Iglesias's Music Streaming Suit Confronts Big Industry Issue

Music superstar Enrique Iglesias wasn't dancing around the point when he recently filed a lawsuit in Miami federal court against Universal International Music. The “Bailando” singer's music has generated billions of streams for Universal, which he alleges has shortchanged him on royalties, according to the complaint filed by Miami attorneys at Stroock & Stroock & Lavan. Iglesias v. Universal International Music BV, 1:2018cv20283.

The case is part of the larger issue of how the music industry treats the sale of digital music versus physical counterparts like compact discs. “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's attorney James Sammataro, who is national head of Stroock's entertainment litigation practice group and managing partner of the firm's Miami office, said in a statement. “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.”

Iglesias is a Grammy Award winner who has outpaced all other artists on the Billboard Latin Chart by achieving more than two dozen No. 1 singles, and has surpassed music legends Prince and Michael Jackson as the male performer with the most top-selling dance singles, according to the lawsuit. Iglesias has also proven to be a hitmaker on social media and streaming services that deliver digital content via computers and mobile devices. His 2014 summer hit, “Bailando,” for instance, has amassed more than 2.46 billion views on YouTube.

The lawsuit claims Universal International systematically underpaid the singer, offering “a small fraction of the contractually required 50% royalty rate.” The single-count complaint alleges breach of contract.

“This is not what Enrique's contract or the contracts of many other artists call for,” Sammataro said. “Artists, producers and songwriters should benefit from the reduced costs of streaming, not have their musical works spin unwarranted profits” for the distributor.

Universal International did not immediately respond to requests for comment.

Iglesias's pleading claims the company applied a lower royalty — due on sales of albums — instead of the higher rate. It alleges an amendment to the singer's contract did not specifically cover streaming, keeping a 50% royalty in play.

The litigation is the latest in a series of disputes over royalties for digital products. It follows growing support from music industry groups, including the American Society of Composers, Authors and Publishers and the National Music Publishers' Association, for legislation to require a uniform digital royalty rate for all music. The sparring is also playing out in a $1.6 billion lawsuit by music publisher Wixen against streaming service Spotify over royalties for compositions.

Sammataro suggests the filing in federal court was the singer's last resort. “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,” he said. “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.”

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Samantha Joseph is a reporter for the Daily Business Review, the Miami, FL-based ALM sibling of this newsletter in which this article also appeared.