A few weeks ago, I was reading in the news about a lawsuit involving producers formerly connected to Eminem.  According to The Guardian’s story on Monday, 9/6/10 (Eminem Music Lawsuit), Em’s former production company, FBT Productions, sued Universal Music, Em’s record label, under the grounds that digital downloads don’t count as sales but as “licensing.”

Now, this could potentially be huge. Consider how, when we buy digital music, that you can’t always get what you want.  A great example is trying to find Beatles’ stuff.  For my wedding this past summer, I was trying to find a particular version of The Beatles’ “Let It Be.”  To my frustration, I couldn’t find it.  I could get any number of covers but not the real thing. There are some artists that don’t have their music out at all.

The payoff could be huge.  According to the article, when Eminem went to Universal, EBT was entitled to a 12% royalty rate on “records sold.” However, if digital downloads are classified as “licensing” of masters, then that rate goes up to 50%.  According to an article “How Music Royalties Work” in howstuffworks.com (Music Royalty Rates), the average rate for recording artist royalties can vary from 8-25% of which 25% gets removed from this to cover packaging.  While there are other factors such as writing and publishing that can come into play, this helps you to imagine how much an artist can get.

Now, when you’re talking about 50% of sales, this is a whole lot of money.  Consider iTunes.  If a track goes for $3.99, the artist, assuming that they get paid Em’s 12%, would get  roughly 36¢/song.  If the track sells 1 million copies, then the artist gets $360,000.  Now, if the artist starts at a rate of 50%, they would get roughly $1.5 million.   If you were a recording artist, which would look more appealing?

I pray now that recording artists, especially long-established ones, will now have more of a business incentive to provide their music for digital download.  Granted that Universal, at present, will be appealing this decision, this plays into how the public is getting their music.  CDs are a thing of the past.  Digital downloads are the wave of the future.

Author: José A. Rodríguez

Graphics: Salvador Cid III