The Ninth Circuit Court of Appeals on Friday denied a petition for a rehearing in F.B.T. Productions, LLC, et al. v. Aftermath Records, et al., a case that threatens to drastically change royalties associated with paid downloads, ringtones, and related formats.
Outside of the immediate implications for Aftermath parent Universal Music Group, the denial could also spell significant obligations for rival majors as well.
Legal sources to Digital Music News are still sifting through the details of this decision, and attempting to determine what Universal Music Group will do next. Lawyers for F.B.T., however, already appear to be popping the champagne corks. “The denial of rehearing is effectively the last word from the Ninth Circuit,” said Daniel Asimow, appellate counsel for F.B.T. Productions. “We are very pleased with the Court’s decision as it vindicates our position that the agreements between record labels and iTunes and other digital music services are licenses, and record companies have to pay Eminem and F.B.T under the royalty provisions governing licenses of their products.”
The ink is still drying on this one, though industry attorneys have been pointing to a potentially serious game-changer. Just recently, barrister Steve Gordon estimated that 90% of iTunes content from major label-distributed artists could be affected. But so far, eligible artists have not come forward with demands of their own, a reasonable result given the early and still potentially fluid nature of this decision.