Warner Music Group will today (February 25) conclude a long-running $11.5m settlement with more than 2,000 artists who have brought class action suits against the company in the US.
The artists claim they had been short-changed on their digital royalties from historic downloads and ringtones. They argue that rather be paid the standard artist royalty – somewhere between 6% and 20% – they should have received payment on a licensing basis, splitting revenues 50/50.
The initial artist suit in the case was filed in 2012, with plaintiffs including Kathy Sledge-Lightfoot, Gary Wright and Ronee Blakely, but has since attracted thousands of claims.
Warner has advertised the opportunity for artists to receive the settlement in national US media and a website has been created to inform any artists with a contract dated before 2002 on a WMG U.S. Label – one which pays ‘on a Royalty Rate Basis or a Penny Rate Basis’ – that they could be entitled to a slice of the settlement.
MBW has learnt that a Federal Judge in California granted final approval of the settlement on January 12, 2015. This should become effective today (February 25), following a 30-day appeals period.
In the Judge’s ‘Motion for Final Approval of Class action Settlement, filed on January 8, 2015, it is revealed: “The settlement has seen an overwhelmingly positive reaction from the music community, with 2052 claims being filed and only 40 opt outs.”
Those 40 opt-outs are now likely to try and claim retrospective royalties off their own backs. As for the 2,052 claimants, it is likely their royalty rates will now be raised by WMG for future sales.
Warner will make available $11.5m – less around $3m in attorneys’ fees and costs – to compensate class members for past sales of downloads and ringtones later this year.
The plaintiffs based their claims on ‘a previous ruling that held another recorded music company had breached the specific recording contracts’.
This almost certainly refers to Eminem’s victory against Universal Music in 2012 for unpaid ringtone and download royalties.
At no stage has Warner accepted liability for its royalty payments being wrongly categorised.Music Business Worldwide