generally paid at 50% … and there were reportedly less deductions to create the net. These early contracts did not anticipate digital downloads.
Now we see in pursuit of Universal the estate of Rick James, plus Rob Zombie, White Zombie, Whitesnake and Dave Mason. For certain there will be more, though for some reason, the latter four have banded together to file a class action, which gives Universal one more arrow in their defense quiver (do they qualify as a Class?). The Class claims Universal deliberately miscalculated royalties by intentionally avoiding contractual obligations. That may be tougher to prove that “is it a license or a sale?” something the Eminem court already decided.