The court this morning denied an appeal from Universal Music Group.
The dispute centers on the rate of royalties Eminem and his producers are entitled to for music sold online – in downloads from iTunes, for example, or ringtones sold through cellphone providers.
The U.S. 9th Circuit Court of Appeals in San Francisco ruled last year that the artist and his producers were entitled to a much bigger percentage of royalties from digital music sales than from physical CD and album sales.
Universal Music Group appealed that ruling to the Supreme Court.
The higher court’s denial of that appeal means the case will return to the Los Angeles courtroom where the case was first heard, within 30 to 60 days to determine damages, said Richard Busch, the Nashville-based attorney with King & Ballow, who represents Eminem’s producers, FBT Productions.
Eminem and FBT stand to gain tens of millions of dollars in retroactive royalties. They had been receiving 12 percent of online music royalties sold. The 9th Circuit said they were entitled to 50 percent instead.
Industry observers say the case could impact more than just Eminem’s royalties, and at a high cost to recording companies. A large percentage of record contracts like Eminem’s, which was signed in 1998 -- predating the digital era, spelled out smaller royalty payments for music sold in physical form than music licensed for other uses – in movies, for example. The 9th Circuit determined that the sale of online music is a “license” rather than a sale.
