Filing a class action lawsuit in New York last week (January 4), the two members of Black Sheep, Andres Titus and William McLean (AKA Dres and Mista Lawnge), allege that UMG agreed to lower royalty rates in 2008 from Spotify in exchange for shares, Music Business Worldwide reports.
They argue that due to a clause in their contracts with Universal, pertaining to “net receipts”, they and other artists have been underpaid by around $750 million (£630 million) and that they should have received half of UMG’s shares in Spotify, or half of the value of it.
The complaint also alleged: “Universal concealed from artists that it acquired Spotify stock and that royalty payments were depressed as a result.
“Over time, the value of the Spotify stock that Universal improperly withheld from artists has ballooned to hundreds of millions of dollars,” it continued.
The claim has been rejected by UMG, who in a statement to MBW described the allegations that they accepted lower royalty rates in exchange for equity “patently false and absurd”.
"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," the statement reads.
“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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In 2021, UMG’s report for investors revealed that the label held a 3.37% stake in the streaming service.
Since then, the value of Spotify’s shares has nosedived, with MBW calculating that the value of UMG’s stake has fallen from around $2.3 billion in February 2021, to approximately $511 million now.
Universal have previously promised that if it did ever sell its shares in Spotify, it would share the proceeds with artists on its roster.
Black Sheep is an influential hip hop duo, originally from Queens, New York City, whose 1991 debut album ‘A Wolf in Sheep’s Clothing’ went gold in 1992 after selling over 500,000 copies.
Isaac Muk is Mixmag's Digital Intern, follow him on Twitter