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Rick James' Estate Sues Universal for Digital Music Royalties

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By Stephanie Rabiner, Esq. on April 08, 2011 9:46 AM

The Super Freak is back from the grave!

Okay, no he isn't. But his estate is.

On the heels of the Supreme Court's refusal to hear Universal Music Group's (UMG) appeal of a 9th Circuit decision awarding Eminem 50% of all digital royalties, funk legend Rick James' estate has filed suit.

It's a class action, too.

Prior to the digital revolution, artists received a different royalty rate for "sales"--which covered CD's, vinyl and tapes--and "licenses"--which included other various uses. Licenses were awarded a much higher rate, as Techdirt notes that they required little work.

Eminem sued UMG in 2009 arguing that digital downloads and ringtones are licenses, not sales. The 9th Circuit agreed, ordering the label to pay him royalties for past and future downloads. The Supreme Court decided to let the ruling stand.

Rick James' lawsuit is based on the same grounds, but it requests class action status in order to include other musicians. If successful, the estate will receive 50% (up from 12%) of all digital royalties.

UMG may be in a bit of trouble. A large chunk of music contracts are subject to California law, and the decision in Eminem's case is binding precedent, meaning it applies to Rick James' lawsuit.

However, Rick James' lawsuit isn't as expansive as one may think. Artists that signed contracts near or after the digital music boom have set royalty rates for digital downloads and other products like ringtones, according to HipHop DX. It's only everyone that came before that they must contend with.

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