The Supreme Court has slammed the door on Universal Music Group and the recording industry in its bid to prevent a big pay-out to Marshall Mathers (aka Eminem), and, many say, opened the door for further legal negotiation and potential litigation by other recording artists whose songs and ringtones are distributed digitally on iTunes and other online distribution services.
The Supreme Court, in declining Universal’s appeal, left standing a September, 2010, ruling by the Ninth District appellate court adverse to not only the company but, analysts have said, the industry, too. The appellate court had been asked to decide if contracts’ provisions on “Records Sold” or “Masters Licensed” set royalty rates for sales of Eminem’s music as permanent downloads and master-tones. The court decided Mather’s contracts were unambiguous, finding, in effect, that licensing provisions should pay a 50% royalty rate, not the 18%-23% that had prevailed commonly in the trade. Because digital music sales have become the central means by which consumers buy music now, the higher court rulings will prompt big, costly changes in the music industry, analysts say, readjusting royalties due artists by their industry. This more will affect big-selling recording veterans, whose contracts were struck before the digital age but also may empower artists with greater bargaining powers, some say. Universal insists the case affects only Mathers and sets no precedent.