3LAU sues former employee over $11 million NFT project

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Chris Cook | Published on Monday, November 14, 2022

An interesting lawsuit was filed against DJ/producer 3lau last week in connection with a dispute over an NFT mega-bucks auction he ran in early 2021 that was linked to his 2018 album Ultraviolet.

3lau – real name Justin Blau – sued Luna Aura, who co-wrote and appeared on the track “Walk Away”, which appeared on “Ultraviolet”.

Producer NFT’s auction, which coincided with the record’s third anniversary, offered buyers a variety of products and perks, all related to his 2018 record and some specifically to “Walk Away.” The auction brought the producer over $11 million.

In her lawsuit, Luna Aura — real name Angela Ann Flores — says that while Blau owns the copyright to the recording of “Walk Away,” she has a share in the song’s copyright and is also owed royalties to the artist under the exploitation contract. records. She then alleges that Blau did not properly license the inclusion of “Walk Away” in his NFT release and did not pay her the proper royalties.

Blau did offer Flores a one-time payment of $25,000 in connection with the NFT sale, but she doesn’t think it’s an appropriate fee given how much the wider NFT auction brought to the manufacturer.

It’s an interesting legal battle because, despite all the hype and chatter surrounding music NFTs over the past couple of years, there’s no consensus on how they should be licensed when records are part of an offer, but the artist or label leading the NFT drop isn’t controls all rights to the songs contained in these recordings. Which they often don’t.

There are industry conventions on how revenues should be split between recording rights and song rights whenever recorded music is used, but these splits vary by use, meaning it’s not clear with new products which split is fair. .

There is also often disagreement about what the separation should be. Many songwriters and music publishers contend that the streaming division is still unfair, despite the fact that streaming has been a key source of income for many years, and the distribution of song rights has increased slightly over the past decade.

In the US, royalty rates for songs are actually set by law in many cases, including downloads and discs, and most music NFTs typically include a download and/or disc. While these statutory rates are set in cents rather than percentages of revenue, this makes them very inappropriate for NFT sales that generate millions.

Then, of course, there are additional complications with musical NFTs. First, as with the 3lau NFT campaign, purchasers of each non-fungible token receive different products and perks that need to be considered.

And secondly, there is debate about the extent to which the value of any token comes from the music associated with it, and to what extent it is all really associated with the artist’s brand.

With all of these uncertainties and complexities, it would probably be wise to sort out any custom licensing before embarking on an NFT music project. But this may stop the project altogether. And apparently Team 3lau was looking to cash in on all the NFT hype in early 2021 that led to tokens being sold for super stupid money.

In any case, Flores believes that Blau failed to fulfill his legal obligations regarding Walk Away prior to the launch of the Ultraviolet NFT drop, meaning that he and his company 3lau Entertainment are liable for breach of contract and unjust enrichment.

Her lawyers write: “Luna Aura did not receive any compensation from the proceeds from the NFT project, nor did Luna Aura. [received] matching credit in connection with NFTs “Walk Away” and “Ultraviolet”. Despite the commercial and financial success of the NFT auction, the defendants offered Luna Aura only a one-time payment after the fact.”

Blau has already responded to Flores’ claims. His manager, Andrew Goldstone, told reporters: “These claims are baseless and we will vigorously defend the lawsuit that was filed yesterday without any prior notice. There are no set standards for how to approach an NFT project that involves so much more than just music. Justin’s team tried for months in good faith to make a deal with Flores, but she stopped responding and decided to file a lawsuit instead.”

LEARN MORE ABOUT: 3lau | Moon Aura

Written by khirou

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