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Record labels have argued that online sales should be treated the same as physical album sales, with the company getting a lion’s share of the royalties for such transactions, typically between 80 percent and 90 percent.

Artists have argued that because the sale of music online involves none of the expenses that record labels typically incur for selling an album — such as packaging and shipping — they’re entitled to the same larger royalty checks that artists typically get for music licensed to movies or TV shows. That is most often a 50/50 royalty split.

A federal appeals court earlier this year sided with rapper Eminem and his producers that music sold online is “licensed” and therefore entitled to the larger cut. That decision has opened the door for other artists with similar contract language to stake their own claims in court.

Used to be the agencies sent out print catalogs and sold images on CDs, which all cost extra money.  IS has yet to adequately justify why 20% was unsustainable when it has none of these types of associated costs.  Do server costs require that much of a cut of the royalties?