Universal Music Group ‘shortly’ expects to settle a major US class action lawsuit with a group of artists, having made a significant offer of monetary compensation.
The suit dates back to 2011, when a group of recording artists filed a claim seeking additional royalties for the online sale of downloads and master ringtones.
These artists – including Public Enemy’s Chuck D, Rob Zombie, the Rick James Estate, Whitesnake (pictured) and Ron Tyson of The Temptations – wish to have their backdated iTunes royalties paid in ‘licence’ terms.
That’s because a ‘licence’ payout typically involved a 50/50 split between label and artist – while just 6-20% of a ‘sale’ transaction ends up with performers.
In 2012, the production company who discovered Eminem, FBT Productions, settled with Universal out of court in a similar case.
UMG isn’t alone in facing such class action claims: in February this year, MBW discovered that Warner concluded an $11.5m settlement with 2,000 artists making claims on the same basis.
The reason the major labels are keen to settle rather than risk a victory in court?
Any court decision would strike a precedent – so if the trial didn’t go the majors’ way, they’d potentially be liable to pay out to all artists/estates on their books, and in future.
According to UMG owner Vivendi, a ‘global transaction terminating the litigation’ with the class action artists was entered into on April 14 this year.
This motion for approval was submitted to U.S. District Judge Susan Illston.
In other words, UMG made these acts a settlement offer and they have tentatively accepted.
According to Vivendi: “This settlement transaction is expected to be formally approved by the Court shortly.”
UMG just posted very healthy revenues of €2.3bn in the six months to end of June.
