A federal judge in California is allowing a class-action lawsuit spearheaded by Rob Zombie and the estate of Rick James over digital download royalties to go forward. The Hollywood Reporter says the suit against Universal Music Group alleges the record label has “underpaid royalties on digital downloads and ringtones.” Damages in the case could could rise to the billions of dollars.

The dispute arose over music labels calling the download of song recordings via the internet or mobile phone a ‘sale’. Recording artists, noting there’s little manufacturing cost involved, consider downloaded songs and ringtones to be a ‘license’.

THR reports the difference between a ‘sale’ and a ‘license’ for accounting purposes is huge, pointing out, “If the record labels are correct, they only need to pay artists a royalty rate that’s roughly between 10 and 20 percent. If artists get their way, the revenue apportionment is much closer to a 50/50 split.”

The suit could end up playing a major role in the way music is distributed in the future and could mean the end of record labels as we know them. According to THR a study by the Future of Music Coalition estimates “the difference in interpretation just for music downloaded off of iTunes alone could be $2.15 billion. Considering all the other digital outlets out there, and the fact that consumers increasingly get music through digital channels, an adverse judgement for record labels in the current class action could threaten their continued viability.”

Public Enemy‘s Chuck D got involved today, filing his own lawsuit after the federal judge’s decision was announced. Chuck isn’t just in it for himself. His lawyer told The Hollywood Reporter, “Chuck D has been ‘fighting the power’ for over two decades and will continue to do so through this suit in order to help all musicians, including many legacy artists who are living on fixed incomes.”

Here’s some of the plaintiffs, in less litigious days:

Eddie Murphy & Rick James:

And Chuck D with Flava Flav:


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