Universal Music Group, a Vivendi unit, won a jury verdict over royalties from iTunes downloads and mobile-phone ringtones in a lawsuit brought by the Detroit producers who helped launch rapper Eminem’s career.

A jury in Los Angeles found that Universal Music wasn’t liable for breach of contract, rejecting arguments by FBT Productions LLC that Eminem is entitled to half the net receipts the record company gets for the downloads, rather than his standard royalties from record sales. The producers, who first signed Eminem in 1995, get a cut of the royalties the label pays the artist.

A verdict for the producers could have brought millions of dollars for artists whose contracts with record labels pre-date the birth of digital download sites and mobile phone ringtones, which have energized sales of long-dormant recordings.

It also might have fortified efforts of artists who have refused to sell their recordings on iTunes, such as Kid Rock and the owners of the Beatles catalog, because they receive so little of the proceeds, Joel Martin, one of the plaintiffs, said in an interview during the trial.

Universal Music’s lawyers told the jurors that iTunes downloads are no different from retail sales of compact discs under the contract’s royalties provisions. FBT Productions claimed that downloads instead fall under a contract clause governing the label’s licensing of the recordings to third parties, for which the artist gets a 50 percent royalty.

Eminem wasn’t a party in the case.

FBT Productions, owned by brothers Jeff and Mark Bass, signed Eminem to an exclusive recording deal in 1995. In 1998, they made a deal with rapper Dr. Dre’s Aftermath Records, a unit of Universal Music, which released Eminem’s breakthrough album, The Slim Shady LP.

Source: Bloomberg