At issue is whether the music sold through these services is a "license" or a "sale." Sony pays less to its artists for sales than for licensing (Sony artists reportedly earn $0.045 for each $0.99 song sold on iTunes). Naturally, Sony claims that the songs sold on iTunes are sales and not licensing deals.
This is where it gets interesting. As Brad Templeton and others have pointed out, Sony and others have long maintained that what you get when you buy an iTune is a license, not ownership of a product. That license prohibits you from doing all kinds of otherwise lawful things, like selling your music to a used-record store, loaning it to a friend, or playing it on someone else's program.
But if Sony says that it's selling products (and therefore only liable for 4.5 cents in royalties to its artists) and not licenses, then how can it bind us, its customers, to licensing terms?
According to the suit, the record company is treating digital downloads like traditional record sales, rather than licensed music, triggering a different royalty deal.Link (via /.)
Under that old rubrik, the record company deducts fees for the kind of extra costs they used to incur when records were pressed on vinyl, including packaging charges, restocking costs and losses due to breakage.