Universal Music Group has been hit with a new lawsuit.
Filed in a federal court in Manhattan, the “The Choice Is Yours” rappers claim that Universal Music Group “owes more than $750 million to its stable of artists for allegedly breaching contracts with a ‘sweetheart’ deal with Spotify,” including their own early 1990s contract — the outlet reports.
Titus and McLean also claim that UMG received cash and company stock from Spotify in return for music from its artists. However, the cash was said to only be counted when it distributed royalty payments.
What’s more, the group alleges that UMG was in on negotiating lower royalty payments from Spotify to have the stock and use it to its advantage.
Black Sheep’s “previously undisclosed” deal with UMG’s predecessor, Polygram, reportedly requires the company to pay 50 percent of all net receipts connected to the group’s exploitation.
“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 lawsuit claims, according to documents obtained by the outlet. “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.”
“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 lawsuit also claimed.
UMG’s stake in Spotify had a valuation of $1.7 billion back in September 2021, which allegedly a “substantial portion” of it is from UMG and its subsidiaries acquired shares from in or around 2008.
The lawsuit details that due to UMG continually breaching contracts, it “unlawfully retained” $750 million in royalties that belonged to Black Sheep and fellow artists who were exploited.
On the other hand, UMG has issued a statement.
“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 told Rolling Stone. “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.”
In regard to the sizing of the lawsuit’s possible class, Titus and McLean claim that “it encompasses at least thousands of artists whose identities can be readily ascertained from Universal’s records.” Additionally, a motion to seek class certification is in the works.