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Black Sheep Files Lawsuit Claiming Universal "Unlawfully Retained" $750M in Royalties

Black Sheep Files Lawsuit Claiming Universal "Unlawfully Retained" $750M in Royalties

Published Thu, January 5, 2023 at 9:23 AM EST

Veteran Hip-Hop duo, Black Sheep has filed a class action lawsuit claiming Universal Music Group owes more than $750 million to its stable of artists for allegedly breaching contracts with a “sweetheart” deal with Spotify, Rolling Stone reports.

Black Sheep members Andres “Dres” Titus and William “Mista Lawnge” McLean say Universal "accepted both cash and company stock from Spotify in exchange for music from Universal’s stable of artists" but only counted the cash when it distributed royalty payments.

Members of The Native Tongues collective, Black Sheep achieved stardom with their 1991 Hip-Hop classic, "The Choice Is Yours." The group claims the “previously undisclosed” deal violated their early-1990s contract with Universal predecessor Polygram. The deal required Universal to pay 50 percent of all net receipts connected to exploitation of Black Sheep’s music. Specifically, they say Universal knowingly "negotiated lower royalty payments from Spotify to obtain the stock and then retained the stock for its own benefit."

“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, per Rolling Stone. "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. 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 a statement to 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.”

The complaint also claims Universal valued its stake in Spotify at around $1.7 billion in 2021, and alleges a "substantial portion" of that stake comes from the shares Universal and its subsidiaries acquired around 2008.

“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 the New York law firm Wittels McInturff Palikovic states.

While Black Sheep says they don't know the exact size of the lawsuit’s possible class because the info is exclusive to Universal, they do think it “encompasses at least thousands of artists whose identities can be readily ascertained from Universal’s records.”

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