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Glassnote sues Childish Gambino in SoundExchange royalties dispute

By Chris Cooke | Published on Monday 9 July 2018

US independent Glassnote Records has sued Childish Gambino – aka Donald Glover – in a dispute over what should happen to royalties that are earned by his recordings but are paid to collecting society SoundExchange.

Glover released three albums with Glassnote before announcing earlier this year that he was switching his musical allegiances to Sony Music. The major will release his next album in partnership with his management firm Wolf & Rothstein. The new lawsuit relates to monies earned by Glover’s Glassnote-released records via SoundExchange.

Whenever satellite or online radio services – included personalised radio platforms like Pandora or iHeart – make use of the US compulsory licence administered by Sound Exchange, the royalties collected are split 50/50 between copyright owners and performers. SoundExchange pays the artists their 50% direct. Although technically it’s 45%, because the other 5% goes to session musicians via their unions.

The artist’s statutory right to 45% of the money technically only applies where SoundExchange provides the licence. However, in the main, where labels have done direct deals with services like Pandora and iHeart, they have continued to allow 50% of the money to flow directly to artists via the collecting society.

Royalties paid by such services for using Glover’s recordings have seemingly followed that industry standard throughout his alliance with Glassnote. But now, according to the label, he is allegedly claiming that he should have received 95% of his SoundExchange royalties during that time, ie both the copyright owner’s share and the performer’s share.

To that end, Glover’s reps have seemingly demanded that Glassnote hand over $1.5 million to compensate him for the 50% of SoundExchange monies that have gone to the label and which he believes should have been paid to him. Glassnote was given until the end of last week to make that payment under the threat of legal action, but has decided to file its own litigation instead.

The label wants the courts to confirm that, according to both Glover’s deal with Glassnote and the rules around the online radio compulsory licence under US copyright law, the artist has received all the SoundExchange royalties he is due. Last week’s legal filing reckons that is somewhere around $700,000.

Glassnote’s lawsuit also documents its work in launching Glover’s music career, the investment it made at the outset and the fact that both label and artist enjoyed “a productive and profitable creative and business relationship” until the end of last year (although there were some tensions along the way).

It also reveals that Glover’s deal with Glassnote was a licensing arrangement that provided him with a 50% royalty. That deal, the legal papers then say, has seen Glover receive $8 million in royalties from the label to date – his share of all the other revenue streams – with another $2 million in royalties due to be paid imminently.

Noting that the dispute over SoundExchange income started after the two parties’ formal alliance ended last year – and Glover signed up with Sony – the lawsuit states: “Glover, apparently unsatisfied with the approximately $10 million in royalties already paid or due to him by Glassnote and the 45% of the public performance royalties from SoundExchange, took the position that he was entitled to the entirety of Glassnote’s 50% share of public performance royalties from SoundExchange – and that Glassnote was not entitled to any such royalty”.

It goes on: “Glassnote has repeatedly conveyed to Glover over the past several months that his position is untenable – but Glover has not relented. He has continued to demand from Glassnote payments corresponding to SoundExchange royalties which he is legislatively and contractually precluded from receiving. Most recently, Glover, through his representatives, has demanded the payment of $1.5 million from Glassnote for resolution of the SoundExchange royalty dispute under threat of legal action”.

The lawsuit then concluded: “Given Glover’s intransigence, Glassnote has no choice but to seek a declaration that it, and not Glover, is entitled to the 50% portion of the SoundExchange monies, and hereby requests such relief”.

Glover’s reps are yet to respond to Glassnote’s legal action. Assuming they do, it will be fascinating to see on what basis they reckon that all SoundExchange income – bar the session musicians’ cut – should have gone to their client. Glassnote is adamant that, although it had a licensing deal with Glover, the rights licensed under that deal definitely include those covered by the SoundExchange compulsory licence. Let’s see if Team Glover have an alternative reading of that contract.