Universal Music Group is being sued over its Spotify equity ownership by the hip hip duo Black Sheep, who filed a class action lawsuit on Wednesday (January 4).
The duo, comprised of Andres Titus and William McLean, have claimed that Universal owes them and other artists approximately $750million (just under £630million) in unpaid royalties.
The plaintiffs claim this is because UMG allegedly agreed to accept lower royalty rates from Spotify in exchange for shares in the streaming service back in 2008. Due to a clause in their contracts pertaining to “net receipts”, Black Sheep argue that they and other Universal artists should have been paid 50 per cent of royalties from Spotify. Indeed, they say they also should have also received 5 per cent of UMG’s Spotify equity (or the value of it) because, according to the duo’s suit, this would be “proportional” to their royalty contract.
Music Business Worldwide reports that Universal has called Titus and McLean’s claim that it accepted lower royalty rates in exchange for Spotify equity “patently false and absurd”. UMG added in a statement that it has “a well-established track record of fighting for artist compensation”.
Indeed, Universal has publicly pledged to share proceeds from its Spotify equity, should it ever sell it, with the artists on its roster.
UMG’s annual report for investors confirmed that the label owned a 3.37 per cent stake in Spotify as of the end of 2021. This is lower than it was in 2008, when UMG reportedly acquired a share of the company of just over 5 per cent, which then rose to 7 per cent in 2018 when UMG acquired EMI, which had its own 2 per cent stake. UMG’s shareholding in Spotify fell due to share dilutions caused by further investments.
Black Sheep were mostly active in the early 90s, with their most well known song being ‘The Choice Is Yours’ from their 1991 album ‘A Wolf in Sheep’s Clothing’.
In other Spotify-related news, the streaming platform has just released a new feature called ‘Playlist in a Bottle’ that allows users to create their own music time capsule to open next year.