Black Sheep has reportedly filed a $750 million class action lawsuit against Universal Music Group over unpaid royalties. According to Rolling Stone, Dres and Mista Lawnge claim the label breached their contracts with a Spotify “sweetheart” deal. They say Universal accepted both cash and company stock from Spotify in exchange for music from Universal’s roster but then only counted the cash when it distributed royalty payments.
“In the mid-2000s, Universal struck an undisclosed, sweetheart deal with Spotify whereby Universal agreed to accept substantially lower royalty payments on artists’ behalf in exchange for equity stake in Spotify – then a fledgling streaming service," the docs read. "Yet rather than distribute to artists their 50 percent 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.
“For approximately a decade, Universal omitted from the royalty statements Universal issued to plaintiffs that it had received Spotify stock in connection with the ‘use or exploitation’ of Black Sheep recordings."
In September 2021, Universal valued its stake in Spotify at approximately $1.7 billion. The docs allege a “substantial portion” of that stake stems from the shares Universal and its subsidiaries acquired in or around 2008.
The lawsuit continues: "As a result of its continuing contractual breaches, Universal has unlawfully retained approximately $750 million in royalties that should have been paid to plaintiffs and the class."
Consequently, a motion seeking class certification is expected to come soon. Black Sheep released four studio albums, including 1991's A Wolf In Sheep's Clothing. Released on Mercury Records, a subsidiary of UMG, the album went on to get a gold certification from the RIAA.
