Universal Music Group is crying foul over allegations of fraudulent misrepresentation in its licensing deal for Prince's catalog, which could result in the artist's records once again being shopped to competing labels.
In February, UMG agreed to a $30 million deal with the Prince estate, in which the label would assume the rights to Prince's post-1995 catalog globally; unreleased material; and, in the United States, the licensing and distribution of "certain key titles" from his Warner Music Group catalog, recorded between 1978 and 1995, including 1999. (Four soundtrack albums, including Purple Rain, will remain with WMG in perpetuity.)
But recently, UMG sent a letter to Comerica Bank, which took over as administrator for the estate from Bremer Trust on Feb. 1, alleging that the terms of its deal were misrepresented by the Prince estate's representatives. At the heart of the dispute is the expiration date of Prince's deal with Warner. A representative from Prince's camp allegedly informed UMG that the Prince-Warner deal expired in June 2018. But most sources now believe the existing agreement doesn't run out until 2021. (A few still insist it will be sooner.)
Who in Prince's camp made the alleged misrepresentations? It's unclear -- the estate had a team of lawyers involved -- but according to sources, former estate adviser L. Londell McMillan led the recorded-music deal, while co-adviser Charles Koppelman led publishing talks. McMillan denied misrepresentation, and Koppelman declined to comment. Both have since been replaced by Spotify's Troy Carter, who issued a statement on April 17 saying the estate is "assessing all rights relating to Prince's recorded music."
UMG and WMG declined to comment. In a statement to Billboard, a Comerica rep said that the deal "was fully negotiated prior to Comerica assuming its role with the estate."
In addition to the master recordings, UMG also cut deals for Universal Music Publishing Group to serve as administrator to the catalog and for its Bravado unit to handle merchandising. UMG is happy with those deals. But the three-year differential now in dispute is a significant one.
"UMG's financial modeling is tricky right now because of the streaming model and sales projections," says a source familiar with the situation. "If the reversion dates are inaccurate, the models don't work."
Yet the problem is now for Comerica and its advisers to solve. The Prince estate has three potential options: return UMG's advance and put the catalog back up for bid; keep the advance and go to court with UMG; or quietly negotiate a resolution.
A source familiar with the situation downplays any potential fireworks: "This is all a lot of posturing. Whatever UMG's issue is, it will all be negotiated and solved."
This article originally appeared in the April 29 issue of Billboard.
