In the latest move in an ongoing dispute, singer-songwriter Barry Manilow, who sold a catalog of his music to the Hipgnosis Song Fund in 2020, and Nevada-based Stiletto Entertainment have filed a lawsuit seeking $1.5 million in unpaid bonus money in U.S. District Court in California. The lawsuit, obtained by diverse, It claims the bonuses were due as part of the acquisition of Manilow's catalog in 2020; it also alleges breach of contract, fraud, fraudulent misrepresentation and negligent misrepresentation.
Hipgnosis had sued Manilow under similar terms late last month, also alleging breach of contract. “In discussions with Mr Manilow’s representatives, it became clear that there was a difference in understanding of certain provisions in the sales agreement regarding bonus payments,” a company representative told the Financial Times.
The lawsuit — which identifies the plaintiff in a comic note as “Barry Manilow writes songs that make the whole world sing” — details the payment of an initial $7.5 million purchase price for the catalog, with “an additional purchase price of $750,000 to be paid if the cash income Hipgnosis receives from Hipgnosis’s share of the assets [i.e., income based on the Subject Masters] “an increase of not less than ten (10%) percent per annum for each of Years 1 through 3 from the Purchase Date,” and “an additional payment of the Purchase Price of $750,000.00 if the cash income received by Hipgnosis from Hipgnosis’s interest in the Assets increases by not less than ten (10%) percent per annum for each of Years 1 through 4 from the Purchase Date.”
It alleges that Manilow's songs “met the conditions necessary to receive two additional payments of $750,000 to the purchase price based on income received” by Hypnosis during those years, which it lists as ranging from $404,388 to $550,383 during each of those years.
Referring to Hipgnosis founder Merck Mercuriadis, who stepped down from the company earlier this year after its stock plunged, the lawsuit states: “Hipgnosis, through its agent Merck Mercuriadis, induced Plaintiffs to enter into the Contract by promising that its Chief Catalog Officer and several of its employees and officers with alleged music industry expertise would pursue and secure reissues of albums, special compilations, and licensing agreements in commercials, films, television, and other media. It promised to do so by leveraging its alleged expertise, experience, and power through its vast staff. Hipgnosis promised to provide a full-time, dedicated team of qualified industry professionals who would devote themselves to enhancing the value of the royalties they purchased.”
But, the report continues, “Plaintiffs and Defendants entered into the MCAA on or about March 20, 2020, and were ultimately forced to backdate it, in reference to what would come later, as Mercuradis lacked the institutional authority he represented, causing stagnation and delay in the execution of the deal… None of the promised marketing or promotion ever materialized. She never consulted with Manilow or even attempted to consult. It became clear that Hipgnosis made largely false promises. She lacked the skill, experience, and expertise to improve Manilow’s strokes under the contract.”
Hipgnosis launched in 2018 and almost single-handedly led a rush into song catalogs by paying outrageous sums for more than $2 billion for a diverse slate of music assets from artists ranging from Neil Young and the Red Hot Chili Peppers to Shakira and a slew of producers and songwriters. However, the company’s commitments exceeded its ability to deliver, and after months of falling stock values and a shareholder revolt, Blackstone-owned Lyra Bidco Limited acquired the company and Mercuriadis stepped down in July.
