(Reuters) - A proposed class-action lawsuit filed Thursday by rap duo Black Sheep accused Universal Music Group of unlawfully lowering artists' royalty payments from Spotify after signing an "undisclosed, sweetheart deal" with the streaming service.
Andres Titus and William McLean told a Manhattan federal court that the label has withheld nearly $750 million owed to its artists after agreeing to reduced payments from Spotify in exchange for company stock.
A UMG spokesperson called the claims "patently false and absurd" and said the label has "a well-established track record of fighting for artist compensation."
Black Sheep's attorneys and representatives for Spotify did not immediately respond to requests for comment. Spotify is not a defendant in the case.
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 group signed a recording contract with Polygram Records, which UMG later acquired, in 1990.
The lawsuit said UMG received more than 97,000 Spotify shares in the 2008 deal and that other major labels signed similar deals with the company. Spotify went public in 2018.
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 agreements.
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