Limp Bizkit frontman Fred Durst has already filed a lawsuit against Universal Music with a state court in California after a judge ruled that the musician’s breach of contract claims against the major could not be heard in a federal court, even though Durst’s original lawsuit also included copyright infringement claims, which are a matter of federal law.
Durst accuses Universal of failing to report and promptly pay royalties he was due via three deals he did with the record company in the late 1990s and early 2000s. And that, he claims, is because Universal, despite all its press releases claiming to be “pro-artist”, has “designed and implemented royalty software and systems that are deliberately designed to conceal artists’ royalties and keep those profits for itself”.
The new lawsuit, filed with the Superior Court in California, is mainly a cut and paste of previous filings with the federal court, running through Durst’s various dealings with Universal back in the day, and the discovery by his business manager last year that there were millions in unpaid royalties owing.
It also generally lambasts Universal for failing to properly report and pay over royalties to catalogue artists whose recordings have seen a resurgence in the streaming age, and lays into Universal CEO Lucian Grainge’s ‘megabonus’ as well as taking aim at Grainge’s much hyped ‘Streaming 2.0’ thesis.
Durst’s original lawsuit, filed last October, was scathing of the major, but those more general criticisms were subsequently ramped up even further in an amended complaint filed with the federal court in February. The ramped up version of those criticisms is included in the new lawsuit too.
“Streaming allows consumers to more easily go back into the ‘deep catalogue’ and listen to previously forgotten about artists since there is no extra cost to do so”, the lawsuit observes. “Thus, many forgotten-about artists like Limp Bizkit have experienced a resurgence in the streaming era, which is pure profit for the labels, since there are no costs like those incurred in making new music”.
However, the labels do have to account that income to the artists and pay them any royalties they are due under their old record contracts. Although, because many artists from the 1990s and 2000s will have been paying off recoupable advances and expenses until relatively recently, that also involves the label getting in touch with those artists to set up the necessary processes for making payments.
But, Durst alleges, Universal hasn’t done that, because it’s not in the company’s commercial interest to do so, despite all the PR bumf insisting that the major is “a pro-artist company that fights for the rights of artists”.
“Instead of tracking down these artists to pay them”, the lawsuit alleges, “UMG built a system that keeps these profits for itself by default”. And this is impacting on many heritage artists, Durst claims, adding that, since filing his original lawsuit last year, he has “learned that many other artists have had similar experiences, demonstrating that this is a widespread practice”.
“By failing to pay royalties owed to artists”, the lawsuit goes on, “defendants have understated their true expenses and liabilities, and artificially increased their profits and therefore UMG’s share price”. Bosses at the major have “every incentive” to do that, it claims, because their bonuses are “tied to the company’s share price”.
It then discusses the mega-bonuses paid to Universal CEO Lucian Grainge and how they could be even more mega if certain share price targets are met. The discussion of Grainge’s pay deal, and investor concerns that it’s too excessive, is partly there to back up the lawsuit’s argument, but also possibly because it’s known such discussions really piss off Grainge.
The lawsuit also takes aim at one of Grainge’s favourite buzzwords of the moment, “Streaming 2.0”, which refers to a streaming strategy that, the major has said, informed its latest deal with Spotify.
However, says Durst’s lawsuit, while Universal says that strategy and that deal are “intended to improve artist remuneration”, neither the major nor Spotify “have shared any details” about how the deal works or “how it would benefit artists”.
Universal, the lawsuit adds, has achieved tremendous revenue growth over the last ten years “by fraudulently designing a system intended to never pay artists’ royalties. This is particularly true with respect to catalogue artists like Limp Bizkit, since the current costs to UMG are virtually zero. By keeping those artists’ profits for themselves, UMG has been able to double its revenue in less than a decade”.
Universal, of course, strongly denies all these allegations, and – in its response to Durst’s original lawsuit – stressed that it did pay the musician what he was owed once his business manager got in touch. It also insisted that past email exchanges between its execs and Durst’s team disprove the claim that it tried to hide the royalties that were due to the musician.
Durst ultimately wants to cancel his old deals with Universal on the basis that the major is in breach of contract for failing to report and pay royalties on time.
However, Universal argues that would only be possible if there had been a “total failure” on its part to fulfil the terms of Durst’s various contracts, and the issues around royalty payments do not constitute “total failure”, an argument that led to the judge in the federal court initially dismissing the contract claims.
After Durst amended his lawsuit in federal court, the judge last week said that the breach of contract claims now required “an analysis of state law of both New York and California” that would be better done in the state courts, separate from the copyright claim that stayed in the federal court.
Given Durst’s new lawsuit mainly repeats allegations from his previous legal filings, presumably Universal’s response will be pretty much the same as before.
We shall see if the state courts reckon that – beyond the explosive allegations about Universal’s general attitude towards artists deep in its lucrative catalogues – whether the Limp Bizkit frontman’s specific breach of contract claims are sufficient to proceed to full analysis.