Fred Durst has sued Universal Music accusing the major of failing to report and pay the royalties he was due from Limp Bizkit’s releases. This happened, his lawsuit claims, because Universal “designed and implemented royalty software and systems that were deliberately designed to conceal artists’ royalties and keep those profits for itself”.
Universal will deny that claim, of course, but - as Durst’s lawsuit notes - if true, it trashes the major’s claim to be “a pro-artist company that fights for the rights of artists”. The legal battle could also be costly for Universal in a more tangible way, because Durst claims that the major has breached the terms of his old contracts, allowing him to terminate those deals. The lawsuit then estimates that that means Universal now owes Durst “in excess of $200 million”.
The lawsuit runs through various deals Durst did with Universal and its Interscope division back in the early days of Limp Bizkit. The initial deals were actually with indie label Flip Records, which then did its own deal with Interscope. There was then a direct deal between Limp Bizkit and Interscope, and a separate agreement in relation to Durst’s own label Flawless Records, which operated as an imprint of the major label for a time.
Limp Bizkit “saw the height of its popularly in the late 1990s and 2000s”, the lawsuit concedes, but more in more recent years there has been renewed interest in the band and their music, resulting in a surge in streams. “Year-to-date in 2024, Limp Bizkit has over 450 million streams, and is on track to have over 793 million streams by the end of 2024", the legal filing explains. Which means the band’s recordings are generating quite a lot of money again.
Yet, when Durst hired new representatives earlier this year, he informed them that he’d never received any royalties from the major. Said representatives were “shocked because they were aware of Limp Bizkit’s phenomenal increase in popularity over the past several years”, the lawsuit reveals.
When they asked to see the musician’s royalty statements to assess what was going on, “Durst explained that he had been informed by UMG that he had not received any royalty statements because UMG told him over the years that it was not required to provide them since his account was still so far from recoupment”. Which is to say, Durst’s share of the money being generated by his recordings was still paying off advances and other recoupable costs from back in the day.
However, that was wrong twice over. First, under the old contracts, Universal was still obliged to report royalties to Durst even while that income was paying off unrecouped balances. And second, Durst had actually recouped. After his representatives got access to Universal’s royalty portal, they found he was due just over a million dollars in Limp Bizkit royalties and another $2.3 million stemming from the Flawless Records partnership.
In July, Durst’s people spoke to Universal’s SVP Of Business Affairs, Jason Kanejsza, and asked why the major hadn’t paid over the millions its own systems showed were owing to their client. Kanejsza was “apologetic over what he considered an ‘egregious’ and ‘embarrassing’ mistake” due to an error with the company’s new software. But, it was pointed out, Universal's deal with Durst as an artist and its deal with Flawless Records were separate agreements with different legal entities. And yet both had gone unpaid.
“When questioned about how an allegedly one-off mistake could happen to two completely separate accounts - ie Limp Bizkit and Flawless Records - Mr Kanejsza was not able to offer any logical explanation”, the lawsuit states.
“Although Limp Bizkit and Flawless Records had completely separate royalty accounts with UMG”, it goes on, “they appear to both have suffered from a critical, prejudicial and essentially fraudulent design in UMG’s system whereby artists are owed millions of dollars in royalties and yet know nothing about it”.
After completing the necessary administration to get that money paid to Durst, his representatives then started digging further. Universal says Durst actually recouped in 2019. It took that long, it adds, despite the huge success of Limp Bizkit’s albums around release, because the major paid the band “approximately $43 million” in recoupable advances over the years.
However, as Durst’s representatives worked their way through paperwork from the last 25 years, there were lots of issues with and gaps in Universal’s royalty reporting. Says the lawsuit, “UMG had not provided a detailed accounting of its alleged recoupment costs, had claimed recoupment costs for an extraordinarily long time, and had failed to issue any royalty statements at all for certain periods, including those during which Limp Bizkit was selling millions of albums”.
Given the gaps in reporting, the lawsuit claims it’s impossible to ascertain if Universal is correct to say Durst didn’t recoup on his deals until a few years ago. To that end, it demands that Universal “must produce documents through this litigation” to demonstrate that its claims regarding what the musician is due are accurate.
The failure to properly and promptly report and pay Durst his royalties, the lawsuit goes on, constitutes a breach of the old contracts. His lawyers alerted Universal to the alleged breach on 15 Jul and, under the terms of those old deals, the major then had 30 days to remedy the breach. But the outstanding payments didn’t arrive until 26 and 27 Aug, and there remain issues with Durst’s royalty reporting. Which is why he now wants to terminate his old deals and, to that end, served a ‘notice of rescission’ on 30 Sep.
“As set forth in the rescission notice”, the lawsuit explains, “Limp Bizkit and Flawless Records, as applicable, agree to restore to UMG everything of value which they have received from UMG under” the old deals “upon condition that the other party do likewise”. Quite what that means is slightly complicated, but, the lawsuit concludes, the amounts owed to Durst and Flawless by UMG “following the rescission of these agreements will easily surpass $200 million”.
Which is an awful lot of money. Though, arguably, the allegations that Universal systems are deliberately set up to stop payments to artists as they recoup on old deals could be more damaging for the company, given the implication those systems are potentially harming many more artists with recordings deep in the major’s catalogues. And its previous commitment to pay through royalties to unrecouped artists with pre-2000 record deals isn’t that impressive if its systems aren’t set up to actually make those payments.
