Universal sued by Enrique Iglesias for ‘systematically underpaying streaming royalties’

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Latin superstar Enrique Iglesias is suing Universal Music Group in the US for an alleged “shortfall of millions of dollars” in streaming royalties.

The lawsuit, filed in Miami today (Jan 24) relies on the accusation that Universal failed to specifically assign a royalty rate for streaming in two contracts with Iglesias: one signed in May 1999 with Interscope in tandem with Universal’s global company, plus an additional contract signed in May 2010.

The initial contract covered English language and Spanish language albums, while the second tied Iglesias into albums containing both English and Spanish-language music.

Iglesias’s legal team allege that, without a specifically contracted royalty rate, Universal should have been paying its client 50% of net receipts from services such as Spotify, Apple Music, YouTube and Pandora.

That’s because, says Team Iglesias, the record contracts state that a 50% royalty would be paid ‘for any type of use not specifically covered [here]’.

However, Iglesias’s lawsuit notes that the rate agreed for both downloads and physical album sales was stipulated in the deals – at a significantly lower rate than 50%.

“Despite Iglesias’ record-breaking success, Universal has refused to reciprocate and breached its contractual obligations to Iglesias,” reads the suit, which you can download in full here.

“Specifically, Universal has been systematically underpaying Iglesias’ streaming royalties by calculating those royalties at a small fraction of the contractually-required fifty percent (50%) royalty rate.”

“Universal has been systematically underpaying Iglesias’ streaming royalties by calculating those royalties at a small fraction of the contractually-required fifty percent (50%) royalty rate.”

Enrique Iglesias’s Vevo channel has racked up more than 10bn views on YouTube, while his biggest songs on Spotify have over 300m plays each.

Continues the lawsuit: “Universal’s inaccurate financial statements characterize Iglesias’ account as being un-recouped millions of dollars even though Iglesias has generated sales of a magnitude rarely attained in the music industry.”

The lawsuit, issued against Universal Music B.V, further alleges that in March 2017, on realizing that his royalty numbers were “distorted”, Iglesias exercised his contractual right to inspect Universal’s books with an audit.

Yet it claims that UMG “has not substantively responded… nor made any attempt to provide Iglesias with the contractually-mandated access to the salient books and records”.

UMG declined to comment on the matter when contacted by MBW.

Reads the lawsuit: “Iglesias respectfully asks this Court to enforce the contract’s fifty percent (50%) streaming royalty rate, order a fair accounting of royalties earned by Iglesias, and award Iglesias the royalties which Universal has refused to acknowledge or pay.”

It adds: “Despite Iglesias’ record-breaking success, Universal claims that Iglesias remains un-recouped. Universal’s claim is unsupportable and unfathomable given Iglesias’ indisputable commercial triumphs.

“This gross discrepancy can be explained, in part, by Universal’s improper crediting of streams at the incorrect Album Royalty Rate.. because Iglesias ranks among the most-streamed artists, this improper accounting has resulted in a shortfall of millions of dollars.”Music Business Worldwide

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