SAN FRANCISCO (Hypebot) – A Federal Appeals court in San Francisco has ruled that songs downloaded from iTunes and other digital retailers are not actually purchased, but instead licensed by the buyer.
The decision involving rapper Eminem's earlier recordings is a blow to labels and could mean a jump in revenue for older artists.
Under most older recording contracts, artists get 50% of revenue from licensed uses of their music which was originally intended to include movies, TV and advertising. Full music sales, on the other hand, reap just 8-18% for most artists.
According to the Ninth Circuit court, even DRM free downloads are encumbered by enough restrictions that they should not be considered sales. Most newer contracts address the issue differently.
But Universal will fight the ruling. “We will be filing a petition for a rehearing,” UMG told the WSJ. “In the meantime, it should be noted that this ruling sets no legal precedent as it only concerns the language of one specific recording agreement. Any assertion to the contrary is simply not true.”