Lawsuit Seeking Greater Digital Royalties for Eminem\'s Music Is Settled

Larry Busacca/Getty Images for the Recording Academy Eminem performing at the Grammys in 2011.

A federal lawsuit that has been closely watched in the music industry because of its potential effect on the contentious issue of digital royalties has been settled.

In the case, F.B.T. Productions v. Aftermath Records, a team of Eminem's early producers sued a subsidiary of the Universal Music Group, arguing that they were not getting the royalties they were owed from downloads at iTunes and other digital stores.

The label calculates the royalties for those downloads as it does for CDs, but F.B.T. contended that the downloads should instead be treated as licensed music, whic h pays substantially higher royalties. (In typical contracts, artists earn a royalty of 10 percent to 20 percent from sales of albums and singles, and 50 percent from licenses for other uses, like a TV commercial.)

The United States Court of Appeals for the Ninth Circuit, in California, ruled in F.B.T.'s favor in 2010, overturning a jury verdict by a lower court, and the parties have been involved in a damages trial for more than a year. They announced the settlement in a court filing on Monday, but both sides declined to reveal the terms of their agreement.

The F.B.T. case - Eminem himself was not a party - opened the door for a wave of litigation over the last two years. Artists as varied as Kenny Rogers, James Taylor, the Temptations, Weird Al Yankovic and Rob Zombie have all filed suits arguing that their labels owed them huge amounts of digital royalties. Sony settled a similar class-action suit earlier this year, agreeing to pay artists a total of $8 millio n.

The full effect of the F.B.T. case on the music business is still unclear. Universal declined to comment on Tuesday, but in the past the company has disputed that the case set a legal precedent. David M. Given, a lawyer in San Francisco involved in a number of such cases, including one filed by the estate of the singer Rick James, disagrees with that view.

“The legal precedent the case set has already had a profound impact,” Mr. Given wrote in an e-mail on Tuesday. “If U.M.G. paid the price, which I think it probably did, then that will set the bar (which I expect will be high) for the settlement of other download royalty claims, like the ones in the James class action, for other recording artists.”

Ben Sisario writes about the music industry. Follow @sisario on Twitter.