CMU Daily 06.03.23: SM cancels Kakao deal, Jesus And Mary Chain settle termination rights case

SM Entertainment cancels Kakao deal after Hybe-supported founder scores win in South Korean courts
South Korean music company SM Entertainment announced earlier today that it has cancelled its controversial deal with internet firm Kakao following a court ruling on Friday, in a move that will please its rival and new shareholder Hybe.

Management at SM previously said that their proposed deal with Kakao, which involved issuing new shares, would enable a revamp of the company domestically and put in place the infrastructure needed to capitalise on the recent growth in popularity of the K-pop genre globally.

However, SM's founder Lee Soo-man - until recently the company's biggest shareholder - objected to those plans, the issuing of any new shares obviously diluting his share-holding. With that in mind, he launched legal action to block the Kakao deal and the issuing of any new shares.

As the dispute between SM's founder and current management team gained momentum, it emerged that Lee had sold most of his shares in the company to rival K-pop firm Hybe, best known as the home of BTS. That deal gave Hybe a 14.8% shareholding in SM, but it quickly let it be known that it was interested in acquiring more shares in a bid to secure a 40% controlling stake in the company.

Meanwhile, Hybe CEO Park Ji-won initially said that he wasn't opposed to SM forming an alliance with Kakao in principle, providing any deal was in the interest of all SM shareholders. However, having seen the deal, Hybe then joined Lee in opposing the proposed partnership.

Both SM and Kakao defending their alliance, insisting elements of the deal were being misrepresented by Lee and Hybe. However, on Friday the court considering Lee's legal claim sided with the SM founder and issued an injunction basically blocking the Kakao deal.

A legal rep for Lee told the Korea JoongAng Daily: "In the ruling, the court denied the need [for SM] to urgently raise cash and form a strategic alliance by stripping existing shareholders of the preemptive rights to acquire new shares and convertible bonds".

Hybe, in its guise as an SM shareholder, responded to that court ruling by demanding that the SM management team confirm they would comply with the injunction and not enter into any deals that violated the court order. SM then said that its proposed deal to issue and sell new shares to Kakao had now been withdrawn.

Alongside all the legal wranglings, Hybe also ramped up its efforts last week to woo SM's other shareholders, with it both wanting their support in opposing the plans of SM management, and - of course - to buy more shares.

Indeed, it has already confirmed another SM share purchase, buying stock from Hyosung Group's affiliate Galaxia SM. That deal gets Hybe another 0.98% of SM, bring its total shareholding up to 15.78%.

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The Jesus And Mary Chain settle with Warner Music in termination rights dispute
Warner Music has settled a lawsuit filed by The Jesus And Mary Chain over the good old termination right under US copyright law.

Band members Jim Reid and William Reid sued the major through the Californian courts in 2021 arguing that the record company was in breach of US copyright rules by refusing to accept termination notices they had filed in relation to recordings they released with the UK wing of the label in the 1980s.

The US termination right says that creators who assign their copyrights to third parties have an opportunity to terminate those assignments and reclaim their rights, albeit only within the US, after 35 years. On the songs side of the music industry, the employment of the termination right by American songwriters has become pretty routine.

However, many labels continue to argue that the right doesn't usually apply on the recordings side, because - they claim - American record deals are often work for hire agreements, meaning the label not the artist is the default owner of any recording copyrights. Which in turn means there are no assignments of copyright to terminate.

There also remains disagreement over whether or not the termination right applies to publishing and record deals signed outside of the US.

Plus, with UK copyright law, if a label organises a recording session it is the default owner of the recording copyrights, which again means there would be no assignment to terminate. Though more clearly so, given the status of American record contracts as work for hire agreements remains disputed by many artists.

All of which made the legal filing by the Reid brothers interesting, give their deal with Warner was signed in the UK, meaning the major had three potential arguments to fire back: the termination right doesn't apply to recordings generally; the termination right doesn't apply to non-US contracts; and the termination right definitely doesn't apply to UK recordings where the label organised the recording session.

Getting some judicial insight on the legitimacy of all or any of those arguments within the US courts would have been of value. But, alas, that now won't happen.

A new filing with the court last week stated: "Plaintiffs James Reid and William Reid [trading as] The Jesus And Mary Chain and defendant Warner Music Group Corp, through their respective counsel of record, stipulate to dismissal with prejudice of this action in its entirety, with each party to bear its own costs, expenses, and attorneys' fees".

A legal rep for the Reids then confirmed to Law360 that an out of court settlement had been reached. Details of said settlement are, needless to say, confidential, with the musicians' lawyer saying simply: "It's been amicably resolved".

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Grande asks judge to overturn $46.8 million ruling in copyright dispute with the major labels
US internet service provider Grande Communications has, somewhat unsurprisingly, called on the judge overseeing a copyright case in which it was ordered to pay the major record companies $46.8 million in damages to overturn that ruling or instigate a new trial.

Grande - which rebranded as Astound Broadband last year - was one of the American ISPs sued by the music industry for not doing enough to combat infringement and infringers on its networks.

As with the precedent setting legal battle in this domain - against Cox Communications - the record companies argued that Grande did not do enough to deal with repeat infringers among its customer base to avoid liability for its users' infringement via the copyright safe harbour.

Last year a jury ordered Grande to pay the labels the $46.8 million in damages in relation to the 1400 tracks which the music companies said had been distributed across the ISP's networks without licence.

In a new legal filing submitted to the court last week, Grande say that the judge overseeing the case should overturn that ruling as a matter of law, on the basis that there was insufficient evidence to support the jury's decision.

The labels, they argue, failed to provide sufficient evidence that the 1400 tracks in question had been infringed on its networks; that Grande was wilfully blind to the direct infringement of their copyrights; that Grande contributed to that infringement; that separate statutory damages were due on each and every track; or that they even owned the copyright in the 1400 recordings.

With that in mind, the ISP reckons, the judge should set aside the jury's decision, or at least call for a retrial. If he doesn't - and it seems unlikely that he will - Grande is expected to then take the matter to the Fifth Circuit appeals court.

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BMG announces partnership with new Scandinavian management firm
BMG has announced a partnership with newish Stockholm-based artist management firm Scandinavian Talent Management - or STM to its friends.

Launched by Henrik Johansson last November, STM also has music supervision, music publishing and live event divisions as well as working in artist management. Its roster currently includes the likes of Kristofer Greczula, Wilma Lidén, Chad Neale and Johan Brisinger.

Says Albert Slendebroek - BMG's MD Scandinavia - of the new partnership: "BMG and STM are a perfect match! Both share the mission of helping artists to make the most out of their careers and, most importantly, they don't work for us, we work for them as a service-oriented partner".

"Henrik Johansson is a great entrepreneur with a proven track record of building successful businesses", he goes on. "Over the last decades, Sweden has proven to be a flourishing market for music export with great success stories. We're looking forward to expanding with STM in Europe".

Johansson himself adds: "Artists have increasingly diverse careers, and the importance of a strong personal artist brand is becoming more and more important".

"With the launch of STM, our vision was to create opportunities for artists who are shaping pop culture in Scandinavia and beyond - and we are not limited to the music industry", he continues. "We are delighted with BMG's trust and are confident that we can create many synergies with their global resources and networks".

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British MP criticises TikTok over its restricted music experiment in Australia
Another politician has hit out at TikTok, though specifically about the way it is treating the music community rather than the customary concerns about whether or not the Chinese government has access to the video sharing app's user-data via its China-based owner Bytedance.

Damian Collins MP - a Conservative member of Parliament who had a brief stint as a minister in the UK government's Department For Digital, Culture, Media & Sport last year - has written an op-ed piece in the Telegraph criticising TikTok's ongoing experiment in Australia where it is restricting access to music.

The official line from TikTok is that that experiment - which means some Australian users don't currently have access to some music on the platform - is part of an investigation into how "sounds are accessed and added to videos" within the app, with a view to improving and enhancing its Sounds Library of audio clips.

However, the music industry suspects that the test is very much linked to ongoing licensing negotiations between TikTok and the record labels in which the latter are looking to increase the monies they receive from the digital firm on the basis music has played a key role in the app's huge success.

The labels suspect TikTok will try to use the results of its experiment in Australia to play down the importance of music on its platform worldwide in a bid to keep its royalty payments down.

The boss of the Australian record industry's trade body ARIA, Annabelle Herd, recently said: "It is frustrating to see TikTok deliberately disrupt Australians' user and creator experience in an attempt to downplay the significance of music on its platform".

Although the experiment is only affecting Australian users, it impacts on artists globally, both in terms of their short-term ability to reach fans in Australia via the video-sharing app, and - if the results are used to try to keep music royalties down - the long-term income they can make when their music is utilised on the TikTok platform anywhere in the world.

"TikTok and its Chinese owner Bytedance have capitalised handsomely on the enormous appeal of UK artistry, using it to help attract more than a billion estimated users worldwide and soundtrack many of the platform's most viral and successful clips", Collins writes in his article. "But now, TikTok is trying to cut artists out of the equation, launching a new trial in Australia which is silencing creators in favour of its own self-interests".

"Concerningly, as many as half of Australian TikTok users are reportedly no longer able to access some or all music on the platform as the company sets out to 'prove' that music from world-renowned artists is no longer necessary for the platform to be a success", he goes on. "Not only is this action disruptive to huge numbers of local users, but it presents a considerable threat to the creative community around the world".

"This degrading of the music experience on the platform runs counter to what consumers want from TikTok by denying users access to the best content", he adds. "It also ignores the very talent that has helped create TikTok's global significance - key among them British artists".

Concluding, Collins writes: "We should be doing all we can to keep our British music industry globally competitive, protect our soft power and support our artists. We cannot quietly stand by and let Bytedance and TikTok stifle our world-leading creative sector with their Chinese technological iron grip while enriching themselves from it at the same time".

"This suffocation of creative and commercial freedom must not be allowed to go any further", he then insists, "[and] it must not be allowed to happen here in the UK".

For its part, TikTok insists that the experiment in Australia is temporary, while also telling the Telegraph that "speculation that the test is expanding to other markets is baseless".

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New host announced for Radio 1 Rap Show
The BBC last week announced a new host for its 'Radio 1 Rap Show', which airs on both Radio 1 and 1Xtra on Saturday nights. Kenny Allstar, already a 1Xtra presenter, will take over the programme from current host Tiffany Calver.

Says Allstar: "From the age of eleven, I remember taking my mother's cassette tapes to record 'The Rap Show' on Saturdays. This was more than a radio show it was my entire social life. I always wanted to one day be the host of this powerful slot on these powerful networks. I hope to uphold the legacy that Tiffany left in place and continue to showcase the hottest in hip hop music on a global scale".

Head Of Radio 1 Aled Haydn Jones adds: "I am so excited to welcome Kenny Allstar to the BBC Radio 1 family. He is a true tastemaker in the industry who brings that first-in-class authenticity and credibility that this iconic show is known for. He is a true force to be reckoned with and I can't wait to see him continue the legacy and put his own personal stamp on 'The Rap Show'".

The show is actually currently called the '1Xtra Rap Show', but will rebrand as the 'Radio 1 Rap Show' when Allstar takes over.

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APPOINTMENTS

Downtown Music has promoted Manan Vohra to Chief Technology Officer and Harmen Hemmings to VP Product & Services Strategy, both moving up from roles at the music firm's FUGA division. "Both Manan and Harmen have made unprecedented contributions to the growth and development of FUGA's technology and strategic services", says President Pieter Van Rijn. "I am confident they will bring their unparalleled knowledge and experience to the wider Downtown Music group, spearheading our next chapter".

Transgressive has promoted Mike Harounoff to become Associate Director, Senior A&R and Artist Manager. "Transgressive has been home since I was 21 years old", he says. "It's been a pleasure and privilege working alongside our incredible artists and teams throughout that time - and I am truly excited for the future together".

Audio recognition company Audoo has named Peermusic's Nigel Elderton as its new Chair. "Having Nigel join is an honour", says CEO Ryan Edwards. "[He's] a true champion of the songwriter and music industry with unparalleled experience and expertise. We are excited to benefit from his guidance and continue on the mission of revolutionising the public performance royalties space worldwide".

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RELEASES

Simply Red have released new single 'Better With You' and announced that they will release new single 'Time' on 26 May. "When we were in lockdown, I went, well, jeez, who am I actually?" says Mick Hucknall. "What makes me tick? And I realised: you are a songwriter. So why don't you write some songs about who you are? That's really the essence of this album".

Sparks have released new single 'The Girl Is Crying In Her Latte', taken from their upcoming album of the same name. That album is out on 26 May and the duo will also be touring the UK the same month.

Alma will release new album 'Time Machine' on 21 Apr. Here's new single 'Hey Mom, Hey Dad'. "This album's key message is finding your own voice", she says. "Going back to the start on your own, knowing your worth and asking for more from life. Every song is like an honest conversation in my head".

The Umlauts have released a remix of their track 'Non È Ancora' by The Regressive Left. "We were really taken by the expressiveness of the vocals on 'Non È Ancora'", say The Regressive Left, "so our remix was all about focusing on that expressiveness and creating rhythms and textures out of Annabelle Mödlinger's voice by turning her voice into a synthesiser and using LFOs to oscillate between different vocal samples to form the basis of the remix".

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

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Nicki Minaj to launch record label
Nicki Minaj has a record label now. "I have a record label now", she said on her Queen Radio show on Friday.

Although she did not reveal the name of the new label venture, she did let slip that artists she has already signed include Nana Fofie, Tate Kobang, Rico Danna and London Hill. She also announced that she and longtime associate Patty Duke will handle A&R for the company, and that it will operate as an imprint of Universal Music's Republic Records.

"When I get behind an artist, y'all know how I do shit for people that's not even signed to me", said Minaj. "Imagine what I'ma do for the ones that's signed".

She added that she's always been inspired to support newer artists thanks to the backing Lil Wayne gave her when she was starting out in the music industry.

"When I came in this game I didn't have no paperwork with Lil Wayne", she said. "But he had us on tour, he had us in a studio, he was getting on my mixtapes. So I understand the importance of having somebody else doing the heavy lifting for you".

"I understand why people are coming out and they're so, you know, microwaveable and they're here today and gone tomorrow, because there's no structure", she went on. "There's no real person that believes in them. That's like, 'Nah, I'm gonna make it my business to see you shine'".

As well as all that, Minaj also released a new single of her own last week, 'Red Ruby Da Sleeze'.

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