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Chuck D royalty lawsuit could make it hard to sell EMI

Written by Rich Fiscus (Google+) @ 07 Nov 2011 16:49 User comments (8)

Chuck D royalty lawsuit could make it hard to sell EMI When Chuck D filed a lawsuit against Universal Music Group last week, the implications for that company were obvious.
If his suit is successful, which seems likely based on recent precedents, it could result in UMG facing a huge new royalty burden to pay numerous artists who signed standard recording contracts in the days before iTunes. But it could end up having an even bigger impact on another label.

EMI, the smallest of the big four labels, is currently owned by Citigroup. They took over the struggling company when previous owner, Terra Firma, defaulted on loan payments.

Citigroup has no interest in owning a record label, and is looking for a buyer. But with the threat of a huge royalty liability hanging over the company, that would become more difficult.

Digital Music News has spoken to people involved in negotiations to buy EMI, and they believe potential buyers will demand protection against that possibility. One source told them, "This could be accomplished through mechanisms like graduated payments, it could be done through clawbacks or sunsetting."

In other words, any buyer will likely insist Citigroup return some of their money if EMI suddenly finds itself having to pay adjusted royalties for years of music downloads.

Of course, even these payments may pale in comparison to what is expected on the horizon. US Copyrights for recordings made prior to 1976 will soon be subject to termination, a right created by the Copyright Act of 1976.

Labels will soon have to decide whether to offer artists and their heirs big settlements or lose control over huge swaths of their catalogs. The way things are headed, record labels may have to start relying on actually recording music instead of selling the same old work over and over in one new format after another.

Or maybe they will simply be forced to accept their new place as just service providers for musicians instead of the center of the music world.

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8 user comments

18.11.2011 3:42

Quote:
Or maybe they will simply be forced to accept their new place as just service providers for musicians instead of the center of the music world.
I live for the day.

28.11.2011 4:38

Originally posted by DDR4life:
Quote:
Or maybe they will simply be forced to accept their new place as just service providers for musicians instead of the center of the music world.
I live for the day.
LoL...and maybe dolphins will learn to fly.


38.11.2011 11:30

haha....music industry getting a taste of their own medicine.


Forza Juve!!

48.11.2011 14:48

the only thing that's going to happen is we will all be charged 1.99 per song. when that doesn't sell labels will cry piracy pay a few politicians and get some laws changed.


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59.11.2011 2:40

Originally posted by DXR88:
the only thing that's going to happen is we will all be charged 1.99 per song. when that doesn't sell labels will cry piracy pay a few politicians and get some laws changed.
Lol. That's so true.

69.11.2011 5:52

Originally posted by DXR88:
the only thing that's going to happen is we will all be charged 1.99 per song. when that doesn't sell labels will cry piracy pay a few politicians and get some laws changed.
I blame the musicians...it is easy to blame the terrorists, but there will always be terrorists...so instead I blame those who sign contracts with the terrorists knowing that they would do better on their own.


711.11.2011 9:32

I don't agree, KillerBug. What do you expect from some 20-something garage band..?

811.11.2011 12:43

Originally posted by KillerBug:
Originally posted by DXR88:
the only thing that's going to happen is we will all be charged 1.99 per song. when that doesn't sell labels will cry piracy pay a few politicians and get some laws changed.
I blame the musicians...it is easy to blame the terrorists, but there will always be terrorists...so instead I blame those who sign contracts with the terrorists knowing that they would do better on their own.
Originally posted by Bozobub:
I don't agree, KillerBug. What do you expect from some 20-something garage band..?
The problem is the music industry has a glitz that gives a jump start over what a garage band could do in ten or twenty years. The downside being the middleman who not only takes his cut but also dictates artist actions (when to record vs concert dates for instance) which the artist must pay for with little input as to venue or costs

the indi "label" sites are making it easier to make and sell music but larger venues require funds and organization not available to unsigned bands.

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