NoCopyrightSounds wins £1.4M in dispute against AEI Music

A forceful judicial ruling in the electronic ecosystem

The London High Court has issued a court order requiring the former distributor AEI Music to make an interim payment of 1.4 million pounds sterling (plus interest) in favor of the independent label NoCopyrightSounds (NCS). The resolution, issued in mid-September 2026 under the neutral legal reference EWHC 2360 (Ch), marks a turning point in one of the most complex disputes over the exploitation of music rights and unpaid royalties in the current industry. This financial ruling functions as an interim measure issued under Part 25 of the UK Civil Procedure Rules, pending the full trial scheduled for January 2028.

The business model and the origin of the commercial fracture

NoCopyrightSounds has been a pioneer in an innovative business model within electronic music, allowing content creators on platforms like YouTube and Twitch to use its catalog for free, while the label monetizes the tracks through traditional streaming platforms (DSPs) and commercial licenses. To manage this massive volume of streams, the relationship with AEI Music and its subsidiary Featherstone Music was established in 2014. Both entities assumed the roles of distributor and sub-publisher, respectively, taking charge of collecting and settling the income generated by the artists.

After nearly a decade of joint operations, the alliance deteriorated drastically when NCS discovered severe accounting discrepancies that directly affected the revenue share of its producers. In May 2025, the situation reached a critical point: AEI Music formally acknowledged an accumulated debt of approximately 4.1 million pounds. However, the distributor warned the label's executives that it did not have sufficient liquidity, stating that it could not disburse more than 250,000 pounds without risking entering an insolvent liquidation process. Faced with this scenario, NCS issued notices of contract termination for material breach.

Financial breakdown of the High Court ruling

During the hearings held in July 2026, the London law firm Simkins, representing NoCopyrightSounds, requested an interim payment of 3 million pounds. This figure was based on an estimate of total debt, interest, and amounts owed to artists that amounted to 6.5 million pounds. After analyzing the evidence, the court determined that, even based exclusively on the documents provided by the defense, the actual minimum liability stood at 4.5 million pounds.

To establish the final amount of the interim payment, the judge applied a mathematical deduction based on the counterclaims presented by AEI Music. The distributor claimed 1.06 million pounds for an alleged breach of contract derived from the early termination of the agreements, and another 2 million additional for alleged unjust enrichment. By subtracting these 3.06 million from the minimum liability and rounding the figure down, the court set the immediate compensation at 1.4 million pounds.

The court described this calculation approach as extremely generous toward the defendants, ensuring financial viability while protecting the owed capital.

— Simkins LLP

The application of the 'American Cyanamid' test and the future of the catalog

Beyond the financial compensation, the most critical aspect of the ruling is the granting of an interim injunction that prohibits AEI Music and Featherstone Music from continuing to distribute, license, or exploit any work from the NCS catalog. To grant this measure, the court applied the principles of the landmark case American Cyanamid v Ethicon Ltd, concluding that economic damages would not be an adequate remedy if AEI continued to operate the rights in the face of its evident solvency problems.

Additionally, the court has required the defendant companies to submit immediate audited interim accounts. These documents must detail with millimeter precision the exact debt and establish the recoupment position of all electronic music artists and composers linked to NCS. This case underscores the growing need for absolute transparency in royalty settlements and sets a vital precedent for independent labels that entrust their distribution infrastructure to third parties within the clubbing ecosystem.

Sources Consulted