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Eminem’s Posse Wins Lawsuit Against His Record Company

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When the Supreme Court decided to not hear an appeal from Universal Music Group today, it gave F.B.T. Productions and rapper Eminem a huge victory in a dispute over royalty payments for ringtones and digitally downloaded tracks.

The victory could potentially land the two parties a figure in the neighborhood of $40 or $50 million.

At issue was the royalty rate for tracks distributed via online services such as iTunes. Universal claimed it owed F.B.T. the same royalty it paid for physical sales: 18% of the suggested retail price.

Eminem’s team argued that because Universal’s online agreements are actually licensing situations, not unit sales, a different type of calculation should kick in: 50% of net revenue. The 9th Circuit Court of Appeals agreed in September, reversing an earlier jury decision.

There has been sharp disagreement about the ruling’s broader impact.

The record companies are saying this ruling won’t have a broad impact because most artists who sign with a record label have digital royalty clauses built in. But it could have an impact on older artists such as Motown and country legends.

“We’ve been waiting for this from the Supreme Court, but we’ve been talking with the artists about it, and they’ve been very interested,” Billy Wilson, of the Motown Alumni Association, told the Detroit Free Press. “And it’s not just Motown artists, but many others in the same situation, who now have the same opportunity to renegotiate their contracts — and renegotiate the structure of the music industry, really.”

F.B.T. Productions brought the lawsuit to court in 2007 because the contract they signed on behalf of Eminem in 1998 with Universal predated the coming mp3 revolution.

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