Black Sheep have filed a massive class action lawsuit against Universal Music Group over unpaid royalties in relation to an alleged side deal with Spotify.
According to Rolling Stone, the duo (comprising 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 allege that Universal accepted both cash and company stock from Spotify in exchange for music from their artists, and then turned around and only counted the cash when it distributed royalty payments.
In the lawsuit, Black Sheep state that the “previously undisclosed” deal violated the contract they have with former Universal subsidiary Polygram dating back to the ’90s, which requires Universal to pay 50 percent of all net receipts connected to exploitation of the duo’s music.
“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,” the docs state.
“Yet rather than distribute to artists their 50 percent of Spotify stock or pay artists their true and accurate royalty payments, for years Universal shortchanged 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 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 UMG spokesperson called the allegations “false and absurd.”
“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,” 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 they did not respond.
The $750 million number is derived from a September 2021 Universal report that valued its stake in Spotify at approximately $1.7 billion. The lawsuit alleges a “substantial portion” of that stake stems from the shares Universal and its subsidiaries acquired in or around 2008.
As for exactly how many artists are involved, Black Sheep couldn’t provide an exact number, but they believe “it encompasses at least thousands of artists whose identities can be readily ascertained from Universal’s records.”
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