The case brought by rapper Eminem's former production company against Universal Music Group could have handed music artists a larger share of digital sales.
But a federal jury voted unanimously in favor of Universal Music and other defendants in the case, including rapper-producer Dr. Dre's record label, Aftermath Records, according to an Associated Press report.
Richard Busch, lawyer for plaintiff F.B.T. Productions told the AP that his clients--brothers Mark and Jeff Bass--were disappointed and were considering an appeal.
At the core of the case was F.B.T.'s argument that digital albums were different than physical sales. Artists are compensated on a royalty structure for traditional CD sales. When a CD is sold at a retail store, say at a Wal-Mart Stores outlet, the artist receives about 16 cents. The music publisher gets 9.1 cents.
Things like breakage are deducted from the artist's cut. As other bands, such as Cheap Trick and The Allman Brothers have argued, there isn't any breakage in digital music and such charges are unfair.
Some musicians want compensation for downloads to be structured like licensing fees they receive when their music is used for movies, TV shows, ringtones or commercials. In those cases, artists and labels split equally what's left after publishers takes their 9.1 cents.
Universal lawyers successfully argued that digital sales should be handled the same way as physical sales and that the royalty rate was fair.
Universal Music representative Peter Lofrumento told CNET News that the label "was pleased with the jury's verdict."