At any rate, as I understood things the nub of the issue has to do with the distinction between royalties owed for sales and for licensing. Standard recording industry contracts pay sales at a lower rate, presumably because the record company can expect higher overhead. Here are some key graphs from the article linked above:
The class-action lawsuit claims that the artists' contracts require Sony to pay its artists about 30 cents out of every 70 cents it gets for digital downloads--out of a total of 99 cents that iTunes charges per song. But the complaint maintains that Sony is only paying artists 4.5 cents for each song.
The case hinges on whether a digital download is comparable to a sale of a CD, as the labels contend, or more on par with a license of a song for use on a movie soundtrack, for example, as the artists claim.
At the end of the day I'd like to see artists paid, but what really gets me is that the record companies are trying to have it both ways. As a consumer, it doesn't feel like I really own the songs that I download from the iTunes Store. After all, with other things I own -- cds for example -- I'm free to make copies for personal use, transfer title to others, and so on. Not so with downloaded tracks, which I can only (legally) use in a very constrained way. The point being that so long as the DRM significantly limits my rights regarding a downloaded track, my consumer experience is more like licensing than owning.
Which is, you know, fine. I hardly ever download music precisely because I prefer owning cds to putting up with restrictive DRM. All I'm saying is that if the record industry is going to insist on that sort of consumer/vendor relationship at one end of the supply chain, then that fact ought to be reflected in the royalties paid at the other end.