Universal Music’s Request To Dismiss Rob Zombie And Rick James Estate’s Class Action Over Digital Downloads Rejected, Lawsuit To Move Forward

Posted by on November 3, 2011

It’s safe to assume that previously you would have never thought of seeing Rob Zombie and the late “Super Freak” singer Rick James in the same sentence. However, back in April, Zombie and the estate of Rick James spearheaded a major class action lawsuit against Universal Music Group seeking damages from unpaid royalties on digital downloads and ringtones. While UMG has been trying to get the case dismissed, claiming that underpaying artists harmed neither the consumer nor competitors, a California judge is allowing the case to move forward, according to The Hollywood Reporter.

The case is essentially trying to determine whether digital purchases constitute a “sales” or a “license.” If it counts as a sale, then labels only need to pay artists between 10% and 20% for royalties. However, if it does count as a license, which artists believe it to be because of the little manufacturing that goes into downloads, then artists would be due half of the revenue they make (a 50/50 split). See why labels want to fight this? And it doesn’t look great for UMG, as previous cases dealing with royalties from downloads, including Eminem’s ruling last year, have favored the artists.

And this past Tuesday (November 1), Judge Susan Illston agreed with the musicians that there was a connection to this case and public protection, and that this case could be presented in front of a jury. Her decision read as following:

“The Court finds that plaintiffs have alleged more than just a breach of contract because the complaints allege that UMG engaged in a broad scheme to underpay numerous royalty participants, including formulating ‘an opaque and artificial method for accounting for and paying its royalty participants for income derived from such licenses,’ and engaging in a ‘sustained public relations effort designed to convince the public that it had employed ‘groundbreaking’ and ‘enlightened’ accounting practices that actually benefitted (rather than cheated) the Class.”

In other words, the class action lawsuit against UMG is moving forward. And it could mean a major loss for the label (as if they weren’t struggling to maintain a profit as it is). The artists in the class action could receive up to billions of dollars in damages, not to mention the profit they’d make if digital downloads were ruled as “licenses.” We’ll just have to wait and see how this moves forward.

[via The Hollywood Reporter]

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Categorised in: Legal Woes