Licensing

There are thousands of quotes lingering around created by great inventors, theorist and even ordinary people that mention the love of money. Taking the time out to intensively look for a quote that would best represent money and the music/entertainment industry was very easy, although not one suited the issue of royalties very well. Artists share many things in common amongst one another the greatest of these is money, some who have earned more than others.

As a young manager to an independent upcoming artist I value the opportunity to gain knowledge about the industry. I often ask myself; "Is it really fair the way money is issued between the artist (creator of the product) and the record company, manager, licensing company etc.?" Saying all of that brings to light the very controversial court case that started in 2010 Forefront Law Groups website states   FBT Productions v. Aftermath Records which is rapper Eminem’s former production group who is fighting on the percentage of royalties given to the artist for digital sales.

            Firstly, below briefly summarizes the case at hand; According to Forefront Law Group, The Supreme Court recently declined to hear a Universal Music Group appeal in its years-running fight with Eminem’s former production group. “The decision could have substantial monetary implications for the industry and older artists. In late 2010, in a somewhat strained decision, the Ninth Circuit court held in FBT Productions, LLC. v. Aftermath Records, 621 F.3d 958 (2010), that permanent downloads via Apple’s iTunes and other digital download purveyors constitutes a license for the purposes of calculation of royalties under a particular music distribution agreement (2011).” The facts of are listed as on The Forefront Law Groups website;

1.     1.         “FBT Productions signed rapper Eminem to an exclusive agreement in 1995.

2.     2.         FBT Production entered into a deal with Aftermath Records three years later that guaranteed:

a.     a.         FBT would receive between 12% and 20% of the adjusted retail price of all “full price records sold in the United States through normal retail channels”

b.     b.         FBT would receive 50% of Aftermath’s net revenues on masters licensed for the manufacture and sale of records.

c.     3.         Five years later as the digital music revolution began to take firm hold, Aftermath’s parent signed a deal with Apple that enable the Eminem masters to be sold through Apple iTunes store as permanent downloads.

d.     4.         In 2003 FBT and Aftermath entered into a new agreement that terminated the one stated above. This agreement increased royalty rates and included many of the terms from the prior agreement. The court notes an addition to the agreement: it provided that “Sales of Albums by way of permanent download shall be treated as Net Sales for purposes of escalations.”

e.     5.         Three years following Aftermath sold Eminem records through iTunes (and similar channels) and Aftermath paid, and FBT accepted royalties at the lower license rate on such sales (2011).”

In one’s opinion, FBT productions had an opportunity to work and collaborate with a great music icon (Eminem), which could be debatable for agreement. Bottom line is, that in those years of his initial career his music sold with good numbers, as he started to mature within the industry so did technology. With digital sales being the boom of the century, it increases the money chain for artists and music companies. Forefront Law Groups Website summarizes that the case’s big controversy is over the percentage of digital sales being the same as US normal retail channel sales that are Net Sales; this is to prevent the consumption of receiving more money. The agreement was changed and resulted in receiving royalties at a lower rate. “This will not be as beneficial to artists of the 2000s but it may be for the music of the artists in the past.” In ones opinion, an agreement should not be changed or rewritten because the company can receive more money. However, it would be the best of interest to make another agreement to benefit the artist in these times of technology and new ways to create revenue from sales. It is important to keep money in the hands of the creative one not remove.