Black sheep has filed a massive class-action lawsuit against Universal Music Group over unpaid royalties related to an alleged side deal with Spotify.
According to Rolling stonesthe duo (consisting of Dres and Mista Lawnge) are accusing UMG of owing over $750 million, not only to them, but their entire artist roster for allegedly breaching contracts with a “sweetheart” deal with Spotify.
Black Sheep alleges that Universal accepted both cash and company stock from Spotify in exchange for music from its artists, then turned around and counted only the cash when it distributed royalty payments.
In the lawsuit, Black Sheep states that the “previously undisclosed” agreement violated the contract it has with former Universal subsidiary Polygram dating back to the 1990s, which requires Universal to pay 50 percent of all net receipts associated with the utilization of the duo’s music. .
“In the mid-2000s, Universal entered into an undisclosed sweetheart deal with Spotify, whereby Universal agreed to accept significantly lower royalty payments on behalf of artists in exchange for an equity stake in Spotify — then a fledgling streaming service,” says doc.
“Yet instead of distributing their 50 percent of Spotify shares to artists or paying artists their true and accurate royalty payments, Universal has for years rejected artists and deprived plaintiffs and class members of the full royalty payments they were owed under Universal’s contract.”
It continues: “For approximately a decade, Universal omitted from the royalty statements Universal issued to the plaintiffs that it had received Spotify stock in connection with the ‘use or exploitation’ of Black Sheep recordings.”
In a statement to the publication, a spokesperson for UMG called the allegations “false and absurd.”
“Universal Music Group’s innovative leadership has led to the renewed growth of the music ecosystem for the benefit of recording artists, songwriters and creators worldwide,” they said. “UMG has a well-established track record of fighting for artist compensation, and the claim that it would take equity at the expense of artist compensation is patently false and absurd. Given that this is pending litigation, we cannot comment on all aspects of the complaint. “
Spotify was also contacted for comment but did not respond.
The $750 million figure comes from a September 2021 Universal report that valued its stake in Spotify at approximately $1.7 billion. The lawsuit alleges that a “substantial portion” of that stake comes from the shares Universal and its subsidiaries acquired in or around 2008.
As for exactly how many artists are involved, Black Sheep could not provide an exact number, but they believe that “it includes at least thousands of artists whose identities can be easily ascertained from Universal’s records.”