King & Ballow's Richard S. Busch continues his
assault upon the major label tradition of paying standard artist
royalties for downloads instead of a 50% licensing royalty. The attorney
has filed a lawsuit on behalf of Doobie Brothers singer Michael McDonald against the Warner Music Group in the U.S. District Court of Middle Tennessee in Nashville.
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The suit alleges that WMG has "failed to correctly account and to pay
McDonald for masters licensed to third-part music downloaders." The
damages amount is to be determined by the suit, but the filing alleges
that it is expected to exceed $500,000. Busch began attacking the label
royalty payment policies on behalf of Eminem's former
production company, F.B.T. Productions. The company filed suits against
Universal Music Group in 2007 and 2008 for alleged underpayment of
royalties. The suit argued that UMG should've treated sales of digital
downloads and mastertones of Eminem's music the same way it would treat a
master license. In cases of a master license use, the artist and F.B.T.
would be entitled to a royalty rate of 50% of net receipts, rather than
the traditional 12%-20% rate on retail sales of music.
A federal jury rejected F.B.T.'s claim, but an appellate court
overturned the ruling and the U.S. Supreme Court last year declined
UMG's request to review the decision. Since then Busch has filed
separate similar suits on behalf of the estate of Knack drummer Bruce Gary, Peter Frampton and Kenny Rogers.
This latest suit goes a step further by alleging a conspiracy among
record labels to deprive artists of their proper royalties for the
licensing of master recordings for sale or distribution by third-party
downloaders. The suit claims that the conspiracy could not exist if any
one label accounted for and paid licensed download royalties correctly.
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