NEW YORK - The world's largest music group Universal on Tuesday announced a US$11.5 million (S$15.6 million) settlement with artists who alleged unfairly low royalties since the start of digital downloads.
The decision ends for now a long-running dispute in the music business as the two other record label conglomerates, Warner Music and Sony Music, earlier reached similar settlements.
Musicians including Chuck D of Public Enemy - the classic hip-hop group whose songs included "Fight the Power" - and metal band Whitesnake had sued Universal in 2011 over its formula for compensation.
Labels have classified digital downloads on sites such as iTunes as "sales" - similar to CDs or vinyl, in which artists generally earn around 15 per cent from sales.
The plaintiffs said that downloads, which do not require the label to manufacture a physical product, were more accurately "licenses" in which artists earn half of the revenue.
Universal Music Group, a California-based unit of French conglomerate Vivendi, stood by its position as it announced the settlement.
"Although we are confident we appropriately paid royalties on digital downloads and adhered to the terms of contracts, we are pleased to amicably resolve this matter and avoid continued legal costs," it said in a statement.
Len Simon, a lawyer for the plaintiffs, called the settlement "a fair resolution of this controversy." Of the $11.5 million in the settlement, around $3 million will go to legal costs.
Artists can apply for a share of the remaining fund if they had a contract between January 1965 and April 30, 2004.
The artists will also enjoy an additional 10 per cent on future payments from downloads or phone ringtones.
The settlement also applies to artists on Capitol Records, the celebrated Los Angeles label whose roster has included The Beatles, Nat King Cole and Radiohead.
Capitol Records is now part of the Universal Music Group, which agreed to buy the label's British parent EMI in 2011.
The settlement was announced the same day that the global recording industry body IFPI announced that money generated from digital music matched physical sales' revenue in 2014.