Universal Music Group Faces Dozens of Artist Lawsuits Related to the 2008 Universal Studios Fire — And a Potentially Serious Hit to Its $50B Valuation

Universal Studios Fire
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Universal Studios Fire
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photo: Pinguino K (CC by 2.0)

Universal Music Group lied about the loss of roughly 500,000 recordings in the Universal Studios fire in 2008.  Now, 11 years later, top industry attorneys are gearing up for some serious litigation, with dozens of artists potentially filing suit.

With all of the lip service given to transparency these days, it’s surprising how many incidents involving the exact opposite of transparency emerge.  Enter Universal Music Group, which is now dealing with a horribly-timed outing by the New York Times Magazine — right as the mega-label’s parent, Vivendi, is trying to offload half of the label at a record valuation.

According to the damning Times report by Jody Rosen, roughly 500,000 irreplaceable recordings got torched in the fire.  The depressing list has yet to be clarified, but it appears that treasures like Nirvana’s Nevermind, the entire Buddy Holly catalog, and rare recordings from the likes of Muddy Waters and Chuck Berry were permanently lost.

But that’s just scratching the surface — here’s a list of all of the artists whose catalogs have been affected by the fire.

Unfortunately, many of these artists are just learning the bad news.  Sadly, this is because back in ’08, UMG did such an impressive job of flat-out lying about the damage — and getting away with it (at least for a decade).  Leading the subterfuge, according to the Times, was UMG’s then PR executive Peter Lofrumento, who gloated in an internal email about tricking major publications like the Los Angeles Times and New York Times into reporting that scant damage had occurred.

Of course, that was the exact opposite of the extreme damages incurred.

“There is a significant amount of discussion going on, and there will be formal action taken.”

Lofrumento is no longer with UMG, but declined to comment to Digital Music News.  Other top-ranked executives at the label in 2008, including Zack Horowitz and Doug Morris, have also remained quiet as this PR disaster unfolds eleven years later.  Both had been copied on Lofrumento’s email and were undoubtedly informed of the severity of the issue.

Fittingly, the Los Angeles Times — among the publications tricked in ’08 — is now reporting on an upcoming wave of potential lawsuits.

Among those pondering litigation are Howard King of the LA-based firm King, Holmes, Paterno & Soriano.

“We have many very concerned clients,” King told the Times. “This has a potentially huge impact on their future, coupled with the rather disturbing fact that no one ever told them that their intellectual property may have been destroyed.

“There is a significant amount of discussion going on, and there will be formal action taken.”

In terms of numbers, King said that “more than 10 but fewer than 100 clients” might file lawsuits.  He also indicated that each artist, or artist estate, would be filing individual suits instead of glomming into a class action, given the differentiated nature of each claim.

Of course, any number in that range translates into millions in potential damages, if not billions in damages to UMG’s frothy top-line valuation.

Also studying litigation avenues for his clients is industry power-lawyer Ed McPherson of McPherson, LLP, a well-entrenched LA-based firm representing several artists on the list.

“I certainly have represented some of the clients that are on the list [of musicians whose recordings were held at the storage facility] and definitely others who have been inquiring,” McPherson relayed to the LA Times.  “Everyone feels kind of victimized, and they don’t know what to do.”

Meanwhile, it’s unclear what the current UMG brass is planning to do about this.

That includes current chairman/CEO Lucian Grainge, who wasn’t at the helm during the fire.  Grainge started in 2011, roughly three years after the studio inferno, though the extensive damage was reportedly an ‘open secret’ at the mega-label.

Amazingly, UMG is still on the PR counter-offensive and refusing to admit any serious damages.  The label is attempting to dismiss the New York Times piece as inaccurate and ill-informed while pointing to a broader ‘non-issue’.   In a statement offered immediately after the Times piece went to press, UMG stated:

“Music preservation is of the highest priority for us and we are proud of our track record. While there are constraints preventing us from publicly addressing some of the details of the fire that occurred at NBCUniversal Studios facility more than a decade ago, the incident — while deeply unfortunate — never affected the availability of the commercially released music nor impacted artists’ compensation.”

Meanwhile, over in France, UMG owner Vivendi could have a vexing problem on its hands.

Earlier this year, UMG valuations soared to as high as $50 billion, thanks mainly to the explosive growth in streaming.  But the specter of years of litigation, damaging headlines, and damaged artist relationships could knock that valuation down a few billion.
Even worse: some buyers may prefer to let the smoke clear on this one before tendering an offer.  And that could take a long, long time.

3 Responses

  1. Tony Gottlieb

    Sure would like to see a copy of any insurance policies that were in force then and their claim settlements.

    • Scott

      Likely invalidated by failure to report the loss to the insurance company.

  2. Blobbo

    A lack of info in this story. THe question is which recordings were destroyed that had NOT been transferred digitally, and when that transfer was done. In the case of Muddy Waters and Chuck Berry, that tape might’ve degraded to worthless anyway if it hadn’t been digitized, and EVERYTHING they had by them should have been transferred. Of course, tape was more valuable then than digital files are today, so it’s not like people were running days of tapes on jams. Even Nirvana era magenetic tape would’ve been degraded by 2008, and its transfer of course mustve happened the first year the tech was available.

    We need more clarification on what has been lost and what has not. If they didn’t digitize all of the tapes of the long dead greats like Buddy Holly, then they are bums.