Settlement With Musicians Will Cost UMG $11.5 Million

SAN FRANCISCO (CN) – Universal Music Group will pay $11.5 million plus $3.3 million in legal costs to settle a class action over royalties from digital music downloads.
     The Estate of Rick James, Chuck D (of Public Enemy) and others sued UMG in 2011 on behalf of artists with UMG or Capitol Records contracts from 1965 through April 30, 2004.
     UMG must pay up to $11.5 million in supplemental royalties for past digital downloads and increase future download royalties by 10 percent to class members who submit claims. It also must pay $2.9 million in attorney’s fees, $450,000 in legal costs and additional compensation for expert witnesses.
     The settlement, proposed on April 14, must be approved by a federal judge.
     UMG did not admit guilt and continues to deny wrongdoing.
     “Although we are confident we appropriately paid royalties on digital downloads and adhered to the terms of contracts, we are pleased to amicably resolve this matter and avoid continued legal costs,” UMG said in a statement Tuesday.
     The musicians say UMG underpaid them by calling digital downloads “sales” instead of “licensing agreements” when people bought permanent downloads and ringtones for cell phones.
     Sales royalties are smaller than licensing royalties.
     “This settlement is a fair resolution of this controversy over how to compensate artists for their valuable work in a new medium which we believe was not contemplated by their contracts, many drafted in the 1970s or 1980s. And it compensates these artists now, rather than after additional years of litigation and uncertainty,” class attorney Len Simon said in a statement.
     UMG owns a slew of major labels, including Motown, Capitol, A&M, Blue Note, Def Jam, Decca, EMI, Geffen, Virgin and many more.
     Class attorney Simon did not return a call seeking additional comment Thursday.
     UMG representatives were not available for comment.

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