UMG defeats rap duo Black Sheep's lawsuit over Spotify royalties
Black Sheep accused Universal Music Group of lowering royalties based on Spotify deal
Court said claims time barred, terms of contract supported UMG
By Blake Brittain
Nov 21 (Reuters) -Universal Music Group UMG.AS persuaded a judge in Manhattan to dismiss a proposed class-action lawsuit brought by rap duo Black Sheep that accused the label of withholding nearly $750 million in Spotify SPOT.N royalties from its musicians.
U.S. District Judge Jennifer Rochon said on Monday that the duo waited too long to bring much of its case and that it could not support its remaining claims that UMG unlawfully underpaid its artists.
Representatives for UMG, the rappers and Spotify – which was not a party in the case – did not immediately respond to requests for comment on Tuesday.
Black Sheep's 1991 album "A Wolf in Sheep's Clothing" sold over 500,000 copies in the U.S., and its best-known single "The Choice Is Yours" charted on the Billboard Hot 100. The duo signed a recording contract with Polygram Records, which UMG later acquired, in 1990.
Black Sheep's lawsuit from January accused UMG of unlawfully lowering its artists' royalty payments from Spotify as part of an "undisclosed, sweetheart deal" for shares in the streaming service in 2008.
According to the complaint, UMG revealed in 2021 that it owns more than 3% of Spotify's shares worth $1.7 billion, of which a "substantial portion" came from the 2008 agreement.
Black Sheep said that UMG broke their recording contract by underpaying their Spotify royalties based on the deal.
Rochon said on Monday that much of the duo's case was barred by a two-year statute of limitations from its contract with UMG.
The judge also said that Black Sheep could not support its remaining claims for underpaid royalties dating from 2021, finding in part that the contract gave the label "sole discretion" over how to distribute its music.
"Given this wide discretion, there is no basis upon which to find that UMG breached the contract by accepting a lower royalty from Spotify," Rochon said.
The case is Titus v. UMG Recordings Inc, U.S. District Court for the Southern District of New York, No. 1:23-cv-00015.
For Black Sheep: Steven Wittels and Burkett McInturff of Wittels McInturff Palikovic
For UMG: Rollin Ransom and Lisa Gilford of Sidley Austin
Read more:
Lawsuit claims UMG cut artists' royalties under secret Spotify deal
Reporting by Blake Brittain in Washington
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
