According to legal documents obtained by Complex, McDJ is accusing Glassnote of misrepresenting their true business relationship in regards to Gambino's work. McDJ refers to a complaint filed by Glassnote earlier this year, when the label claimed they were entitled to half of the digital performance royalties as laid out by the U.S. Copyright Act: 50 percent goes to the copyright owner; 45 percent goes to the performing artist (Gambino); and 5 percent goes to non-featured musicians/vocalists.
Glover’s company insists Glassnote’s claims are misleading and fail to address the bigger picture. McDJ argues that the issue isn’t about royalties owed to Glover, it is about unpaid royalties to them. McDJ acknowledges that Glover, as the recording artist, is entitled to a 45 percent cut of the royalties; however, the company claims the 50 percent that goes toward the copyright owners was to be split between them and Glassnote.
Per McDJ’s statement in the legal documents:
Under the License Agreement, Glassnote is obligated to pay [McDJ Recording] a “Royalty” equal to 50% of the Net Proceeds received from the exploitation of the master recordings subject to that agreement. The Net Proceeds are defined as the “Gross Revenues” that exceed “Deducted Expenses.” Because SoundExchange royalties received by Glassnote, as the purported rights holder, are included in the definition of “Gross Revenues” under the License Agreement, those royalties are subject to the 50/50 Net Proceeds split.
Because Glassnote is retaining royalty monies that allegedly belong to McDJ, the company said it plans to file counterclaims against Glassnote to recover their proper cut.
McDJ has also accused Glassnote of withholding or underreporting other payments that should’ve gone to them. Referencing an audit report, McDJ accuses Glassnote of taking “excess distribution fees, underreporting of international revenues, deduction of excess producer royalties, underreporting of merchandise sales, and undocumented manufacturing expense charges.”
McDJ’s suit will include breach of contract claims. Stay tuned as more information about the case becomes available.