I have been arguing this point for years as anyone taking one of my classes at Berklee can testify.  This past week, rapper Eminem and his former production company F.B.T Productions won a significant digital royalties lawsuit granting the artist and production company a 50% split of revenue from digital downloads and ringtones. Universal Music Group will be required to pay a higher share of royalties for downloaded music or on ringtone sales according to a recent ruling by a federal appeals court.

This is a potentially HUGE change from how the recorded music industry’s business model works.  This new ruling may now mean that digital copies of  music are digital “masters,” which command a much higher royalty share than single or album “sales” do.

When consumers purchase a download from iTunes, they are actually “licensing” the song for playback within certain boundaries. According to many label contracts, licenses are to be treated as splits, perhaps split 50/50 between artist and label. To date, that has not been the case as downloads via iTunes and other sites have been treated as “sales” of copies of the song, rather than a license of the “master recording”.  Eminem and company challenged that assumption.