The record labels considered a download sale to be just like a CD sale and therefore subject to the same royalty rate, which could be anywhere from 12 to 20 percent. FBT contended that a download was in fact, NOT a sale, and really was a license, which was subject to a much higher royalty rate of 50%. When HBC/Eminem won, it was predicted that there'd be a flood of classic artists suing their record labels. Sure enough, that's what happened, with a number of acts including The Allman Brothers, Cheap Trick and The Youngbloods filing a class-action suit right away.
Now it's been reported that Sony Music has filed a motion to settle with these acts, paying around $8 million and raising the royalty rate 3% in most cases, and 4.7% in the case of The Youngbloods. If this is approved, artists who have had at least 28,500 downloads on iTunes will be eligible. Ironically, many acts are choosing not to settle or be part of this action, preferring to file their own suit to get an even better deal.
This might seem like a win for the artists, but consider this. 8 million bucks is a drop in the bucket to a major label, and raising the royalty rate isn't that great either. The digital download cat has been out of the bag for sometime, which means that there won't be that many download sales forthcoming, and the next music distribution frontier is subscription, which pays even worse.
Yes, this seems like a victory, but at the end of the day the artists only received what will amount to a little bump. This isn't the only suit that's ongoing however, and it will be interesting to see if any of the others have endings along these same lines.
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