Report: UMG Sued By Hip-Hop Duo Black Sheep Over Equity Stake In Spotify

Class Action Lawsuit

Hip-hop duo BLACK SHEEP, best known for the 1991 album "A Wolf In Sheep’s Clothing," are suing UNIVERSAL MUSIC GROUP in a class action lawsuit, filed WEDNESDAY in NEW YORK, according to a MUSIC BUSINESS WORLDWIDE report.

Their lawyers claim that BLACK SHEEP and other UMG artists should have been paid 50% of royalties from SPOTIFY since 2011 due to a clause in their contracts pertaining to "net receipts." That UMG agreed to accept lower royalty rates from SPOTIFY in exchange for their equity shares back in 2008.  And finally, that BLACK SHEEP and other artists should have received 50% of UMG's SPOTIFY equity because, it would be "proportional" to their royalty contract. 

BLACK SHEEP argue that UNIVERSAL owes it and other artists approximately $750 million in unpaid royalties as a result of these three claims.

UNIVERSAL calls the claim that it accepted lower royalty rates in exchange for SPOTIFY equity "patently false and absurd," adding it has “a well-established track record of fighting for artist compensation."

BLACK SHEEP isn’t the first artist signed in the analog era to make this kind of claim about streaming royalties. EMINEM producers FBT sued AFTERMATH/UNIVERSAL in 2009 over iTUNES royalties, arguing that it should be paid a 50% share as well. The case was settled out of court in 2012.

Responding to the lawsuit, a UMG statement reads: “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.

“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.”

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