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This is ALL THINGS CONSIDERED from NPR News. I'm Michele Norris.


And I'm Melissa Block.

A recent move by the Supreme Court could mean millions of dollars in additional royalty payments for older musicians. The case began with unpaid royalties from digital downloads of music by rapper Eminem. But as NPR's Joel Rose reports, the case could have implications for other artists who signed contracts before the digital era.

(Soundbite of song, "Give It to Me, Baby)

JOEL ROSE: Rick James died in 2004, but that hasn't stopped James' estate from suing his record label, the Universal Music Group.

(Soundbite of song, "Give It to Me, Baby")

Mr. RICK JAMES (Singer): (Singing) Give it to me. Give me that stuff, that funk, that sweet, that funky stuff.

Unidentified Female Singer: Say what?

Mr. JAMES: Give it to me. Give me that stuff, that funk, that sweet, that funky stuff.

Unidentified Female Singer: Say what?

ROSE: The funky stuff, in this case, is money, more specifically unpaid royalties from digital downloads.

Mr. JEFF JAMPOL: I believe that the artists are being unfairly shortchanged.

ROSE: Jeff Jampol manages Rick James' estate. And to understand his lawsuit, it helps to start with a similar case filed against the same record label. The plaintiff was FBT Productions, the producers who discovered Eminem before the rapper went on to sell more than five million digital downloads, the most ever.

(Soundbite of song, "Not Afraid")

EMINEM (Rapper): (Singing) I'm not afraid, I'm not afraid to take a stand, to take a stand. Everybody, everybody come take my hand, come take my hand. We'll walk this road together.

ROSE: Five years ago, Eminem's former producers sued Universal for unpaid royalties. The case boils down to a very specific legal distinction, the difference between a sale and a license. If you're an artist, you generally get to keep around 15 percent of the proceeds from the sale of a CD, while your record label keeps the rest. But if you license a song, say, to a TV commercial or a movie, you're entitled to a 50-50 split with your label.

Eminem's producers argued that a digital download is more like a license than a sale. Their lawyer, Richard Busch, explains why.

Mr. RICHARD BUSCH (Lawyer): Where a record label is selling a record, they have incremental costs. They have a cost for each CD, for the packaging, for the manufacturing, for the distribution. On the other hand, those incremental costs just simply are not present where they simply send a master recording over to a third party.

ROSE: So when a third party like iTunes sells a digital download, it's selling a copy of the track that the record label licensed it to make. Busch argued that FBT and Eminem should get a 50-50 split on royalties from downloads. And a federal appeals court agreed. In March, the U.S. Supreme Court denied Universal's appeal. A spokesman for Universal declined to be interviewed for this story. But in a statement, he says the case is only about one agreement with one artist and, quote, "does not create any legal precedent."

Mr. JAMPOL: I kind of call balderdash.

ROSE: That's Jeff Jampol again, the manager for Rick James' estate. He thinks the Eminem ruling has wide implications.

Mr. JAMPOL: It's very clear to me that downloads are a license, and a license calls for a payment which is much different than a sale.

ROSE: Jampol's lawsuit is seeking class action status for James and other artists, something Universal says, in another statement, it will oppose vigorously. Recording contracts are rarely made public, so it's hard to say exactly how many artists might have a similar case. And many record labels changed their contracts in the mid- to late 1990s precisely to avoid this issue. But that still leaves plenty of music recorded before the age of digital downloads.

Glenn Peoples is an editorial analyst at Billboard.

Mr. GLENN PEOPLES (Senior Editorial Analyst, Billboard): I think it's the older artists who are really at the heart of this issue. It's about interpreting old contracts. And I imagine there are a lot of old artists who might want to try that in the court and see how the court interprets these contracts.

ROSE: This could be a big problem for record labels. Catalog sales are one of the healthier parts of an ailing business. Last year, they accounted for nearly half of all digital sales. In some cases, record labels have renegotiated old contracts with their biggest sellers. But others, like the Allman Brothers Band, have sued for unpaid digital royalties.

And at 20 cents per download, even smaller sellers may find there's a lot of money at stake.

Ms. JOYCE MOORE: That's not a couple of hundred dollars. It's not even a couple of thousand dollars. It's thousands of dollars.

(Soundbite of song, "Hold On, I'm Coming")

Ms. MOORE: It's easily well more than chump change.

ROSE: Joyce Moore is the wife and manager of Sam Moore of the soul duo Sam & Dave.

(Soundbite of song, "Hold On, I'm Coming")

SAM & DAVE (Musical Duo): (Singing) Just hold on, I'm coming. Hold on, I'm coming.

ROSE: Today, Sam Moore is 75 years old and lives in Arizona. Joyce Moore says his union pension does not pay all the bills.

Ms. MOORE: For somebody that's on a fixed income, that's in his 70s, that's never had good royalties, it's life-changing money.

ROSE: That's exactly what Universal and the other major record labels seem to be worried about.

Joel Rose, NPR News.

(Soundbite of song, "Hold On, I'm Coming")

SAM & DAVE: (Singing) Just hold on, I'm coming. Hold on, I'm coming. Hold on, I'm coming. Hold on, I'm coming.

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