Chuck D Sues Label Over Digital Royalties

The MC-activist's suit could have major ramifications for the music industry.

Posted: 11/03/2011 11:41 AM EDT
Chuck D, Public Enemy, sues label

Chuck D is fighting the power yet again — this time in court. The Public Enemy front man filed a class action suit against Universal Music Group, claiming underpayment of royalties on digital downloads.

According to The Hollywood Repoter, the lawsuit, filed in San Francisco federal court yesterday, alleges that UMG consistently underestimates royalties owed to artists for digital downloads, such as MP3s and ringtones, by treating them as “sales” of physical albums rather than “licenses.”

Chuck D's suit comes in the wake of a federal judge's decision on Tuesday to allow a similar class action suit brought by Rob Zombie and the estate of Rick James to proceed. Taken together, the two suits could have a huge impact on the music industry. By treating digital downloads as they do sales of physical albums, labels only need to pay artists a royalty rate that's approximately between 10 and 20 percent. However, these class-action suits argue that this rate is unfair because there is little manufacturing expense involved in downloads. If the suits successfully convince the courts that the downloads constitute "licenses," artists may be able to earn an approximate 50 percent split on digital revenues.

 

In Chuck D's case, his attorneys highlighted a 2010 decision by the Ninth Circuit Court of Appeals that they say offers some precedent that digital downloads be viewed as "licenses." "Chuck D has been ‘fighting the power’ for over two decades and will continue to do so through this suit in order to help all musicians, including many legacy artists who are living on fixed incomes," said lawyer James Pizzirusso.

"This complaint suffers from serious flaws and weaknesses, not the least of which is that the claims asserted are not appropriate for class treatment," a UMG spokesperson said in response to the suit. "We will vigorously defend against it."

(Photo: Chelsea Lauren/WireImage)

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