Cutting the music label distributor middle-man out

The music publishing companies that oversee rapper Eminem's music, Eight Mile Style LLC and Martin Affiliated LLC, filed suit against Apple Inc. (NASDAQ: AAPL) last week over lost compensation from digital download sales. A day later, legendary rock group AC/DC announced that they would be bypassing Apple in favor of a deal with phone provider Verizon Wireless (NYSE: VZ).

In the article carried by PCWorld.com, contributor Elizabeth Montalbano quoted a researcher commenting that as a result of the suit music labels could lose control of handling artist and publishing compensation "if Apple and other music services decide to set up direct relationships with music publishers." Though seemingly unrelated, the similar move by AC/DC could signal an end to the traditional online music setup. Artists with control over their material and enough capital could engage digital providers directly. This is a trend that is already present in stores like Apple's iTunes via exclusive live tracks or other variations on hit tracks controlled through the music labels. AC/DC's deal with Verizon only builds on a preexisting alternative to products like iTunes and iPod's, adding a catalog that will not be available anywhere else. Obviously, plans such as these rely on artist-label cooperation, in this case with Columbia Records (a division of Sony Entertainment) spearheading the move away from Apple, because the deal seemed to benefit only Apple.

Eminem's case, on the other hand, does not rely on the middle-man music label. Universal Music Group is seen by analysts as the entity responsible for handling compensation from Apple to Eminem. With the suit asking for direct compensation payment from Apple, Universal would be cut out, as was mentioned above. This move comes as a complex time for Apple, as the company has joined forces with AT&T (NYSE: T) and moved into the phone arena with the iPhone, as we are all presumably aware.