Latin superstar Enrique Iglesias is accusing Universal Music Group of "systematically underpaying" his streaming royalties in a new lawsuit filed Wednesday in a Miami federal court.
According to the suit, Iglesias has sought to inspect Universal's bookkeeping after receiving what is described as a "small fraction" of his 50 percent royalty rate for streaming. The artist and his legal team believe UMG's "improper accounting" has resulted in a shortfall running in the millions of dollars, and is demanding the court enforce his streaming rate and force the label to pay lost royalties.
"Few business relationships in the history of the music industry have achieved the commercial success attained by Enrique Iglesias and Universal: 100 million albums sold, billions of streams, and repeat appearances at the top of the Billboard charts," Iglesias' attorney James Sammataro said in a statement provided to Billboard. "Despite this record-breaking success, Universal has wrongly insisted that artists like Enrique be paid for streams in the same manner as they are paid for physical records despite the fact that none of the attendant costs (production, distribution, inventory, losses) actually exist in the digital world. This is not what Enrique’s contract, or the contracts of many other artists, call for.
"Artists, producers and songwriters should benefit from the reduced costs of streaming, not have their musical works spin unwarranted profits," the statement continued. "Universal has long ignored, and is now attempting to distort, the clear terms of its artist agreements so that it alone reaps the savings from digital streams. After lengthy efforts to have Universal honor its contractual obligations, Enrique’s team regrettably concluded that he had no choice but to file this lawsuit."
Universal had been Iglesias' label home since 1999, for via Interscope and, later, Republic, until he departed for Sony in July 2015.
The suit gives an accounting of Iglesias' career and 1999 contract with Universal, which it says included language that indicated that digital sales of the artist's work would be paid at the same royalty rate as for physical albums, at 50 percent of UMG's net receipts, and that "for any type of use not specifically covered" the royalty rate would also remain the same. (As streaming was not around in 1999, the lawsuit claims this would fall into that category.)
In 2010, the two sides renegotiated Iglesias' deal to include two additional albums but also did not include specific language with respect to streaming, which the suit refers to as "not an oversight." A note indicates that "up until approximately 2016, Interscope properly recognized and credited Iglesias’ streaming royalties at 50 percent," but that after a directive from Universal streaming royalties were lowered, prompting Iglesias to respond.
Iglesias sent UMG a letter in March of 2017 that took objection to its accounting practices and supposed inaccurate sales reports, "unjustifiable deductions" and other accounting mistakes. Iglesias said Universal did not respond to his demands for an audit and refused to give his team access to its books, amounting to a breach of contract.
The suit claims that the "improper accounting has resulted in a shortfall of millions of dollars," and requests an accounting of Iglesias' royalties, access to UMG's records and damages.
Marc Schneider contributed to this report.