NFTs (non fungible tokens) have quickly become a major revenue and investment generator in the music industry this year.
Jay-Z has been making NFT-related headlines again this week, but for different reasons.
Roc-A-Fella Records, the label Shawn Carter co-founded in 1994, is suing a fellow co-founder, Damon Dash, for allegedly planning to sell a share of Jay-Z’s debut album Reasonable Doubt as an NFT.
According to the lawsuit, filed in New York on Friday (June 18), and first reported byTMZ, Dash was planning to work with NFT platform SuperFarm to host an online auction on Wednesday (June 23) for the copyright to Reasonable Doubt.
The claim, which only names Roc-A-Fella (RAF Inc) and Dash as plaintiff and defendant respectively, states that the auction was cancelled, and that Dash “is currently frantically scouting for another venue to make the sale”.
It adds: “It’s not a matter of if [Dash sells the NFT], only when. But Dash does not even own Reasonable Doubt or its copyright and, therefore, has no right to sell the album or any rights to it.
“Instead, RAF, Inc. owns all rights to Reasonable Doubt. The sale of this irreplaceable asset must be stopped before it is too late, and Dash must be held accountable for his theft.”
According to the claim, RAF, Inc, which was incorporated in New York on January 8, 1996, “owns the copyright and all rights, title, and interests to and in Reasonable Doubt, including, without limitation, right to sell, record, reproduce, broadcast, transmit, exhibit, distribute, advertise, and exploit the album”.
As explained in the legal document, Jay-Z (Shawn Carter), Dash and fellow Roc-A-Fella co-founder Kareem ‘Biggs’ Burke each own one-third of RAF Inc.
The lawsuit claims that Dash’s “status [as] a minority shareholder in RAF, Inc., gives him no right to sell a company asset” (i.e the copyright to Reasonable Doubt).”
It adds: “The bottom line is simple: Dash can’t sell what he doesn’t own. By attempting such a sale, Dash has converted a corporate asset and has breached his fiduciary duties”.
The wording of the claim, which you can read in full here, then gets more serious, stating that Dash’s “planned auction of Reasonable Doubt would result in irreparable harm”.
It goes on to accuse Dash of the “brazen theft of RAF, Inc.’s most prized asset”.
RAF. Inc seeks to “enjoin” dash from “selling any interest in Reasonable Doubt” and to be awarded damages “in an amount to be determined at trial”.
“There is nothing in our agreement between us that prohibits me or Jay Z from selling our share of Roc A Fella Records, Inc., the company which owns Reasonable Doubt“.
Yet in an exclusive statement provided to MBW, Dash has fired back.
He calls the Roc-A-Fella lawsuit “meritless” and seeks to clarify that he is not selling the entire album as an NFT, but rather a “one-third share which I own through my one-third ownership of Roc A Fella Records”.
Dash argues that “there is nothing in our agreement between us that prohibits me or Jay Z from selling our share of Roc A Fella Records, Inc., the company which owns Reasonable Doubt“.
Furthermore, Dash asserts that that “this type of transaction takes place every day”.
Dash claims that Jay Z even tried to buy his one-third share in Roc-A-Fella in March this year, but that Dash turned down the offer.
He also explains that a deal with a potential buyer would see said buyer obtain Dash’s share of Roc-A-Fella Records only, and that “Jay Z will have exclusive administration rights”.
Dash states that this was done “to avoid a buyer from interfering with Jay Z[‘s] exploitation of the rights”.
You can read Damon Dash’s statement in full below:
The lawsuit is factually incorrect. I am not selling the entire Reasonable Doubt album as an NFT, I am selling my one-third share which I own through my one-third ownership of Roc a Fella Records.
I, along with Jay Z and Biggs own in equal shares the Reasonable Doubt album, the artwork and videos because we own in equal shares, Roc a Fella Records, Inc. whose sole assets is the Reasonable Doubt album, artwork, videos and the underlying copyrights.
Reasonable Doubt was the first album released under Roc a Fella Records. We are all very proud of its success and the successful launch of Jay Z’s career.
There is nothing in our agreement between us that prohibits me or Jay Z from selling our share of Roc A Fella Records, Inc., the company which owns Reasonable Doubt.
This type of transaction takes place every day. As recently as March of this year, Jay Z offered to buy my one-third share at a price I deemed unacceptable.
I turned down the offer and as would any other owner of valuable music assets, I have explored the possibility of a sale and decided to sell my one-third share of the company which includes my share of the copyrights as an NFT.
This lawsuit is meritless, misstates the facts and is an attempt to prevent me from selling something that I have the legal right to sell. My transaction does not involve Jay’s or Biggs’ ownership interests.
Under the terms of the deal with a potential buyer, the buyer would buy my share of Roc A Fella Records and Jay Z will have exclusive administration rights. This was done to avoid a buyer from interfering with Jay Z'[s] exploitation of the rights. Music Business Worldwide