Blog Post

Lawsuit Claims That Download And Store Purchases Should Be Treated Differently

Not to make too big a deal out of a single lawsuit but the argument by Third Story Music, the LA music publisher that owns the rights to Tom Waits’ earlier work, that downloads of those songs and albums should be treated as third-party licenses raises questions that could bleed into areas beyond music. Third Story is suing Warner Music Group, claiming that the record company should be paying royalties for Waits’ music at the high-percentage third-party license rate (25 or 50 percent) instead of the lower rate (9 or 13 percent)for sales. Warner gets 67 cents for every $0.99 download, according to Reuters. WMG replied in March that downloads “are sold to customers such as iTunes and Listen.com just as physical product is sold to … Best Buy and Virgin.” (Irony alert: “Small Change” is one of the Waits’ albums in question.)
Some questions: Could subscription music (and other content) be considered third party while downloaded purchases would be treated the same as physical stores — one as a license for listening; the other for sale? Would there be one percentage for something purchased at a bricks-and-mortar store and a different one for a download from that same store’s online outlet? Again, right now it’s just a single lawsuit in federal court in California.