Universal Music Group has fired back at a U.K. lawsuit that claims it’s been underpaying for a prominent King Crimson sample on Kanye West’s 2010 track “Power,” arguing the allegations are “commercially nonsensical” and that it’s actually been even “more generous” than legally required.
Declan Colgan Music Ltd. sued UMG in March, claiming the label had used the wrong royalty calculation to pay streaming royalties for Kanye’s sample, which was pulled from the prog rock band’s 1969 “21st Century Schizoid Man” and plays a central role in the 2010 song. West wasn’t named in the lawsuit.
At the core of the dispute is DCM’s allegation that the deal to license the King Crimson sample required UMG to pay the same for streaming royalties as it would for a song from a physical CD. DCM claims UMG violated that deal by instead paying based on a percentage of revenue it received from streamers.
But in a new response to the lawsuit filed last week in London’s High Court, UMG said that interpretation of the license agreement was “commercially nonsensical” and would have been a non-starter when the deal was signed in 2010.
“A purchase of a CD gives permanent ownership of a copy of the recording, which entitles the owner to play the recording as many times as they wish,” UMG wrote in the May 19 filing. “By contrast, exploitation of a recording via a streaming service or platform is ephemeral, and only provides the listener or subscriber with conditional access to, rather than ownership of, the recording.”
“The latter is of an intrinsically different nature to the former, and the price of such usage is accordingly very much lower,” the company wrote.
DCM, which owns the sound recording copyrights to “21st Century Schizoid Man,” filed its lawsuit on March 28, claiming it was owed more than $100,000 in damages over UMG’s failure to properly pay up for its use of the sample.
According to the lawsuit, Kanye used the “21st Century” sample and released “Power” on YouTube without first obtaining a license. After DCM complained, it says UMG agreed to pay a 5.33% royalty – and crucially, that such royalties would be calculated the same way as those paid to Kanye. That’s important, because DCM claims that Kanye’s existing record deal required that his streaming royalties be calculated in the same manner as a track off a physical copy of the album.
“The claimant contends that the defendant has failed, and continues to fail, to comply with its royalty accounting obligations,” DCM wrote at the time.
But in Monday’s response, UMG told a very different story. Under different provisions of the contract and proper interpretations of them, the label said it had clearly paid all of the royalties it had been required to pay to DCM. It also argued that it had actually been paying out royalties to DCM on a “more generous basis than the claimant is in fact entitled to,” and said it was entitled to recover that money via the lawsuit.
Attorneys for DCM did not immediately return a request for comment on UMG’s response.
Read UMG’s full response below: