[Editor Charlie sez: The more interesting claim is against Spotify for inducing a breach and discriminating against all the artists who didn’t get stock, RSUs or something that represented the value of the stock. But the really interesting case is against the publishers for conspiring to keep streaming mechanicals at a “less than zero” rate while braying about how great a job they’d done in negotiating at the CRB with streaming and freezing the mechanical rate for physical over the same period that just happened to correspond to Spotify’s launch.]
Black Sheep have filed a class-action lawsuit against Universal Music Group, Rolling Stone reports and Pitchfork can confirm. The 1990s hip-hop duo allege that the label owes more than $750 million in royalties to numerous Universal artists due to an early “sweetheart” arrangement with Spotify, which allowed the streaming company to pay less in royalties in exchange for Spotify stock. The artists are suing Universal for breach of contract, breach of duty of good faith and fair dealing, and unjust enrichment.
In the lawsuit, plaintiffs Andres “Dres” Vargas Titus and William “Mista Lawnge” McLean allege that Universal “is withholding hundreds of millions of dollars in royalties” due to a “previously undisclosed” agreement with Spotify. This “sweetheart” arrangement allowed Spotify to license music from the label at a discounted rate “in exchange for Spotify stock and lower royalty payments.”
But after a disastrous 2022 for investors, Spotify’s dive into podcasting raises key questions about the company at large:
- Does the business model work?
- How long until sustained profitability?
- Is the streaming service losing core appeal for the younger audiences, who are the most avid music consumers?
- Has its CEO lost credibility with investors?
The answers to these questions hold the key to whether Spotify can mount a turnaround in the eyes of investors in the years ahead.
Emmanuel Legrand has authored an important study for GESAC.Thinking Outside the Pie: @legrandnetwork Study for GESAC Highlights Streaming Impact on Choking Diversity and Songwriter Royalties — Music Tech Solutions