Glassnote Files Complaint to Resolve Contract Dispute With Donald Glover Over $700K in Royalties

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Donald Glover arrives at FX's 'Atlanta Robbin' Season' FYC Event at the Saban Media Center on June 8, 2018 in North Hollywood, Calif.

Glassnote Records filed a complaint last week (June 6) in U.S. District Court seeking to resolve a contract dispute with Donald Glover, who records under the name Childish Gambino, over $700,000 in digital performance royalties from non-interactive streaming services, according to court documents reviewed by Billboard. The royalties are derived from digital radio services like Pandora, SiriusXM and the non-interactive radio functions of Spotify, among others, which were paid to SoundExchange when his songs were streamed by those services.

The dispute boils down to ownership of the rights to Glover's master recordings, which include the three albums he released via Glassnote -- 2011's Camp; 2013's Because The Internet; and 2016's "Awaken, My Love!" -- as they pertain to digital performance royalties. Under the terms of Glassnote's original contract with Glover, signed in 2011, the label would license three albums' worth of material from Glover at a 50 percent net royalty rate. But non-interactive digital performance royalties operate under the U.S. Copyright Act and thus work slightly differently than on-demand digital royalties would: under federal regulations, those royalties are paid to SoundExchange, which then would pay 50 percent to the owner of the master recording; 45 percent to the recording artists on the song; and five percent to non-featured contributors, such as producers or engineers.

Under this arrangement, SoundExchange paid Glover $700,000 for his role as the recording artist on those songs, for which he is entitled to 45 percent of the approximately $1.6 million paid out to date. But according to court documents, Glover has sought Glassnote's additional 50 percent of the royalty payments; a source tells Billboard that claim derives from the fact that Glover owns his own masters, and that Glassnote licensed those from him (the license period expired last Halloween). Glassnote, however, claims that its license to those recordings entitles the label to its 50 percent share of the SoundExchange payments.

Contrary to reports, Glassnote hasn't sued Glover. The complaint filed last week asks a judge to step in and mediate the contract dispute and sort out which claim is valid, and who has the rights to those royalties. A source close to Glassnote said that the company is not asking Glover for anything, only asking a judge to solve the dispute, and has never been in litigation with an artist in the company's 11 years in business.

Glover's team attempted to work out another split over the royalties, another source says, but after the dispute was dragged out one of his attorneys sent a demand for $1.5 million to the label to be delivered by July 6. That day is when Glassnote filed its complaint, seeking judicial resolution.

Other details in the complaint shed light on other aspects of the contract, most notably that Glassnote has paid Glover $8 million in royalties over the length of the contract, and will be paying him an additional $2 million in further royalties within the next 90 days, in addition to any future royalties derived from their 50-50 split.

Glover left Glassnote Records last year, and signed a partnership deal with RCA Records covering both new recordings and a label venture, which Glover called "a necessary change of pace." His first single under the new arrangement, "This Is America," reached No. 1 on the Hot 100 in May.