The music publishing companies that represent rap artist Eminem have filed a multimillion-dollar suit against Apple Inc. for selling downloads of Eminem's music on iTunes online music service without compensating them. The suit could have ramifications for the current compensation plan that online music services have for divvying up profits between record labels and the publishing companies that hold rights to artists' songs.
Typically, Apple charges US$0.99 a song for music downloaded from iTunes, and then compensates the artist's record label a percentage of that sum. The label then will pay the music publishers of the artist a small portion of that sum.
But the suit, filed Monday in a U.S. District Court in Detroit by Eight Mile Style LLC and Martin Affiliated LLC, Eminem's music publishers, attacks Apple. The publishers claim they are not receiving compensation from Universal Music Group, the record label that publishes Eminem's albums.
Apple declined to comment on the lawsuit.
Mike McGuire, a research vice president at Gartner Inc., said it's odd the publishers are filling suit against Apple for payment they should be getting from labels, unless they "are realizing we could get a straight payment out of Apple and the other online stores instead of waiting for the label," he said.
In their claim, Eight Mile Style and Martin said they have not authorized Universal to distribute digital transmissions of the songs to Apple. They also outline the set-up that is typical with music-download services, saying that Apple has "provided and continues to provide digital downloading of [Eminem's] recordings ... on a regular and systematic basis to end users" but has only shared the compensation it has received from those downloads to Universal. The complaint also said that Apple has provided no compensation to Eight Mile Style or Martin for its use of the songs for which the two companies own the rights.
McGuire said that, depending on the outcome, the suit "could send a chill down the spine of your average music label executive" if Apple and other music services decide to set up direct relationships with music publishers instead of letting the record labels handle the compensation.
"The labels right now, because of the pass-through set-ups, they control how the money is divvied up," he said. "This might be unnerving for the labels. [It would be] one less thing they control of."
Eight Mile Style and Martin are requesting that the court order Apple to stop selling Eminem's music on iTunes and are seeking profits Apple has earned from selling Eminem's music. Alternatively, the companies seek statutory damages of up to $150,000 per act of infringement, which could tally up to millions of dollars. They are also seeking damages for "suffering" in excess of $75,000.
The suit is the second time Apple and Eminem's publishers have met in a legal dispute. In 2004, Eight Mile Style and Martin also sued the computer and gadget maker for using Eminem's song "Lose Yourself" in a television advertisement for Apple's iTunes online music service. The suit was settled out of court, but the companies did not disclose the financial sum of the settlement.