The Bass Brothers' FBT Productions and Joel Martin's Em2M filed a lawsuit Monday (May 21) against Aftermath Records, Interscope Records and others over the split of digital royalties due for Eminem's recordings. The suit claims that the labels should be paying half of the net receipts from downloads and master ringtones rather than the lesser artist royalty rate based on sales.

According to the suit filed May 21 in the federal District Court in Los Angeles, FBT entered a recording agreement with Eminem in 1995. FBT then agreed with Aftermath in 1998 to furnish Eminem's recording services to that label. Through a series of amendments and other agreements, FBT and Em2M were to receive accounting statements and royalties in connection with certain Eminem recordings. Eminem is not a party to the suit, which names as defendants Aftermath, Interscope, UMG Recordings and ARY Inc.

The complaint alleges that an audit of defendants by FBT and Eminem revealed that FBT and Em2M were underpaid by more than $650,000 from 2002-2005 since they did not receive 50% of the net receipts from the sale of downloads and master ringtones, among other reasons.

FBT and Em2M claim the relevant contract requires payment of 50% of the net receipts from licenses entered into for the sale of records "or from other uses." Those "other uses" are downloads and master ringtones, they claim.

Older recording contracts typically provide that artists will receive a royalty for the sale of records based on the unit's retail or wholesale price -- often 10%-14% of the retail price or double that percentage of the wholesale price. When the recording is licensed, the label and artist often share equally the net receipts from licenses.

The FBT and Em2M suit is not a proposed class action lawsuit like the two suits filed last year against Sony BMG Music Entertainment in New York over the same issue of contract interpretation. The Allman Brothers Band, Cheap Trick and Elmo & Patsy class action suit targets the Sony labels, while the Youngbloods class action suit targets the BMG labels. Both suits are still pending.

Richard Busch with King & Ballow and Mark Block with Christensen, Glaser, Fink, Jacobs, Weil & Shapiro represent FBT and Em2M.

The Universal Music Group labels could not be immediately reached for comment.