Labels Could Owe Artists More Than $2 Billion In Unpaid Royalties

(Updated)This guest post by Dave Kusek, a VP at Berklee College of Music and CEO of Berkleemusic was experpted with permission from his Future Of Music blog.

U If you are a recording artist or a manager and have been distributing music on iTunes under a deal with one of the big record labels, pay attention.

…the producers who helped Eminem achieve his success are paving the way via a lawsuit against Universal Music and others, to larger payouts for digital music sales via iTunes and other digital services both past and future. This effort could unleash literally billions of dollars in unpaid royalties for recording artists. (Click on image to enlarge.)

How Much Labels Could Owe Artists:

I want to be very conservative and so will assume that half the music distributed on iTunes is from catalog sales of artists with older label contracts, and the other half is from music distributed from sales of more newer artists.  SoundScan numbers from last year show 648.5 million downloads of “catalog” singles in the US, meaning songs more than 18 months old, compared with 523 million for current tracks, so this seems like a very safe assumption.

Using this quick and dirty math, the potential unpaid royalties to artists from just iTunes sales would be around $2.15 billion.  Admittedly some of this money has already been paid to music publishers, so the number may be overstated somewhat, and could benefit from a finer accounting.  But then again, existing iTunes downloads could be 80% based on catalog sales which would make the number much higher.  So the amount is significant.  Really significant. (more)

Dave Kusek is a digital music pioneer, author, businessman and entrepreneur. Kusek is Vice President at Berklee College of Music and CEO of Berkleemusic, the world's largest online music school. Kusek helped develop the Musical Instrument Digital Interface (MIDI), was co-inventor of the first electronic drums "Synare", and founder of Passport Designs, the first music software company. In 2005 he co-authored the best selling music business book "The Future of Music: Manifesto for the Digital Music Revolution".