What’s The Verdict: Universal Music Royalty Class Action Lawsuit?

What’s The Verdict: Universal Music Royalty Class Action Lawsuit. 

Class action lawsuits regarding royalties, compensation, or lack thereof is not a new phenomenon in the music business; Universal Music Group’s lawsuit is only the most recent.  Allegedly, UMG was cheating record artists out of their royalty payments by improperly classifying digital downloads, i.e. iTunes,  as ‘sales’ instead of ‘licenses.’  In effect, artists got unfairly low royalty payments. The difference between the two classifications makes all the difference.  When classified as a ‘sale,’ artists only get about 15 percent of the cut.  On the other hand,  a ‘license’ classification gives artists a 50-50 cut with labels.  It’s comes as no surprise that artists want their digital downloads to be called ‘licenses.’  Interestingly enough, Universal does not admit to any misconduct; however, they reached a settlement and are willing to pay up $11.5 million, which includes payouts and attorneys fees of about $3 million.  Moving forward, all royalty rates currently written in fine print will receive a 10 percent increase. This is interesting considering Universal does not admit to any wrongdoing.  Regardless, it’s always a win when a case is settled and it is most definitely a win for Universal Music Group artists who will be receiving the compensation they feel is owed.

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