The choice wasn’t theirs – and it cost them, they say.
The duo behind the influential Nineties hip-hop group Black Sheep has filed a class action lawsuit in federal court in Manhattan claiming Universal Music Group owes more than $750 million to its stable of artists for allegedly breaching contracts with a “sweetheart” deal with Spotify.
Plaintiffs Andres “Dres” Titus and William “Mista Lawnge” McLean allege Universal accepted both cash and company stock from Spotify in exchange for music from Universal’s stable of artists but then only counted the cash when it distributed royalty payments.
Best known for their 1991 megahit “The Choice is Yours” off their debut album A Wolf in Sheep’s Clothing, Titus and McLean say the “previously undisclosed” deal violated their early-1990s contract with Universal predecessor Polygram, which requires Universal to pay 50 percent of all net receipts connected to exploitation of Black Sheep’s music.
The group claims that 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.
“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,” the new filing obtained by Rolling Stone states.
“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.” (Spotify, which is not named as a defendant, did not respond to a separate request from Rolling Stone.)
According to the complaint, Universal valued its stake in Spotify at approximately $1.7 billion in September 2021. The paperwork alleges a “substantial portion” of that stake stems from the shares Universal and its subsidiaries acquired in or 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.
Titus and McLean say they don’t know the “exact size” of the lawsuit’s possible class because such information is “exclusive” to Universal, but they believe “it encompasses at least thousands of artists whose identities can be readily ascertained from Universal’s records.”
They said a motion seeking class certification is forthcoming.