Gracie Chunes January 6th, 2023 - 4:21 PM
On Wednesday, January 4, a class action lawsuit was filed by hip hop duo Black Sheep, suing Universal Music Group over its Spotify equity ownership. Andres Titus and William McLean of Black Sheep claim that Universal owes them and other artists approximately $750 million in unpaid royalties. This is because UMG allegedly agreed to accept lower royalty rates from Spotify in exchange for shares in the streaming service in 2008.
Due to a clause in their contracts concerning “net receipts,” Black Sheep argue that they, and other Universal artists, should have been paid 50% of royalties from Spotify, as well as 5 per cent of UMG’s Spotify equity, or the value of it, because this would be “proportional” to their royalty contract according to the duo’s suit.
Universal has called Titus and McLean’s claim “patently false and absurd,” and that they have “a well-established track record of fighting for artist compensation,” Music Business Worldwide reports. Universal has publicly pledged to share proceeds from its Spotify equity with the artists on its roster, if it ever were to sell.
UMG’s annual report for investors confirmed that the label owned a 3.37% stake in Spotify as of December 2021. This is lower than it was in 2008. UMG reportedly acquired a share of the company of just over 5%, which then rose to 7% in 2018 when UMG acquired the music industry company EMI, which had its own 2% stake. UMG’s shareholding in Spotify fell due to share dilutions caused by further investments. (NME)
