Hip-hop group Black Sheep has filed a class action lawsuit against Universal Music Group, claiming the company 'unlawfully retained' $750 million in royalties as part of a 'sweetheart' deal with Spotify. UMG called the claim 'patently false and absurd.'
Plaintiffs Andres “Dres” Titus and William “Mista Lawnge” McLean allege Universal accepted both cash and company stock from Spotify in exchange for music from Universal’s stable of artists but then only counted the cash when it distributed royalty payments.A Wolf in Sheep’s Clothing
, Titus and McLean say the “previously undisclosed” deal violated their early-1990s contract with Universal predecessor Polygram, which requires Universal to pay 50 percent of all net receipts connected to exploitation of Black Sheep’s music. The group claims that Universal knowingly negotiated lower royalty payments from Spotify to obtain the stock and then retained the stock for its own benefit.
“In the mid-2000s, Universal struck an undisclosed, sweetheart deal with Spotify whereby Universal agreed to accept substantially lower royalty payments on artists’ behalf in exchange for equity stake in Spotify – then a fledgling streaming service.
“For approximately a decade, Universal omitted from the royalty statements Universal issued to plaintiffs that it had received Spotify stock in connection with the ‘use or exploitation’ of Black Sheep recordings,” the new filing obtained by“Universal Music Group’s innovative leadership has led to the renewed growth of the music ecosystem to the benefit of recording artists, songwriters and creators around the world,” a UMG spokesperson said in a statement to“UMG has a well-established track...
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