CMU Daily 01.03.18: Spotify files for public stock market listing, PRS and PPL officially launch joint performing rights licence

Spotify files for public stock market listing
Spotify has finally filed its documents to become a public company. The streaming service submitted the required papers to list on the New York Stock Exchange yesterday. As expected, it will arrive on Wall Street via a direct listing rather than a traditional IPO.

Of course, going public means giving up lots of information about the running of your company. And Spotify's papers are full of it, giving potential investors a deeper look at what they could be getting themselves in for. And the rest of us things to chatter about.

The listing will give the company a valuation of $19.7 billion based on the midpoint of privately traded shares - although it adds that shares have traded at up to $132.50 each, which gives it a top end valuation of $23 billion.

In terms of users, Spotify says it currently has 71 million paying subscribers, with 159 million monthly active users in total across 61 territories, when its free subscribers are included in the mix. This, it notes, is far in excess of its closest rival, Apple Music, which has 36 million subscribers in total (that service not offering a free tier).

Despite this, the company acknowledges the threat it faces from Apple Music, as well as any music ventures led by Google, because both tech giants have the advantage of owning major app stores. Both charge third party developers transaction fees, which are not levied on their own services. This, in particular, makes Apple Music appear cheaper than Spotify, if bought through Apple's app store (although their price points are actually the same when bought direct), as Spotify passes the 30% cut taken by the tech giant on to consumers.

Spotify's filing also notes the possibility of other as-yet-unlaunched services taking market share from existing players, noting: "As the market for on-demand music on the internet and mobile and connected devices increases, new competitors, business models, and solutions are likely to emerge".

With the majority of its users not paying for a subscription, instead relying on the ad-funded free service, Spotify also talked up that aspect of its business model. Although still bringing in a significantly smaller portion of its revenue than premium subscriptions, the company says ad income grew 41% last year, from $359.9 million in 2016 to $507.5 million.

Total revenues were $5 billion last year, just over double those of 2015. But still, the company is yet to make a profit. The music industry is doing very well out of it all, though. Since 2008, the listing discloses, Spotify has paid out over $10 billion to rights holders. The cost of royalties grew 27% last year, despite new deals with labels securing lower cuts.

The filing shows that in 2015, Spotify was paying about 88% of revenues to rights holders. Last year, this shrank to 79%. This is still higher than the 70% its business model demands - the result of the advances and minimum guarantees it provides the music rights owners - but it possibly indicates a trend in the right direction.

Even if it does reach profitability year-on-year, Spotify admits that it has built up a deficit of $3 billion, due to "significant operating losses" over the last three years. These have risen of late, reaching $461.2 million last year. Total losses last year were $1.5 billion - $1 billion of which related to its equity swap with Chinese company Tencent.

"We cannot assure you that we will generate sufficient revenue from the sale of our premium service and advertising for our ad-supported service to offset the cost of our content and these royalty expenses", says the filing. "If we cannot successfully earn revenue at a rate that exceeds the operational costs, including royalty expenses, associated with our service, we will not be able to achieve or sustain profitability or generate positive cash flow on a sustained basis".

Despite Spotify talking up its advertising business, the streaming services really need to reach a certain number of paying users to become viable concerns. Spotify has attempted to attract different types of users in recent years through various discounted rates for its premium package. Students can join for half price, while the family plan reduces costs for users who use several subscriptions on one account.

Although a wider variety of options is probably needed to ensure greater mainstream growth, current offerings do seem to be working. The number of premium users cancelling their subscriptions each quarter is falling. In the last quarter of 2017, this rate fell to 5.1%, down from 6% during the same period in 2016, and 7.5% in 2015. Paid subscriptions, meanwhile, are growing at 46% per year, and free accounts 29%.

As well as simply seeing how well Spotify shares fare on the public market, there will be a great deal of scrutiny of the success of the direct listing too. Spotify itself notes that this is a risky move, saying: "As this listing is taking place via a novel process that is not an underwritten initial public offering, there will be no book building process and no price at which underwriters initially sold shares to the public to help inform efficient price discovery with respect to the opening trades on the NYSE".

As a result, it says, the company has hired Morgan Stanley "as a financial advisor to be available to consult with the designated market maker in setting the opening public price of our ordinary shares on the NYSE".

Trading is set to begin "as soon as practicable after this registration statement is declared effective".

This week's CMU Trends article will delve further into Spotify's public listing and what it tells us about the streaming business. CMU Premium subscribers will get instant access to this report - sign up to become one for £5 a month here.

With Spotify listing on the New York Stock Exchange, now is also the perfect time to read up on exactly how the streaming business model works. You can do just that by reading 'Dissecting The Digital Dollar', produced by CMU Insights for the Music Managers Forum. Buy the book on Amazon here.

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Concord Music signs Justin Parker
Concord Music has signed songwriter Justin Parker to a new worldwide publishing deal.

EVP of Worldwide Creative at Concord Music Kim Frankiewicz says: "Justin is a once in a generation songwriter. His songs have provided the soundtrack for so many; we are absolutely THRILLED to welcome him to Concord in what looks to be a very exciting year!"

Parker adds: "From the first moment I met Kim and her team I knew Concord was the right place for me. Their genuine passion for what I do and the idea of working with a more boutique publisher was the perfect combination, I'm really excited about the music we're going to make together".

The songwriter's big break was co-writing Lana Del Rey's 'Video Games' in 2011. Since then, he has written for artists including Rihanna, Sia, Linkin Park, Skrillex, Bat For Lashes and Banks, as well as continuing to work with Del Rey.

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PRS and PPL officially launch joint performing rights licence
PRS For Music and PPL have officially launched their new joint venture company. The imaginatively named PPL PRS Ltd will provide one licence to cover all public performance rights.

The new company will administer the joint licence - called TheMusicLicence. This will mean anyone wishing to play recorded music publicly - such as bars, offices, gyms, fishmongers and music venues - will only have to sign one agreement. This will then cover them for the performing rights in both recordings and songs.

Previously, it was necessary to get two licences - one with PPL for recording rights and another with PRS For Music for publishing rights. Plans to launch the new joint venture were originally revealed in early 2016. In May last year, it was announced that they'd finally settled on the PPL PRS Ltd name, and that Suzanne Smith would run the show, joining from credit rating company Experian.

Yesterday, the new company officially launched at its Leicester HQ, offering the new joint licence to anyone who wants to come and get it.

"We are very excited to now offer customers of both PPL and PRS For Music a more streamlined approach for licensing their businesses to play and perform music", says Smith in a statement. "With the launch of TheMusicLicence we are providing one licence and one contact, enabling companies and organisations to enhance their customer and employee experience by playing music in their premises".

PRS For Music chief exec Robert Ashcroft adds: "We have invested years of effort and millions of pounds to simplify music licensing for UK businesses and on behalf of PRS For Music, I am delighted to launch what is the largest joint venture of its kind in the world. This is the beginning of a new era in public performance licensing, which will bring real benefits to our members and customers alike".

Businesses can apply for the new joint licence via the PPL PRS website. Those which already have separate deals with PRS and/or PPL will be transitioned to a joint agreement as their existing licences expire.

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Claire Coulton joins Purple
Entertainment PR firm Purple has announced that it has hired Claire Coulton as a new Senior PR.

"I'm really excited to be joining Purple Entertainment", says Coulton. "They not only have an amazing music roster but a brilliant entertainment and sports division and I'm also really looking forward to working internationally in my new role".

Claire has worked in a number of music PR roles, most recently at Murray Chalmers. She takes up the new position next week. Her roster will include Lewis Hamilton, Alicia Keys, Adwoa Aboah's Gurls Talk, Karryn, Ama Lou and Keir.

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SZA not a big fan of her album
SZA's 'Ctrl' album was among the most acclaimed of last year. Although she's still confused as to why, not thinking much of it herself.

Interviewed as The Fader's latest cover star, she says: "I'm thankful that people don't think it sucks, but I'm gonna have to achieve a ten in my brain. I just made a gang of songs over the course of four years. Heard em all together and I was like, 'Huh, alright'".

In fact, she's a bit miffed that you like it so much: "I didn't even fuck with my own album, so I was so confused and almost, like, angry that everyone fucked with it so much. It meant everything I felt about myself was wrong. And it was just like, 'If that's not the truth, then what is the truth? I think when 'Love Galore' went platinum, Donald [Glover] texted me like, 'Do you still think it sucks?' And I was like, 'I dunno'".

It's not uncommon for artists to say that they don't think their early work was up to much. Although they usually do that when talking up later albums, rather than while still promoting their debut.

Last July she explained to The Guardian that the album only came out because her label took the hard drive with all of her recordings on hostage. Top Dawg Entertainment seemingly felt that she'd done enough, while she continued to tinker and record new music.

So, I guess the positive view of this is that SZA still wants to push herself to make better music. Depending on how hands-on the label is willing to get, it might be a wait though.

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Chvrches detail new album, release collaboration with The National's Matt Berninger
Chvrches have announced details of their new album, 'Love Is Dead', and released a new collaboration with The National's Matt Berninger called 'My Enemy'.

"[The album is about] coming to terms with the fact that there are great things in the world and there are awful things in the world and that you can't get one without the other", says vocalist Lauren Mayberry.

Of working with Berninger, she adds: "We've all been huge fans of The National for a long time. We had played a few festivals together but really got to know Matt when we were involved in Seven-Inches For Planned Parenthood, a fundraising and awareness campaign that he spearheaded. It's really inspiring and reassuring to meet other artists you admire and realise that they are trying to do some good in the world".

"We kept in touch after that and, when it came time to record 'My Enemy', Iain and Martin suggested I email Matt to see if he'd like to sing on it", she goes on. "We never realistically thought he'd have time to do it but he replied right away and recorded the track at his house the next day".

'Love Is Dead' is set for release on 25 May. Listen to 'My Enemy', featuring Matt Berninger, here now.

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Twin Shadow announces new album, releases Haim collaboration
Twin Shadow has announced that he will release his fourth album, 'Caer', on 27 Apr. Accompanying the news, he's released two new tracks, one of which features Haim. The album's title is taken from the Spanish word meaning 'to fall', which he says references observations both of himself personally and the wider world currently.

"Sometimes I feel like I have to take a fall to essentially get to the next phase of my life", says the musician of the album. "It's happened over and over. I've been through so many musical phases and through so many relationships with friends and lovers. I always feel like I'm standing on the edge of a cliff, looking down and thinking, 'this is the only way forward: onto the next thing'. It's sort of destructive, but I guess I thrive on rebirth".

"The patriarchy is falling apart", he goes on. "Our perceptions of who we are as human beings, because of technology and machines, are falling apart. We're living at a breaking point, and a lot of the themes on the album are talking about these fault lines".

Of his Haim collaboration, 'Saturdays', he adds: "It's a love song. 'Saturdays' is the heaven place you go to when you're in love or even with friends, feeling your youth. But it's also about my feeling that the world is starting to tear itself apart and maybe we're falling through the cracks. But when you're lying in bed next to someone you care about, none of that seems real".

Listen to 'Saturdays', and the other new track, 'Little Woman'.

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The Great Escape announces The Beach
The Great Escape has announced that it will host a new complex on Brighton beach during this year's festival. The 2000 capacity venue will feature performances from acts including Superorganism, Tom Grennan, Nilüfer Yanya, and Goat Girl.

"With demand and drive for new music and an ever-expanding festival, creating our first, very own festival site on the beach is the most exciting news in TGE's history and we couldn't have a more perfect spot than right on the seafront", says MAMA Festivals CEO Rory Bett. "The Beach will become a magnet for music lovers during the festival and we can't wait to open the doors".

Programming at The Beach will be curated in partnership with a number of partners, including Island Records, Dr Martens and AWAL.

Delegate passes for this year's Great Escape are still available. They not only get you access to all of the shows at the festival, but also the convention, including the CMU Insights conference strands. This year we will be focusing on music education, China and AI.

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Felix Jaehn, Classic Album Sundays, Kelela, more

Other notable announcements and developments today...

• German DJ Felix Jaehn has signed a global publishing deal with Warner/Chappell. "I can't express how excited I am", says Warner/Chappell's Lars Karlsson excitedly.

• Universal Music UK announced the promotion of Rob Fleming and Nickie Owen to co-Presidents of International Marketing earlier this week. "All our artists have a global footprint from day one and our absolute priority is to support them in amplifying the potential of this changing world map for music", says CEO David Joseph.

• BMG has appointed Alistair Norbury as its President, Repertoire & Marketing for the UK. "I am lucky", says Norbury. "I am confident", adds BMG CEO Hartwig Masuch.

• Classic Album Sundays is putting together a social media campaign around International Women's Day next week. They ask that people submit a selfie with their favourite album by a female artist or an act featuring a woman or women. Email that, plus text of up to 200 characters on why you love that album, to alan@classicalbumsundays.com by 3 Mar.

• Kelela has released a new video for 'Frontline', the opening track from last year's brilliant 'Take Me Apart' album.

• Young Fathers have released new single, 'Toy'. Their new album, 'Cocoa Sugar, is out next week.

• Rapper Dave has returned with new track, 'Hangman'.

• So Below is back with 'Close'. The track is taken from her new EP, 'II', which is due out on 9 Mar.

• Laurence Pike has released a live video of his track, 'Life Hacks'. His debut album, 'Distant Early Warning', is out on 30 Mar.

• Bill Ryder-Jones is heading out on tour in September, including a date at London's Queen Elizabeth Hall.

• The nominations for this year's Jazz FM Awards are out, with the public vote now open until 2 Apr. Cast yours here.

• Marmozets have announced new tour dates for May, kicking off in Norwich on 4 May. Tickets go on sale tomorrow.

• Here's iPod inventor Moby being all amazed by the iPod in 2001.

• Check out our weekly Spotify playlist of new music featured in the CMU Daily - updated every Friday.

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Keith Richards shrugs off drugs and regrets Mick snip quip
With the Rolling Stones' first UK tour in over a decade announced earlier this week, the interviews with individual band members are rolling in. Slowly, we're building up a picture of all the things they're not fussed about. For Charlie Watts, for instance, it's the Rolling Stones. While for Keith Richards, it's all these drugs they have now.

"Drugs are not interesting these days", he tells the Telegraph. "They are very institutionalised and bland. And, anyway, I've done em all".

He goes on to describe sobriety as "novel", which it turns out is a pretty accurate description. When he says he's not interested in doing drugs anymore, he means he's not had any since Christmas.

"I'm not saying I'm definitely off all of this stuff", he continues. "In six months' time, I might be on it again. But at the moment, for a couple of months, I haven't touched it".

One thing that hasn't changed is that he's still making digs at Mick Jagger. Although something that is different now that he's stopped taking drugs is that he's feeling regret afterwards. In a Wall Street Journal interview earlier this week, Richards suggested that his bandmate should have a vasectomy - Jagger having had his eighth child aged 72 in 2016.

"Mick's a randy old bastard", said Richards. "It's time for the snip - you can't be a father at that age. Those poor kids!"

He's since reconsidered, and decided that you can be a father at that age, tweeting yesterday: "I deeply regret the comments I made about Mick in the WSJ which were completely out of line. I have of course apologised to him in person".

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