CMU Daily 04.06.21: US Congress members say Spotify's Discovery Mode raises "significant policy issues", ask Daniel Ek five key questions, Mystery US investor interested in 10% of Universal Music revealed to be Bill Ackman-led SPAC

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US Congress members say Spotify's Discovery Mode raises "significant policy issues", ask Daniel Ek five key questions
Two members of the US House Of Representatives have written to Spotify boss Daniel Ek stating that the streaming firm's new Discovery Mode initiative raises "significant policy issues". With that in mind, they want Ek to answer a number of questions about the scheme by 16 Jun.

Discovery Mode was first unveiled last November and is currently subject to a pilot. Under the scheme, artists and labels can influence the streaming service's all-powerful algorithm, making sure that the Spotify machine is aware of the artist or label's current priorities tracks-wise, or that any one track is particularly newsworthy or timely for some reason.

The algorithm will then prioritise that track when pushing the artist's music to users it has already identified as being interested, or potentially interested, in said artist's output - the pushing happening via Spotify's personalised playlists, radio channels and auto-play function.

The new service has proven somewhat controversial in the music community, however, because there is a cost to utilising it. Basically the artist or label has to accept a lower royalty on any streams generated through Discovery Mode.

Some see that akin to the common practice in the CD era of offering retailers a discount if they gave a release a prime position in store. But others see it more on par with payola, the very dodgy and often illegal practice of bribing radio stations to playlist your music.

Either way, there has been plenty of criticism of Discovery Mode. Although it didn't mention the Spotify service by name, the pan-European trade group for the indie sector, IMPALA, said in a recent white paper on the streaming sector: "We call on the entire music sector to stand with IMPALA to reject any proposals by services that reduce royalties for plays, or privileged treatment, in algorithms or other features. This is payola, and has no legitimate place in improving viability and opportunity for creators".

The Artist Rights Alliance in the US, meanwhile, said Discovery Mode was a "cynical" move at at time when, because of the COVID shutdown, artists were more reliant than ever on things like the Spotify algorithm. The new scheme was "exploitative and unfair", and: "Artists must unite to condemn this thinly disguised royalty cut".

The ARA also argued that once Discovery Mode is rolled out across the whole Spotify platform, the benefits to artists would be nominal. "It's likely to set in motion a race to the bottom in which many active artists feel compelled to pay up rather than risk being left behind in the battle for exposure", it wrote in an op-ed piece in Rolling Stone.

"The unhappy result of this race? Artists and their labels end up receiving lower royalties without gaining any meaningful additional exposure at all, because if everyone is 'boosted', nobody is", it went on. "If every artist, made even more vulnerable by the lack of touring income during the pandemic, pays up, there just won't be any relative gain at all”.

You sense that Congress members Jerry Nadler and Hank Johnson were influenced by the ARA article when writing their letter to Ek. Nadler chairs the Judiciary Committee in the US House Of Representatives, while Johnson heads up another committee that has both intellectual property and the internet within its remit.

Although noting that the specifics of how Discovery Mode work aren't entirely clear, they write that the new service "may set in motion a 'race to the bottom' in which artists and labels feel compelled to accept lower royalties as a necessary way to break through an extremely crowded and competitive music environment. Depending on how the programme is implemented, there is a further concern that accepting lower rates for this boost in Spotify's algorithm may not even guarantee more airplay if virtually all commercial artists are also doing the same".

The Congress members then run through the challenges music-makers have faced during the COVID pandemic; all the criticism Spotify has received from the artist community about the average per-play royalties it pays out; and the controversy around Spotify being involved in an appeal of the Copyright Royalty Board ruling that increased the streaming royalty paid to songwriters in the US.

"At a time when the global pandemic has devastated incomes for musicians and other performers, without a clear path back to pre-pandemic levels, any plan that could ultimately lead to further cut pay for working artists and ultimately potentially less consumer choice raises significant policy issues", they write.

"This is particularly true under Spotify’s current model, where artists’ returns are already low, with Spotify reporting to pay artists less than a cent per song streamed (estimated in the $.003 to $.005 range) and Spotify has challenged an administrative ruling setting a higher royalty rate for songwriters".

"Core copyright industries like music play an integral role in the US economy", they then add, "and the vitality of the industry is undermined when artists' hard work is undervalued. Such a race to the bottom threatens to weaken the core goal of copyright and intellectual property - incentivising creativity by offering a fair return on one's work".

With all that in mind, Nadler and Johnson ask Ek five questions. Among other things they want clarity on if and when Discovery Mode will be rolled out to all artists and labels, and how they will ensure that the service doesn't become entirely ineffective once everyone is using it. They also want more clarity on what discount will be involved, whether all artists and labels will be charged the same rate, and how those using Discovery Mode will be able to measure the effectiveness of the service.

I think most of the music community will now await Ek's answers with some interest.

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Warner Music announces new partnership with Songclip
Warner Music has signed a global multi-year partnership with Songclip, a music tech company that seeks to make it easier for app makers to include music clips in their products.

Most people agree that the use of music in non-music apps of various different kinds is a big opportunity for the music rights industry, and royalties from such apps will become an increasingly important revenue stream in the next decade.

Video-sharing apps like TikTok and Triller are the most obvious users of music in this way, but they are just one part of the opportunity, with fitness app Peloton often held up as an example of how music can be key part of digital services well beyond more conventional social media.

Although, as Peloton itself knows - it having had a number of run ins with the music publishers at various points - securing music for inclusion in apps can be a major task, given all the famous complexities around music licensing.

With apps where music is a useful add-on - but nevertheless, an add-on rather than a crucial component - those licensing complexities can kill opportunities. Hence the gap in the market for business-to-business providers that can simplify the process.

Songclip founder Andy Blacker says: "Apps want to integrate and innovate with music because it drives average revenue per user, but there is no industry wide solution to make this easy, and compliant. As the world's foremost searchable library of compliant five to 30 second meta-tagged music clips, our proprietary solution solves these complex problem sets and powers a new economy for the entire music industry".

Confirming its new partnership with Songclip, Warner Music's SVP of New Business Ventures, Alex Kamins, adds: "We live in an age in which everyone is a creator and digital identity is fundamental. Partnering with Songclip will allow WMG to dramatically expand its social licensing footprint, allowing users of new apps and platforms to express themselves more creatively and authentically through music".

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Mystery US investor interested in 10% of Universal Music revealed to be Bill Ackman-led SPAC
The mystery American entity that might acquire 10% of the Universal Music Group ahead of its upcoming stock market listing is a special purpose acquisition company run by activist investor and hedge fund manager Bill Ackman. So now you know. And don't go claiming you don't. Because you do. We just told you. I saw you reading it. There's no going back now.

Current UMG owner Vivendi is getting ready to list the world's biggest music rights company on the Dutch stock exchange. 60% of the shares in the spun off Universal Music business will then be distributed to Vivendi's current shareholders. 20% is already owned by a consortium of investors led by Chinese web giant Tencent. Vivendi itself was expected to keep hold of the other 20%.

Except last month Vivendi announced that, while it would definitely be retaining at least 10% of UMG post stock market listing, it might actually flog off the other 10% to an unnamed "American investor".

Yesterday, the Wall Street Journal reported that this "American investor" was in fact the Ackman-led Pershing Square Tontine Holdings, a special purpose acquisition company launched on the New York Stock Exchange last November. Special purpose acquisition companies – aka SPACs or blank cheque companies – list themselves on stock exchanges with no active operations, raising money on the markets with the specific aim of then acquiring other businesses.

Following the WSJ report, Vivendi put out a new statement confirming that it was indeed Akman's investment entity that it was busying talking to regarding the sneaky flogging off of 10% of UMG prior to any stock market listing.

"Vivendi and Pershing Square Tontine Holdings Ltd, represented by Chief Executive Officer Bill Ackman, have entered into discussions for Vivendi to sell 10% of the Universal Music Group share capital to PSTH, prior to the distribution of 60% of the UMG shares and its listing", it said this morning. "This transaction would be based on an enterprise value of 35 billion euros for 100% of the UMG BV share capital, subject to the authorisation given by Vivendi shareholders at the 22 Jun 2021 Shareholders' Meeting, to distribute 60% of the UMG share capital and list the company".

Vivendi also added that, assuming this deal goes through, Pershing Square Tontine Holdings, and its affiliates, might then look to further boost their stake in UMG, either by buying up more stock from the Vivendi shareholders who will soon be UMG shareholders too, or by buying into Vivendi.

Ackman's SPAC also confirmed the talks with Vivendi, with Ackman himself stated: "Universal Music Group is one of the greatest businesses in the world. Led by Sir Lucian Grainge, it has one of the most outstanding management teams that I have ever encountered. Importantly, UMG meets all of our acquisition criteria and investment principles as it is the world's leading music company, with a royalty on the growing global demand for music. We are delighted to work with Vivendi on this iconic transaction, and look forward to its consummation".

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Downtown Music sets up new unit to pursue new market opportunities
Downtown Music has announced the launch of a new central department within the business that will lead on the firm's new markets strategy or, in the words of an official statement, "be responsible for unlocking growth opportunities for Downtown in both new and existing global territories".

The new unit is part of rejig at Downtown following the music firm's decision to sell off its catalogue of owned song rights and instead focus entirely on providing services to other rights-holders and independent creators via its various existing subsidiaries that provide such services on both the songs and recordings side of the music rights business.

The new team charged with the task of finding all those growth opportunities will be headed up by David Alexander, MD of the South Africa-based music publisher that Downtown acquired last year, Sheer Music Publishing. He will be joined by Heli Del Moral, who previously headed up international operations for Downtown's DIY distribution company CD Baby.

Says Alexander of his new role as SVP of New Markets for the wider Downtown business: "I'm excited to help shape a comprehensive global strategy that addresses the needs of creators in both established and emerging markets. Understanding cultural differences and how the music industry is developing across international markets is essential to craft better opportunities and more equitable solutions. This decision further demonstrates Downtown's commitment to international creators and its purpose to represent the interests of music creators across all genres, languages, and territories".

He will report into Downtown's EVP Of Global Business Development Andrew Sparkler who adds: "David's deep expertise building the largest independent music publisher on the African continent, his knowledge of the global music industry, and passion for supporting creators, makes him ideally suited to lead our new markets strategy. The added partnership and support from Heli, with his impressive track record growing international operations in Latin America and India, is an ideal complement".

Alexander will also continue to head up Sheer Music Africa in the short term while a new MD is recruited.

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Jax Jones launches his own label, WUGD
Your old mate Jax Jones has just launched a brand new record label, albeit in partnership with the label he's already signed to, that being Universal's Polydor Records. Jones will run the WUGD label with his long-term manager Dan Stacey.

"Being an artist, I know the courage it takes to make it", says Jones, real name Timucin Lam. "I want to create an environment for artists to blossom, with access to everything I can offer - from the expertise of my team to a personal relationship with me, free from interference and bullshit, because I believe that’s what it takes to make the best music".

"And partnering up with Polydor means we can go the whole way round the world with you", he goes on. "It's like Kai says in the WUGD manifesto - we'll find a way together".

Ah yes, I forgot to mention that WUGD has a manifesto written by poet and activist Kai Isaiah Jamal. There will also be a bursary scheme and mentorship programme for young creatives starting out in the music business. Basically, the official blurb says, WUGD is on a mission to "amplify talent that needs to be heard and advocate for those with limited opportunities, creating a positive, long-lasting impact on the music industry".

Stacey adds: "We want to help artists make their favourite music. That's what has always driven Timz in his own career from day one, and I'm proud that WUGD will help other artists do the same. We both feel passionately about protecting the artists vision and creating opportunities for the next generation. Cut the crap. Enjoy it".

The label's first release is a new track from Jax himself called 'Feels', which appears on an upcoming EP titled 'Deep Joy'. Other releases will then follow from artists on its launch roster, which includes System.Inc, Forever, Chaya, Teqkoi and Aikoand Oklou.

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Sophie left behind "literally hundreds" of unreleased tracks, says brother
There is "a lot of music" by Sophie, who died earlier this year, which could be released in the future, says the producer's brother Ben Long. And that includes a follow-up to 2018 album 'Oil Of Every Pearl's Un-Insides'.

"There is a lot of music in the vaults, absolutely", confirms Long - who also worked as Sophie's tour manager, live engineer, and mix engineer on recorded projects - and who has been talking to Billboard. "There are literally hundreds of tracks".

Only a portion of those tracks are ever likely to be released though, with Long and the rest of his family left to decide what should be put out. "There are many, many discussions to be had", he adds. "The most important thing for us is doing right by Sophie - putting stuff out that Sophie was happy with and would want to be out".

"I don't want to be like, 'We're going to put everything out', because sometimes Sophie didn't want it to or it wasn't finished", he adds. "But it was quite clear with a lot of songs, just from the fact that we had been working on them and mixing the album, that I know the direction a lot of things were supposed to be going".

Of that album that he and Sophie were working on prior to the producer's death, he says: "The idea Sophie and I discussed many times was to do one abstract experimental album and then a pop record - this was going to be the pop one - and to keep going on that cycle for years".

Currently, there is no indication when any of this music might be made available.

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DEALS

Hipgnosis has acquired the catalogue of songwriter and producer Joel Little - best known for his work with Lorde. "Joel is one of the most important songwriters in the world today", says Hipgnosis founder Merck Mercuriadis. "More than eight years on from the iconic song that is [Lorde's] 'Royals', he has continued to deliver massive hits for Lorde, Taylor Swift, Khalid, Imagine Dragons and many more. It's wonderful to welcome Joel to the Hipgnosis Family".

Israeli music publisher Amusica Songs Management has joined international digital licensing agency IMPEL. "We are really excited to be welcoming Amusica", says IMPEL CEO Sarah Williams. "This also marks an important moment for IMPEL as we expand beyond what is traditionally perceived to be 'Anglo-American' repertoire to embrace other qualifying works in other languages. This is a reflection both of our own goals and of the way in which the global music landscape is maturing".

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APPOINTMENTS

The US Recording Academy has elected Tammy Hurt as its new Chair of the Board Of Trustees. She replaces Harvey Mason Jr, who recently became permanent CEO of the organisation. Rico Love was also elected as Vice Chair and Om'Mas Keith as Secretary/Treasurer. Christine Albert remains Chair Emeritus. "I'm in awe of the amazingly talented group that's been elected to lead this new era of the Academy and really excited at the possibilities as I start this journey with Tammy, Rico, Om’Mas, and Christine", says Mason. "I know this group is going to do great work as we continue to transform the Academy and support the music community".

Universal Music's Def Jam in the US has promoted Nicki Farag to Executive Vice President and General Manager. She was previously EVP Promotion. "Nicki is a seasoned, consummate professional and true leader", says CEO Jeffrey Harleston. "She has the unique ability to understand and inspire confidence in artists, the passion and tenacity to champion their artistry and the tireless energy to rally her staff to compete and achieve greatness".

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MEDIA

Amazon has announced a new music show, featuring Billie Eilish, HER and Kid Cudi over three episodes. 'The Prime Day Show' - named to mark the company's annual scheme to get customers to buy discounted shit they don't want or need - will "immerse customers in a unique experience that fuses performance and storytelling, transporting fans to worlds inspired by Paris, The Dunbar Hotel and outer space". Or so it says here. It'll be available from 17 Jun and will disappear after 30 days.

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RELEASES

Dua Lipa has released a new song 'Can They Hear Us', taken from the soundtrack of new movie 'Gully'.

Roddy Ricch has released his first solo track of 2021, 'Late At Night'.

Pa Salieu has released new single 'Glidin', featuring Slowthai. He's also announced UK tour dates in November.

J Cole has released the video for 'Punchin The Clock', from his new album 'The Off-Season'.

Belly has released new single 'Zero Love', featuring Moneybagg Yo.

Bad Bunny has released new single 'Yonaguni'.

Tinashe has released new single 'Pasadena'.

John Mayer has released new single 'Last Train Home'. His new album, 'Sob Rock', will be out on 16 Jul.

Mykki Blanco has released new single 'Summer Fling', featuring Kari Faux. "I wanted 'Summer Fling' to feel like a song I could have heard at my middle school dance, maybe it’s because those were the years in which I was coming of age", says Blanco. "Y2K aesthetics still influence me heavily at some point in the creation of my songs. I always feel like the Y2K vibe haunts its way into the room and makes its presence felt on my records".

Jasiah has released new track 'Art Of War', featuring Rico Nasty and Denzel Curry.

Darkthrone have released new single 'Hate Cloak'. Their new album 'Eternal Hails' is out on 25 Jun. "'Hate Cloak' is certainly the slowest song on the album, there are plenty of 'fast' parts on Ted's [Skjellum - vocals, guitar] songs, middle tempos and slow as well", says drummer Fenriz. "The whole point of us having long songs is variation in tempos/pace, hence the epicness”.

Haiku Salut will release new album 'The Hill, The Light And The Ghost' on 27 Aug. "You could say the record is a miniature exploration of sound in relation to memory", says the band's Sophie Barkerwood. "Each piece is intimately connected to a place in time". Here's an introductory video.

Molly Burch has released new single 'Heart Of Gold'. Her new album, 'Romantic Images', is out on 27 Aug.

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

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Grimes calls AI "the fastest path to communism"
Grimes has shared a video on TikTok explaining how good old artificial intelligence can bring about a communist utopia. Computers are going to do all the farming! No one will ever have to work again! Though she then subsequently said that the whole thing had been intended as a joke. Nevertheless, everyone's still trying to work out what she was actually banging on about. If only to be able to enjoy the joke.

"So typically most of the communists I know are not big fans of AI", she says in the video. "But, if you think about it, AI is actually the fastest path to communism. If implemented correctly, AI could actually theoretically solve for abundance. Like, we could totally get to a situation where nobody has to work, everybody is provided for with a comfortable state of being, comfortable living".

If you're worried at this point that you just don't know enough about communism to follow any of this, don't worry - Grimes doesn't appear to know what communism is either. For one, while there are various different versions of communism, none of them has the end goal of no one working.

Anyway, she goes on: "AI could automate all the farming and weed out all the corruption, thereby bringing us to... as close as possible to genuine equality. So, basically, everything everybody loves about communism, but without the collective farm".

"Let's be real", she concludes, "enforced farming is really not a vibe".

No, I suppose it's not. It's still hard to see how we'd get to a situation where farming is entirely managed by benevolent robots. But you shouldn't pay any attention to that idea anyway, because - remember - all of that waffle was just a hilarious joke. Haha! You fell for it!

Replying to one of the many confused comments under the video, which pointed out that her husband is literally note-worthy capitalist Elon Musk, Grimes wrote: "Haha I'm not a communist! This is a joke - but maybe the technocrats and communists could get along".

Let's not even get into that. I think everyone's had a bit too much excitement now and we should have five minutes quiet time.

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