King & Ballow's Richard S. Busch continues his assault upon the major label tradition of paying standard artist royalties for downloads instead of a 50% licensing royalty. The attorney has filed a lawsuit on behalf of Doobie Brothers singer Michael McDonald against the Warner Music Group in the U.S. District Court of Middle Tennessee in Nashville.
The suit alleges that WMG has "failed to correctly account and to pay McDonald for masters licensed to third-part music downloaders." The damages amount is to be determined by the suit, but the filing alleges that it is expected to exceed $500,000.
Busch began attacking the label royalty payment policies on behalf of Eminem's former production company, F.B.T. Productions. The company filed suits against Universal Music Group in 2007 and 2008 for alleged underpayment of royalties. The suit argued that UMG should've treated sales of digital downloads and mastertones of Eminem's music the same way it would treat a master license. In cases of a master license use, the artist and F.B.T. would be entitled to a royalty rate of 50% of net receipts, rather than the traditional 12%-20% rate on retail sales of music.
A federal jury rejected F.B.T.'s claim, but an appellate court overturned the ruling and the U.S. Supreme Court last year declined UMG's request to review the decision. Since then Busch has filed separate similar suits on behalf of the estate of Knack drummer Bruce Gary, Peter Frampton and Kenny Rogers.
This latest suit goes a step further by alleging a conspiracy among record labels to deprive artists of their proper royalties for the licensing of master recordings for sale or distribution by third-party downloaders. The suit claims that the conspiracy could not exist if any one label accounted for and paid licensed download royalties correctly.