Universal Music Group settles digital royalties lawsuit with $11.5m payout

Universal Music Group has agreed to pay out $11.5 million to settle a legal battle that was started four years ago by artists including Rick James, Chuck D and Public Enemy.

The dispute came from the classification of digital downloads and echoed similar suits that have already been settled by other majors over the past decade. UMG classed downloads them as traditional sales - for which artists received royalties in the region of 10 to 15% - whilst the plaintiffs claimed that downloads under the terms of their contracts were not sales but licenses, which enabled them to claim 50% of the royalties. 

It doesn’t look like the settlement will go particularly far, since $3 million will go towards legal costs and artists have the opportunity to apply for a share of the remaining funds if they had a contract with Universal (including Capitol Records artists) between January 1965 and April 30, 2004. This would enable hundreds of artists to apply and it means that when all is said and done they are unlikely to receive more than a few thousand dollars each. 

The good news is that going forward, those artists will receive an additional 10% on download and ringtone royalty sales, which may help in the long run. We'll have to wait and see to know whether this was the last high-profile action on the classification of downloads as sales or licenses.

(Andrea Leonelli)