| We've covered the music business each day since 21 Jun 2002 Today's email is edition #5148 |
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| | In today's CMU Daily: In its latest earnings call, and with the company losing €446 million in 2023, Spotify's CEO Daniel Ek hinted there may be more job cuts coming saying “Killing things that sort of work is a great way to re-energise people on the things that really drive value”
One Liners: NQ partners with Sony; Epitaph appointment; Salt investment; Mogwai launch festival; Killer Mike comments on Grammys arrest; Taylor Swift announces new album; new music from The Ghost Inside, Pissed Jeans and Group Listening Also today: UK's planned code of practice on copyright and AI shelved; Warner Chappell's US Supreme Court sample dispute; Live Nation sent new information requests by US Justice Department
Plus: Bingo Fury, Setlist Podcast, and The F-Lists's Vick Bain on misogyny in the music industry | |
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| CMU Masterclass: Music Streaming In 2024 | Today's CMU Masterclass Music Streaming In 2024 kicked off at 2.30pm today, and will be available as an on-demand session later this evening. Music Streaming In 2024 guides you through everything you need to know about how the streaming business is evolving. We'll be giving an overview of key streaming services, how and why the streaming model is changing, the ongoing economics of streaming debate, and how UGC platforms and revenues fit in.
We will tell you which digital services are generating the most revenue and growth in music markets across the world.
Plus we will discuss how and why the streaming business model is evolving - including reviewing the changes being made by Spotify and Deezer - and we'll explain why some people are proposing even more radical reforms.
Whatever role you have in the music industry, this masterclass will ensure that you have a full understanding of where streaming fits in the modern music business.
Book your place on this masterclass for just £59 inc VAT - or book the series of eight masterclasses for £299 inc VAT. | 👉 Book your place now |
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| | Spotify CEO slams Apple in earnings calls and hints at more job cuts | Spotify now has 602 million active users globally, and generated €12.97 billion in revenue during 2023. However, the company is still losing money, and after declaring a small profit in Q3 of 2023 is now back in the red, losing €75 million in the final quarter of the year, for a total loss of €446 million.
Addressing the company’s lay-offs at the end of 2023 - and whether the reduction in headcount would impact on the Spotify’s ability to innovate going forward - Spotify CEO Daniel Ek said that the company needed to be “more diligent in shutting down things that have sort of worked but that may not work as well going forward into the future”. He said that being “relentlessly resourceful” and re-allocating headcount investment into the “highest impact use case” would be a priority for the company. “Killing things that sort of work is a great way to re-energise people on the things that really drive value”, he said and warned “you’re going to see that across the company in a pretty big way”.
The company now has 236 million premium subscribers, up from 205 million at the end of 2022, a 15% increase year on year. At the same time ad-supported users grew by 18 million across the quarter, and 84 million year on year, to hit 379 million. However, ad-supported revenues are still a long way from Spotify’s goal to deliver 20% of its total revenue from the ad-supported tier, bringing in just €501 million in Q4 - 13.65% of its total revenues for the quarter - and €1.68 billion for the year.
On today’s earnings call with analysts and other investors outgoing Spotify CFO Paul Vogel - the highest profile casualty of the company’s December lay-offs - addressed the apparent poor performance of the company’s ads business. Saying that the market for ads “continues to be choppy”, he revealed that the company is seeing “high teens” percentage growth in its ads business and that this is “really strong relative to the industry overall”.
He also said that despite a recent price increase premium subscriber growth has been “faster than we would have thought” and that these two factors - premium subscriber growth, coupled with the price increase - means that Spotify’s premium revenues are overperforming, meaning that ad-supported revenue is a small percentage of the company’s revenues.
However, he also highlighted the impacts that foreign exchange fluctuations have on the company’s advertising revenues. This is of particular significance when you break out Spotify’s overall monthly active users versus subscribers on a regional basis.
With 65% of premium subscribers concentrated in North America and Europe it would appear from the quarterly breakdown presented in its investor deck that Spotify likely has around 242.5 million ad-supported users in other territories - with approximately 80.5 million in LATAM and as many as 162 million in ‘RoW’ - those countries outside of Europe, North America and LATAM.
Average Revenue Per User for premium subscribers works out to approximately €4.48 a month across the quarter, and projected forward gives annual revenue per premium subscriber of €53.37. However, on the ad-supported side Spotify is generating just €0.44 a month - or €5.29 annually. With the bulk of that ad-supported revenue likely to come from the company’s 136.5m North American and European users, it suggests that in less developed markets Spotify may be making just pennies per user per month.
Responding to a question about models “beyond the all you can eat framework” of monthly premium subscriptions Ek highlighted the “other pricing mechanics” the company has around the world. “It’s easy to think that Spotify is a single proposition for everyone in the world”, he said, but went on to say that it’s “far from” that model today. “We have day passes as one product that we’re offering in certain markets, and week passes”. The company even offers “scratch cards on a weekly basis” in some countries that people can use to “top up their Spotify listening”.
Ek also addressed Spotify’s recent spat with Apple over implementation of the EU Digital Markets Act. He said that there were “many things like a la carte purchases, superfan [clubs], purchasing of audiobooks, that could be quite meaningful for Spotify’s revenues” were significantly hindered “because Apple insists on taking a 30% cut,” and going on to point out that in many cases this exceeds Spotify’s own cut.
Asked whether he expected Apple’s implementation of the DMA to support Spotify’s “vision” Ek lashed out saying that Apple’s stance is “a bit of a farce”. He continued, saying, “On the surface, it looks like they are complying with it. But behind the surface they’re doing pretty much everything to make this such an unattractive experience that no sane developer” would want to agree to the new terms. | Read online | |
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| Taylor Swift, Killer Mike, The Ghost Inside + more | DEALS
Recording, publishing and management company NQ has partnered with Sony Music’s Columbia Records and The Orchard. "It feels like a no-brainer, and a great way to open our artists to international markets via The Orchard's and Columbia Records UK's global distribution channels while NQ Records continues to add value with a bespoke, artist-centric approach on the frontlines”, says CEO Michael Adex.
APPOINTMENTS
Epitaph and Anti- Europe have appointed Laura Pratt as Digital Marketing Manager. “I’m delighted that Laura Pratt is joining our European Epitaph/Anti- team”, says Managing Director Roger Dorresteijn. “With international experience at streaming services, and as a social media strategist, she’s got the skillset and musical background we were looking for to drive the brand of our labels and build the visibility of our artists”.
DIGITAL
ABBA’s Björn Ulvaeus, Eurythmics’ Dave Stewart, and producers Quincy Jones and Dan Kurtz are among a number of new investors in music rights fintech company Salt. “We’re proud that people of the stature of Dave, Quincy, Dan and Björn, who have created some of the most played music of all time, have invested in our plans to help other musicians and songwriters”, says CEO Doug Imrie. “We also warmly welcome Lansdowne Partners as investors to help fuel Salt’s global expansion”.
GIGS & FESTIVALS
Mogwai have announced new Glasgow festival Big City, which will take place on 29 Jun. They will headline, with Slowdive, Nadine Shah, Beak>, Kathryn Joseph, Brdmm, Elizabeth Elektra and more on the bill. Tickets go on sale on Friday. More info here.
ARTIST NEWS
Killer Mike has issued a statement following his arrest backstage at the Grammy Awards on Sunday. “We experienced an overzealous security guard, but my team and I have the utmost confidence that I will ultimately be cleared of all wrongdoing”, he says. RELEASES
Taylor Swift has announced that she will release new album ‘The Tortured Poets Department’ on 19 Apr. Posting the tracklist on Instagram, she revealed that it features Post Malone and Florence And The Machine as guests.
The Ghost Inside will release new album ‘Searching For Solace’ on 19 Apr. Out now is new single ‘Wash It Away’.
Pissed Jeans have released new single ‘Sixty Two Thousand Dollars In Debt’. Their new album ‘Half Divorced’ is out on 1 Mar. Group Listening will release new album ‘Walks’ on 10 May. Out now is new single ‘Frogs’. Catch them live around the UK throughout June.
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| Setlist Podcast: Universal and TikTok accuse each other of “bullying” and “greed” | On this week's show we discuss Universal and TikTok’s big bust up that has seen the major label’s music removed from the social network, the damning report on the “boys’ club” music industry and how it holds women back, and more.
🎧 Listen to Setlist here - or search "Setlist" wherever you normally listen to podcasts. | |
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| Planned UK code of practice on copyright and AI shelved
| The UK’s Intellectual Property Office has shelved its planned code of practice on copyright and AI. First proposed last March, the IPO confirmed in June that it had convened a working group to discuss a code for companies that use existing content to train generative AI models.
According to the Financial Times, "the group of industry executives convened by the IPO has been unable to agree on a voluntary code of practice, meaning that it has returned the responsibility back to officials at the Department For Science Innovation And Technology ... officials in the Department For Culture, Media And Sport are also involved".
The group of industry executives included representatives from music industry organisations UK Music, BPI, the Music Publishers Association and the Council Of Music Makers. Tech companies involved included IBM, Microsoft, Google DeepMind and Stability AI.
Plans to develop the code followed the UK government’s decision to abandon a new copyright exception for data mining that would have benefited AI companies. The code, the IPO said, would aim “to make licences for data mining more available. It will help to overcome barriers that AI firms and users currently face and ensure there are protections for rightsholders".
The creative industries remain adamant that any tech company training an AI model with existing content must get permission from the relevant copyright owners. Many AI companies argue that no permission is required because AI training is covered by copyright exceptions - usually relating to data mining - or, under US law, constitutes fair use.
The shelving of the code is definitely a set back for creative industries like the music industry, which have been calling for more clarity regarding the copyright obligations of AI companies. Though AI companies really need more legal clarity too.
Intellectual property lawyer Paul Joseph at Linklaters told City AM that he wasn't surprised that efforts to find consensus between copyright owners and AI firms had failed, adding "it was difficult to understand what the code was intended to achieve".
As for the impact of the code being shelved, he added, “it’s unclear yet whether this is a blow to the creative industries specifically or whether it is a concern to both the creative and tech company stakeholders, given the current default position in the UK".
It is thought the government will imminently publish a white paper on the regulation of AI. It remains to be seen what that says about copyright matters. There is now a fear in the creative industries that a new narrower copyright exception may as yet be proposed.
Last week a committee in the House Of Lords called on the government to clarify the copyright obligations of AI companies, arguing that waiting for test cases in the courts to reach a conclusion is not practical because that could take years. The Lords report also stated that, "we do not believe it is fair for tech firms to use rightsholder data for commercial purposes without permission or compensation, and to gain vast financial rewards in the process".
Copyright owners will be hoping that the government reaches the same conclusion. Commenting on that report, the boss of record label trade group BPI, Jo Twist, said, “the Lords Communications Committee rightly recognises the importance of intellectual property rights in enabling creativity and incentivising innovation – central to the cultural and economic power of the UK’s creative sectors".
"In music we are embracing many of the opportunities of AI that this report also contains", she added, "while striving to ensure that music creators and businesses are properly recognised and rewarded by those using music to develop commercial AI models. We warmly welcome its findings and urge the government to follow the Lords’ recommendations in respect of the creative sector and rights".
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| Op Ed: The F-List's Vick Bain discusses what the industry's next steps should be after last week’s release of the Misogyny In Music report | Last week the Women And Equalities Committee in the UK Parliament published a damning report on misogyny in the music industry. Researcher and consultant Vick Bain has closely followed issues around diversity and inclusion in the music business, through her academic research and industry roles, for many years. She also founded The F-List For Music, a not-for-profit organisation supporting female musicians. Here she considers the report's findings and how the industry should respond.
The publication of the Women And Equalities Committee’s report on Misogyny On Music has been met with strikingly different responses. From one corner there is muted silence from the ‘industry’, ie, labels, publishing companies, agencies, promoters and collecting societies to name but a few. But from the other corner there are cheers of validation, from women in music campaigning initiatives and organisations.
This is not surprising because I have experienced, time and time again, denial and sometimes anger from calling out unacceptable behaviour in music. I have been told data and evidence isn’t true or that, if it is, publicising it is not good for the image of the music industry.
I have experienced personal backlash and blaming and I know I have most definitely been removed from numerous party and event invite lists. Because as a researcher and campaigner you are the bringer of bad news, the holder of the mirror and what we see in its reflection is not nice. In fact, it’s sometimes disturbing, even harrowing, and the messenger often gets shot. | 👉 Read the full op ed from Vick Bain | |
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| Warner Chappell urges Supreme Court to reject Copyright Office position in Flo Rida sample dispute | Warner Chappell has urged the American Supreme Court to reject a position stated by the US Copyright Office regarding how far back damages can be claimed in a copyright infringement lawsuit, as part of a legal dispute over a sample in 2008 Flo Rida track ‘In The Ayer’.
The Copyright Office says that damages can be backdated to when an infringement took place, providing a lawsuit is filed within three years of the plaintiff becoming aware of the infringement. Warner Chappell says that is wrong. In the past different US courts have been inconsistent on this matter, so the music publisher now wants clarification in its favour.
At the heart of this is what is known as the 'discovery rule'. There is a three year statute of limitations for copyright infringement litigation, but under the discovery rule that means a copyright owner must sue an alleged infringer within three years of them becoming aware of any infringement, rather than three years from the date the infringement actually took place.
The big question here is: if the infringement actually occurred earlier, can the copyright owner claim damages all the way back to the date of infringement or just for the three years prior filing to their lawsuit? That depends on whether you apply the discovery rule in a ‘broad’ way that means it applies to damages as well as the ability to sue.
Flo Rida's 'In The Ayer' sampled 1984 track 'Jam The Box' by Tony Butler, aka Pretty Tony. Flo Rida's team cleared the sample with Butler's team. However, years later, a man called Sherman Nealy claimed that he actually owned the copyright in 'Jam The Box', having signed Butler to his Miami-based label Music Specialist back in the 1980s. That meant, he alleged, the sample was not properly licensed.
Nealy sued in 2018, ten years after the release of 'In The Ayer'. However, he was serving a prison sentence at the time the record came out and therefore was not aware of the unlicensed sample until years later. Relying on the discovery rule, he argued that he could still sue and also claim back damages to 2008. Warner Chappell disputed the damages claim, but the Eleventh Circuit Appeals Court concurred with Nealy.
Noting that different US courts have actually ruled differently on this question, the music publisher requested that the Supreme Court intervene. The court accepted the case last year, with judges now due to consider each side's arguments later this month.
The US Copyright Office submitted an amicus brief as part of the Supreme Court proceedings. It agreed with both Nealy and the Eleventh Circuit and said there was no three year limit on damages. However, Warner Chappell insists it is wrong, certainly when the specifics of the dispute over the Flo Rida sample are taken into account.
In a new filing with the US Supreme Court yesterday, the music publisher states that the government agency "simply assumes that a broad discovery rule applies because numerous courts of appeals have adopted such a rule, but they gloss over the fact that at least three courts of appeals do not apply the discovery rule where, as here, the dispute concerns ownership of a copyrighted work, not infringement".
It then added: "In order to resolve this case, all the court need decide with regard to the discovery rule is that a broad version of that rule - under which a plaintiff can obtain potentially decades’ worth of retrospective relief if he neither knew nor reasonably could have known of his copyright claim - is inconsistent with the text of [the Copyright Act]".
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| Approved: Bingo Fury | Blending jazz, no wave and classic singer songwriter influences, Bingo Fury is set to release his debut album ‘Bats Feet For A Widow’ on 16 Feb.
On his slightly unusual range of influences, he explains, “I was bored of experimental music just being dissonant or atonal – a lot of the people I was influenced by really challenged me but also had a euphoric atmosphere to their output”.
Out now is the latest single from the album, ‘Mr Stark’, which came together during a recording session at a church in Bristol.
"’Mr Stark’ was a half-preconceived, half-improvised song that we pieced together in the church as we were recording”, he says. “I was sent off to the local park to write lyrics and a vocal melody the day we recorded it”.
“I hate writing this way, without being able to meticulously iron out the creases”, he adds. “In hindsight, the spontaneity added an urgency to the song, which made it more infectious than it might have been if it were more considered”.
You can catch Bingo Fury on tour with Folly Group next month, followed by headline dates in April.
Listen to ‘Mr Stark’ on YouTube
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| US Justice Department requests more information in Live Nation investigation | The US Department Of Justice has reportedly sent out a new batch of ‘information requests’ as part of its ongoing investigation into allegations of anti-competitive behaviour against Live Nation and its Ticketmaster business.
According to Bloomberg, officials in the DoJ's Antitrust Division, which enforces US competition law, have become frustrated at how slowly Ticketmaster executives have been in responding to previous requests for information as they proceed with an investigation which could still result in legal action against the live giant later this year.
It emerged last year that the DoJ was again investigating whether or not Live Nation is abusing its dominance in the US live entertainment and ticketing market in a way that disadvantages competitors, artists and/or consumers.
Investigators will also be considering if the live music firm is compliant with the consent decree it agreed with the government department when Live Nation and Ticketmaster merged in 2010.
The DoJ approved that merger subject to Live Nation complying with the terms of the consent decree, which put restrictions in place regarding the relationship between Ticketmaster and Live Nation's venue and tour promotions businesses.
Those restrictions were only meant to be in place for ten years, but the agreement was extended for another five years at the end of 2019. That followed allegations that Live Nation was in breach of the consent decree. For its part, Live Nation has always denied all claims of anti-competitive conduct.
The dominance of Live Nation and Ticketmaster came under political scrutiny again last year following the meltdown that occurred when tickets for Taylor Swift's tour went on sale via Ticketmaster in late 2022. That led to a public war of words with a committee in the US Senate in November.
Issuing a bold statement at the time, Senators said Live Nation had "egregiously stonewalled" its investigation into "abusive consumer practices". Live Nation said the committee had failed to provide assurances that the commercially sensitive information requested by Senators would be kept confidential.
The DoJ investigation pre-dates all of that. There were initially reports that the government department might file a lawsuit against Live Nation before the end of 2023. That obviously didn't happen, though Bloomberg says that was because the investigation was extended and legal action could still happen later this year.
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