Eminem's latest day in court likely to be felt far and wide

By Guy Adams

The last time Eminem took part in a career-changing court case, it revolved around his decision to pull a 9mm semi-automatic pistol during an argument.

That was in 2001. This week, Eminem's lawyers returned to court for a very different trial. Unlike its predecessor, in which the emerging star narrowly escaped prison on gun charges, this case has financial implications that could affect the entire record industry.

The rap artist's publishing company, FBT Productions, is suing his record label Universal for US$1.6 million ($3.1 million) in what it claims are unpaid royalties for songs and albums that were sold in digital formats.

Although it revolves around a single unpaid bill, the outcome of the case, which began on Tuesday in California, will affect the entire definition of the term "digital royalties".

The jury will hear evidence from Steve Jobs, the founder of Apple, who despite his health problems will give evidence via video link, and the hip-hop mogul Jimmy Iovine. Both men are expected to discuss the pressing issue of what proportion of a record's digital sale price should legally go to a recording artist.

At present, the royalty for downloads is not specifically stated in thousands of contracts signed before the emergence of online music retailers. Universal and other record companies say they fall under "distribution" agreements, which give an artist roughly 30 per cent of the sale price.

Eminem says they should fall under a "licensing" contract, with proceeds split 50-50. If the jury sides with the rap star's lawyers, the trial could serve as a landmark case that would force already-struggling music companies to pay hundreds of millions - if not billions - of extra dollars to artists.

The trial's outcome is likely to revolve around the jury's interpretation of specific words in previous contracts.

"If you give the music to a third party without cost to you, like manufacturing or packaging, that's the same as a licensing agreement," said a member of Eminem's legal team. Universal has declined to comment.

- INDEPENDENT

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