90% of Label Artists Could Be Eligible for Huge iTunes Royalty Increases

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Eminem is the type of multi-platinum, long-term superstar that labels dream of.

But a successful lawsuit by Eminem’s original publisher against Universal Music Group could end up triggering a massive financial sinkhole on the digital side – and make Universal seriously regret the signing.

How bad could the damage be – for all the labels?  According to new information shared by attorney Steve Gordon at CMJ, upwards of 90 percent of label agreements are “essentially identical” to the Eminem contract.  Those contracts are subject to a reclassification of existing “sales” into “licenses,” and therefore, huge royalty increases for the artists involved.  “90% of those agreements haven’t been changed, and no manager is stupid enough to renegotiate,” Gordon told Digital Music News.

Gordon used to be a lawyer at Sony Music Entertainment, and has first-hand knowledge of the agreements involved.  Still, contracts are confidential and there is certainly room for error.  But according to Gordon, absolutely huge artists could soon make their case for bigger payouts, and make UMG wish they’d never signed that white guy from Detroit.

So when will the floodgates pour open?  Well, artists aren’t lining up yet, according to Gordon, though “they should” start investigating.  Perhaps some are waiting for the outcome of the UMG appeal.