Black Sheep Suing UMG for $750 Million Over Unpaid Royalties

The hip-hop duo claim they and thousands of other artists have been cheated out of Spotify stock royalties. UMG called the allegations "absurd."

Hip-Hop Duo Black Sheep's Mista Lawnge (William McLean) and Dres (Andres Vargas Titus)

Image via Getty/Al Pereira/MIchael Ochs Archives

Hip-Hop Duo Black Sheep's Mista Lawnge (William McLean) and Dres (Andres Vargas Titus)

Black Sheep has waged a legal war against Universal Music Group.

The 1990s hip-hop duo, composed of Andres “Dres” Vargas Titus and William “Mista Lawnge” McLean, is spearheading a hefty class action lawsuit over unpaid royalties. According to Billboardthe plaintiffs claim UMG inked a “sweetheart” deal with Spotify in 2008, agreeing to accept lower royalty rates in exchange for cash and equity in the streaming service.

The complaint, filed Wednesday in a Manhattan federal court, alleges UMG failed to disclose the details of the deal and only counted the cash when it distributed royalty payments. Black Sheep claims the company retained the stock for itself, and withheld “hundreds of millions of dollars in royalties” owed to thousands of artists.

Black Sheep says the UMG and Spotify deal violated their 1990 contract with Polygram, which merged with UMG in 1998. According to the lawsuit, the contract required UMG to pay 50 percent of all net receipts connected to exploitation of Black Sheep’s outputs. The music corporation allegedly failed to fulfill its contractual obligations and cheated artists out of $750 million deriving from its Spotify stock.

“Rather than distribute to artists their 50% 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. … Over time, the value of the Spotify stock that Universal improperly withheld from artists has ballooned to hundreds of millions of dollars,” the lawsuit reads. “These and the other wrongful conduct detailed herein resulted in the Company’s breaching its contracts with artists, violating the covenant of good faith and fair dealing that is implicit in those contracts, and unjust enrichment at the expense of its artists.”

A UMG spokesperson denied the allegations in a statement to Billboard, saying its artists have been properly compensated.

“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 representative said. “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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