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Friday, March 6, 2009

Licensing versus Distribution: Why the Eminem Case Matters

Maybe you followed it, but probably not. You saw "Eminem" and thought, "oh, the great white hope!" Ha! Or you thought, "who cares about him anyway?" Either way, he wasn't even directly involved in the lawsuit touted as Eminem's suit for millions! The case was brought by Eminem's former publishing companies (at least according to a detnews.com report). The question was whether digital downloads constitute a purchase or a license. If they are a purchase, then it's the same thing as a CD sale and the royalty is a distribution royalty. If it's a license, then the royalty is much higher- usually 50%. Big difference when you're talking millions of downloads, but a difference of roughly $1.78 when you're talking about your average artist.

The court sided with Universal and said the the digital download is a distribution- a purchase, and not a license. A win for the labels.

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