Tidal Wave

       

Getty Images

Tidal is coming under fire again, this time over one of the company's central tenets: royalty payments to artists. In a class action lawsuit filed Saturday (Feb. 27) by The American Dollar percussionist and keyboard player John Emanuele and the band's publisher Yesh Music in New York's Eastern District court, plaintiffs sued Tidal parent company Aspiro AB, Jay Z's S. Carter Enterprises and Black Panther Bidco -- alleging the latter to be a shell company operated by S. Carter Enterprises -- for damages resulting from copyright infringement and underpayment of royalties.

Essentially, the lawsuit argues that Tidal (and its WiMP predecessor) failed to pay royalties to Emanuele on the duo's 118 registered copyrights, covering 148 musical recordings, for each time songs were streamed over the past three years, and paid only a reduced mechanical rate to Yesh Music over the time period. Further, it claims that the companies failed to deliver a notice of intent to obtain compulsory licenses of its songs within 30 days of selling Aspiro to Jay Z last year, leaving the songs unlicensed and their inclusion on the streaming service infringing on the band's copyrights.

The filing states that through TuneCore, the band (as well as its offshoots) provided Tidal with a master recording license but withheld the mechanical license for its releases. All told, Yesh Music is looking for at least $5 million, and possibly as high as $20 million, in damages and lost royalties in the case.

Tidal was less than enthused about the lawsuit and issued a strongly-worded statement in response, provided to Billboard: "Tidal is up to date on all royalties for the rights to the music stated in Yesh Music, LLC and John Emanuele’s claim and they are misinformed as to who, if anyone, owes royalty payments to them. As Yesh Music, LLC admits in their claim, Tidal has the rights to the Master Recordings through its distributor TuneCore and have paid TuneCore in full for such exploitations. Their dispute appears to be over the mechanical licenses, which we are also up to date on payments via Harry Fox Agency our administrator of mechanical royalties.

The lawsuit brings up a big problem with the record-keeping streaming services first made public last October. Digital distribution monitoring service Audiam found that Spotify had failed to pay out royalties on 53 million streams from the Victory Records catalog. Spotify removed the songs from its library, then responded by announcing plans for a database to handle royalty management. At the time, NMPAA president David Israelite estimated that as much as 25 percent of digital streaming royalties were missing from publishers' coffers. And while Yesh Music has yet to file a lawsuit against Spotify, a class action led by former Cracker frontman David Lowery alleged $150 million in damages against the streamer, a situation which has yet to be resolved.

"The entire catalogue in question streamed fewer than 13,000 times on TIDAL and its predecessor over the past year. We have now removed all music associated with Yesh Music, LLC and John Emanuele from the service. This is the first we have heard of this dispute and Yesh Music, LLC should be engaging Harry Fox Agency if they believe they are owed the royalties claimed. They especially should not be naming S Carter Enterprises, LLC, which has nothing to do with Tidal. This claim serves as nothing other than a perfect example of why America needs Tort reform."

The suit also alleges that the group asked in July for its music to be removed from Tidal, a claim that a source said is unclear as of press time.

Strangely, the lawsuit directly echoes -- down to typos of Emanuele's name in the filing's opening sentence -- a suit filed in the same district of the same court six days prior, alleging extremely similar infringements and under-payment against Slacker. And since July 2014, Yesh Music, LLC has filed lawsuits against no fewer than seven music streaming services, including Deezer, Rdio, Rhapsody and Beats Music.

The irony here, of course, is that the suit attacks Tidal for one of the biggest selling points it has offered since its launch, boasting it offered higher royalty rates than other streaming services such as Spotify and Apple Music. Yesh Music contends that due to "deliberate miscalculation" of "millions of streams" as well as "illegal deals" with some of Tidal's equity holders -- which include all three major labels and 16 celebrity stakeholders -- the streamer wound up delivering reduced royalty rates that rose as high as 35 percent.