On Thursday, legendary singer-songwriter James Taylor filed a complaint in Los Angeles Superior Court against Warner Bros. Records. The document claims that Taylor is owed nearly $2 million in royalties from digital downloads. Taylor was on the label from 1969 until 1979, when he moved over to Columbia.
Taylor’s main complaint is one that many artists have levied at their record labels: While most digital downloads are treated the same as physical sales, many artists are claiming that a digital download should be treated like a license. The difference is astronomical, as most recording contracts generally give the artist around 10% of the fee for sales but as much as 60% for a license. Taylor’s royalty rate for licenses is 50%.
Taylor has been combing through the label’s accounting for several years, uncovering a number of other places where he feels like he was short-changed. He joins artists like Kenny Rogers, Rob Zombie, George Clinton, and Chuck D, all of whom have filed similar suits against their labels.
A few years back, Eminem seemed to set the precedent that allowed the floodgates to open for these types of suits. In 2010, the 9th Circuit Court of Appeals ruled that because a digital download is a more versatile technology than a traditional physical single or album, its use could be spread to other mediums or altered in ways that would otherwise represent revenue streams for the artist (the creation of ringtones, for example). Thus, Slim Shady was allowed to cash in on his 50% license rate.
That decision could potentially open the floodgates and allow quite a few legacy artists—many of whom signed contracts well before the idea of a download was even invented—to cash in on millions of dollars of back royalties owed and put quite a hurt on record labels, many of whom rely on their legacy artists’ ongoing sales to prop up their generally sagging bottom line.