Kieran Hebden, the English producer known as Four Tet, has been a major presence in electronic music over the last two decades. In the early 2000s, he began to attract attention for his intelligent blending of electronic production with organic sounds from folk, jazz, and hip-hop, and he has been credited as one of the pioneers of “folktronica.” After receiving a $70,000 settlement in a recent dispute with his former record label, Domino Recording Company, fellow songwriters are hoping he can also be a pioneer on the legal frontier.

In 2020, Hebden sued Domino – a major UK indie record label that represents the likes of Franz Ferdinand and Arctic Monkeys – for the difference between the 50% streaming royalty rate he argued he was owed under the contract and the 18% rate he was receiving. While an 18% rate is not unusual among major labels, independent labels like Domino tend to pay 50% on streaming revenue. Hebden argued that his cut of the streaming royalties should be determined by the provisions in the contract that govern international licensing and flat fees, which would grant him 50% of the revenue paid to the label for downloads and streams of his music.

Context on how labels traditionally structure deals with songwriters is helpful to understand Hebden’s argument. An artist usually receives a smaller percentage on the sale of a record than they do on the licensing of a recording for use by another party. This disparity made sense when music was primarily consumed through the purchase of physical albums, which had associated production and distribution costs, but the studio does not bear these costs when simply dealing with a streaming service. Artists who signed with record labels before the rise of streaming are stuck in agreements that allow the record labels to pocket the money that would have gone to production and distribution. As a result, Hebden’s claim turned on whether you view the streaming transaction as a license from the label to the streaming service for the use of the artist’s masters or as if each stream were a sale.

As Pitchfork points out, the question of whether digitally distributed music should fall under the sale or licensing provision of a contract resulted in several lawsuits in the 2000s after the emergence of iTunes. One such case that actually made it to trial was F.B.T. Prods., LLC v. Aftermath Records, 621 F.3d 958 (9th Cir. 2010), a case in which Eminem’s production studio, F.B.T., sought compensation for underpaid royalties from Aftermath Records. The contract at issue provided for between a 12% and 20% royalty rate on sales (the contract called this the “Records Sold” provision) and a 50% royalty rate on masters licensed to a third party. When Aftermath made a deal with Apple for the sale of Eminem’s music on iTunes, it interpreted each download on the platform as if it fell under the Records Sold provision, and thus paid the lower rate. However, the court viewed the transaction as a licensing and ruled that F.B.T. was entitled to the 50% rate. Although each purchase arguably did fall under the Records Sold provision, the court held that this did not preclude a transaction from receiving the 50% royalty rate, so long as the label licensed the master to a third party.

The court was able to reach this conclusion because of contract-specific language, so it is unclear how the result would apply to different deals. However, it seems that F.B.T. ‘s argument would be even stronger in a streaming royalties dispute since it is much tougher for a label to argue that a stream qualifies as a sale. If a court were to weigh in on whether streaming agreements should fall under the licensing provisions of record deals, it would help artists stuck in outdated contracts receive the compensation they deserve.