Universal Music Group wins court case against proposed class action lawsuit alleging it underpaid its artists in royalties

UMG described the lawsuit, which was filed in January, as being “patently false and absurd”.

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A proposed class action lawsuit against Universal Music Group (UMG) that alleged it had underpaid its artists $750 million in royalties has officially been rejected.

The lawsuit was filed in January this year by 1990s rap duo Black Sheep, whose real names are Andres Titus and William McLean, which alleged that UMG breached its contract with both themselves and other artists.

As reported by Music Business Worldwide, Titus and McLean alleged that UMG “struck an undisclosed, sweetheart deal with Spotify [in 2008] whereby Universal agreed to accept substantially lower royalty payments on artists’ behalf in exchange for equity stake in Spotify” in their complaint.

The duo argued that UMG should have given its artists 50 percent of its stake in Spotify, or the equivalent cash value, as “proportional” compensation for the lower royalty payments.

At the time of the filing, UMG described the lawsuit as being “patently false and absurd.” It also stated that it has “a well-established track record of fighting for artist compensation.”

UMG took a five percent stake in Spotify in 2008, which rose to seven percent after the company acquired EMI, which held a two percent stake in the company, according to the publication.

In Spotify’s annual report at the end of 2022, it showed that due to stock dilution from further investments into Spotify, UMG’s share of Spotify stock had fallen to 3.3 percent as of the end of that year.

US District Court Judge Jennifer L. Rochon rejected the proposed class-action lawsuit on several grounds in her ruling, which was issued on Monday 20 November. It states that Titus and McLean had taken too long to file the suit; that UMG’s stake in Spotify doesn’t meet the definition of “net receipts” on which it would owe royalties; and that their contract with Polygram in effect gave UMG the right to negotiate royalty payments with Spotify as it saw fit.

You can view the full ruling at Music Business Worldwide.

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