Eminem's Lawsuit Over Royalties Finally Goes to Trial

Eminem's two-year-old lawsuit with Universal Music Group over royalties from music downloads finally goes to trial today, according to The Wrap.

Eminem has sued Universal over how much he is entitled to when UMG sells his music to third-party distributors -- including Apple’s iTunes and phone companies like Sprint and Nextel, which offer the music for ringtones.

At stake is potentially hundreds of millions of dollars for recording artists whose songs have gained unprecedented levels of distribution through digital downloads.

While digital royalties have become a growing source of conflict between artists and record companies in recent years as downloads have gained in popularity, the trial in U.S. District Court for the Central District of California represents the first legal test of the competing issues.

The key question for the court, entertainment lawyer Jay Cooper said, is whether the jury will determine that the use of an artist’s music in a download deal is a licensing agreement or a distribution deal.

The difference in monetary gain for artists is potentially huge. Under traditional licensing agreements, which cover records and CDs, the artist splits royalties 50-50,with the record company. Extended to include digital downloads, that could mean as much as 35 cents for the artist for every iTunes purchase. Under a distribution arrangement, the artist might see less than 20 cents.

Slated to testify: Jimmy Iovine, a founder of UMG and its distribution label, Interscope Records, and its subsidiary, Aftermath Entertainment, the lead defendant and Steve Jobs, chief executive of Apple Computers, Inc. Eminem, who is working on a come-back, is not expected to appear.