Andres Vargas Titus and William McLean allege that UMG unlawfully retained hundreds of millions in royalties rather than paying them to artists following a major Spotify deal.
On Wednesday, Jan. 4, the 1990s Queens hip-hop duo Black Sheep filed a class action lawsuit against Universal Music Group, alleging that they “unlawfully retained” $750 million worth of music royalties.
Best known for their 1991 hit “The Choice Is Yours,” Plaintiffs Andres “Dres” Vargas Titus and William “Mista Lawnge” McLean allege that the studio accepted cash and company stock from Spotify in exchange for music from Universal’s group of artists, but only “counted the cash” — not stock equity — when distributing said royalties.
“As a result of its continuing contractual breaches, Universal has unlawfully retained approximately $750 million in royalties that should have been paid to plaintiffs and the class,” the lawsuit filed by New York law firm Wittels McInturff Palikovic states.
Furthermore, the suit says the “undisclosed” deal violated Black Sheep’s contract with Universal predecessor Polygram from the early 1990s, which entitles Universal to pay 50% of all net receipts connected to the alleged exploitation of Black Sheep’s music.
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“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. 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,” the lawsuit claims.
Unsurprisingly, Universal is fighting the suit. In a statement to Rolling Stone, UMG called the claims “patently 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,” a UMG spokesperson said in the statement. “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.”
As of Sept. 2021, Universal’s stake in Spotify was valued at roughly $1.7 billion, with a “substantial portion” coming from the deal in question, according to documents filed in Manhattan federal court.
Titus and McLean of Black Sheep say they don’t know the “exact size” of the lawsuit’s possible plaintiff class considering that UMG might’ve held royalties from “thousands” of artists that have been signed on with the company.
Keep an eye on this story. There have been several controversies surrounding demand-side platforms such as Spotify, Apple Music, and Tidal and the legal and ethical conversation around artist royalties in a world of fast-evolving technology and methods of consumption.
Black Sheep’s latest allegations against UMG and Spotify are merely the latest.
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