Modular Founder Speaks Out on Lawsuits with Universal, BMG

Modular Founder Speaks Out on Lawsuits with Universal, BMG
Modular Recordings founder Steve "Pav" Pavlovic has been in a sticky legal situation as of late; he was named in a lawsuit with BMG over royalties from Tame Impala, and then he lost a separate lawsuit that handed control of his Australia-based label to Universal. Now, Pavlovic has spoken out to give his side of the story.

According to him, the issue with BMG was simply a misunderstanding regarding how royalties are meant to paid out in different countries. "The issue arose out of an unfortunate misunderstanding due to there being different ways of calculating and paying mechanical royalties in the U.S. compared to the process we were used to in the UK and Australia," Pavlovic told Billboard. "We didn't realize that the different statutory process in the U.S. required Modular to deduct and pay the artists' mechanical royalties directly. We were in amicable discussions with BMG about how we make good. Together we established that we needed an audit to work out exactly what we needed to pay."

He added that the issue became increasingly complicated once Universal/Interscope assumed control of Tame Impala, making it unclear who owed what. Now, it seems that the confusion has been resolved, and he said that BMG is dropping the suit.

As for the situation with Universal, previous reports suggested that Pavlovic had signed over his share in Modular but then later attempted to go back on the deal. Here's what he had to say: "I deliberated about signing and then thought better of it at the last minute. I had felt bullied into agreeing the terms and then got my second wind and stood up to say 'no'. Universal claimed that I agreed to sign and that this was legally binding and that therefore the deed is in effect. A deed is a solemn document and it has always been my understanding that for a deed to bind a person, they have to actually sign it. It seems illogical to me that someone cannot have the right to deliberate about executing a document, especially one that they feel pressured into signing. As the proceedings are still live I unable to say much more than this."

Later in the interview, Pavlovic admitted that he wrote an email to Universal saying that he had signed the document, even though he actually hadn't. He revealed this to the judge during the case, and it seems that this is what destroyed his case. Evidently saying that he had signed a document was as good as actually signing it.

Previous reports had suggested that Pavlovic would appeal the case against Universal. Speaking with Billboard, however, he appeared to have accepted that he was no longer with Modular, saying, "I have no choice but to walk away from a company that I founded 18 years ago."

Regardless of whether or not Pavlovic really did sign away his stake in Modular, there seems to be no question that Universal will be running the show from now on.