Universal Music Says Artist Privacy at Stake in Digital Royalties Dispute

Defending a class action lawsuit, the record giant wants to keep certain financial information secret.

Rob Zombie

Stephen Lovekin/Getty Images
Rob Zombie

How much do recording artists care if music industry lawyers are allowed to see the amount of money they make from digital downloads?

In 2011, a proposed class action lawsuit was launched against Universal Music Group over digital income. The litigation from Rob Zombie and Rick James on behalf of themselves and others under the UMG umbrella seeks substantial damages from the record label’s decision to treat income from downloads off of venues like Apple’s iTunes as “sales” instead of “licenses.”

Just how much money is at stake is an open question.

The lawyers representing the plaintiffs want UMG to turn over download revenue and volume data tied to particular artists so they are able to come up with a calculation of damages and order the information in an effort to gain class certification.

But UMG is telling a judge that’s not reasonable, and if it happens, the privacy of artists will suffer.

The current litigation, in many ways, is a follow-up from a path-breaking 2010 ruling by the Ninth Circuit Court of Appeals over a dispute pitting Eminem‘s production team of Mark and Jeff Bass against Eminem’s record label, Aftermath (a subsidiary of UMG). At the 9th Circuit, the judges ruled that a lower court had erred by not deeming the label’s agreements with third-parties download providers as licenses instead of sales.

The attorneys for other UMG artists want to repeat the success, which would entitle these artists to collect about 50 percent of collected digital revenue instead of about 15 percent.

But this case is somewhat more complicated given the potential number of artists who have contracts with UMG. Not every artist has precisely the same contract. Not all artists enjoy the same level of success. Commonality is one of the factors that a judge will consider when deciding whether or not to certify a class action.

The plaintiffs’ lawyers think that having access to data will help them sort through the issues in preparation for certification. And they’re not willing to settle for data that leans on anonymity such as “Artist #437 had 1000 downloads and $785 in download revenue in 2005.”

The plaintiffs are willing to designate the information potentially handed over as “Attorneys’ Eyes Only,” but UMG is objecting with a noteworthy argument on “third-party privacy interests.”

UMG says that “the issue’ here is that the plaintiffs’ attorneys — “all 50 or so of them” — do work in the music industry. UMG lawyers states in a court filing on Friday, “Under plaintiffs’ proposal, plaintiffs’ attorneys and music-industry professionals could review the private financial information of thousands of recording artists with whom they may have adverse relationships, and who have not indicated any desire to be part of any class or to be represented by these attorneys or professionals.”

In the case involving Eminem music referenced above, UMG asserts that “when plaintiffs earlier sought private download data for just a single artist, Eminem… he strenuously objected, and was prepared to intervene until Plaintiffs agreed not to seek such data at all.”

UMG also believes that the “true, disguised purpose in seeking the artist names is to help evaluate their case for settlement purposes.”

Nonsense, responds the other side.

According to the court documents, the plaintiffs tell the judge, “It is ironic that UMGR continues to press for more information about how Plaintiffs will calculate their damages, but seeks here to deprive Plaintiffs of important data Plaintiffs can use both for internal analysis of class certification theories, and to illustrate for the Court available methods for calculating damages for any class or subclass. Plaintiffs should not be handicapped in these tasks.”

E-mail: eriq.gardner@thr.com; Twitter: @eriqgardner