In what may prove to be the template for settling the Eminem vs. Universal and dozens of other artist (or production company) vs. major label lawsuits, Sony Music has settled a class action lawsuit including The Allman Brothers, Cheap Trick, and The Youngbloods for $7.95 million. Lawyers had sought $25 million, but in addition to the cash, the artists receive significantly increased royalties going forward.
This week's settlement guarantees 3% increase in royalties, which represents 50-65% more than many of the artists covered in the suit had been receiving. The Youngbloods, for example, had been getting 4.7% prior to the settlement. Class members include musicians with Sony recording contracts signed between 1976 and 2001 which included clauses stating that the labels paid 50% percent of net revenue on licensed music.
With the increase, catalog sales, which have sustained many record labels in recent years, have become less profitable. But the real problem for labels is the dozens of similar lawsuits sure to reach the courts in the coming months, including a new round in the high profile battle between Eminem's former production company and Universal Music.
If the Sony settlement, is a hint of things to comie, the major's could avoid huge and potentially crippling cash payouts in exchange increased future royalties.