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Luke Combs has driven his “Fast Car” to the top five of the Billboard Hot 100 – and Tracy Chapman is riding shotgun.
The surprise success of Combs’ cover has been a minor windfall for Chapman, the sole songwriter of the 1988 hit from her breakthrough debut album. Billboard estimates that Combs’ version has generated about $500,000 in publishing royalties globally from its March 17 debut through June 8. Chapman alone is pocketing a sizable portion of that total.
Most of the royalties have come from 154 million U.S. on-demand audio streams from services such as Spotify and Apple Music from March 17 to June 8, according to Luminate. During that period, “Fast Car” also had 6 million video streams and 28 million programmed audio streams in the United States. The track has also been purchased 86,000 times, while the album on which it appears, Combs’ Gettin’ Old, has been purchased 68,000 times in both digital and physical formats. The United States accounts for more than three quarters of the song’s global consumption — a high ratio not atypical for a country artist.
What’s more, Combs’ success with “Fast Car” has also given Chapman’s original recording a boost. Weekly consumption — measured by track sales and streaming converted into equivalent track units — increased 44% since Combs’ version was released, while average weekly radio spins improved about 11%. That’s resulted in a boost in U.S. recorded revenues of about $54,000, with $13,000 coming from publishing royalties, Billboard estimates. (Warner Music Group’s Elektra Records, not Chapman, owns the recorded music rights.) Interest in Chapman herself appears to have increased, too: U.S. Google searches for the singer almost tripled from the weeks ended March 18 to June 3, according to Google Trends.
“Fast Car,” the first single for Chapman’s eponymous debut album, has been covered by the likes of Sam Smith, Khalid, Black Pumas and English producer Jonas Blue, whose dance version reached No. 2 on The Official U.K. Singles Chart and No. 98 on the Billboard Hot 100 in 2016. But in the United States, Combs’ version became the most successful to date by reaching No. 4 on the Billboard Hot 100 (dated June 17), surpassing Chapman’s original which reached No. 6 on the Billboard Hot 100 in 1988, and helped her debut album reach triple platinum within a year of its release.
Combs’ “Fast Car” peaked at No. 1 on the Country Digital Song Sales chart (dated June 10) and No. 2 on the Country Streaming Songs chart (dated April 29). It also reached No. 6 on the Country Airplay chart (dated June 17) in just its eighth week on the tally and hit No. 2 on the Hot Country Songs chart (dated May 6), which combines radio airplay and streams. North of the U.S. border, “Fast Car” reached No. 2 on the Canadian Digital Song Sales chart (dated May 6), No. 5 on the Billboard Canadian Hot 100 chart (dated May 27) and No. 36 on the Canada All-Format Airplay chart (dated June 10).
Tracking the ownership of “Fast Car” is like a brief lesson in the history of major publishing dealmaking of the last four decades. Chapman signed a publishing deal with SBK Entertainment prior to signing with Elektra Records in 1987. SBK was acquired by EMI Music Publishing in 1989. Citi took control of EMI in 2011 after private equity firm Terra Firma defaulted on its debt from a 2007 acquisition. A consortium of investors led by Sony Music Entertainment acquired EMI Music Publishing in 2012. In 2018, Sony Corporation bought out the remaining 60% of EMI Music Publishing. But the rights to “Fast Car” reverted to Chapman a few years ago, according to a Sony Music Publishing spokesperson. As sole owner of the songwriting and publishing rights, Chapman can pocket all royalties generated from “Fast Car” and other songs in her catalog, less any fees paid to a third party for administration services.
“Fast Car” is a rarity in an age of sampling, interpolations and Taylor Swift’s re-recordings. Outside of holiday music, cover songs rarely appear in the top 10 of the Hot 100 singles chart. In fact, the last time a cover entered the top 10 of the Hot 100 was Anna Kendrick’s version of “Cups,” a folk song written in 1931 and recorded by Hendricks for the movie Pitch Perfect that reached No. 6 in 2013. Prior to “Cups,” two cover versions from the TV show Glee appeared in the top 10: “Don’t Stop Believin’” (originally by Journey) in 2009 and “Teenage Dream” (originally by Katy Perry) in 2010. Chapman earns some royalties when “Fast Car” is sampled or used in an interpolation – Chris Brown‘s 2017 song “Runaway,” for example — but she keeps 100% of the songwriting and publishing royalties of cover songs.
While superstar musicians from Puerto Rico, Colombia and across the Americas have raised the profile — and bottom line — of Latin music in recent years, 2023 is turning out to be a breakout year for a particular kind of Latin music.
Regional Mexican music consumption in the United States jumped 42.1% year to date through May 25, according to Luminate. The genre — comprised of banda, corridos, norteño, sierreño, mariachi and more subgenres — had 5.81 million equivalent album units [EAUs] in the first 21 weeks of 2023 compared to 4.09 million EAUs in the prior-year period. EAUs combine album sales in addition to track sales and streams converted into album units.
That outpaces gains in the Latin genre overall (+23.1%), as well as country (+21.7%), dance/electronic (+15.5%), rock (+12.4%) and pop (+10.3%), as well as the overall market (+13.4%). Only K-pop — up 49.4% year to date as Korean music companies partner with U.S. labels to further penetrate the U.S. market — has performed better than regional Mexican.
The numbers are on track with Mexican music’s exponential and global growth — which Billboard has been reporting on — over the past few years. The legacy genre, which has been around for more than a century and a half, has experienced a newfound popularity, ushered in by a new generation of Mexican and Mexican-American artists who have subtly fused core traditional sounds with urbano/hip-hop styles appealing to a younger, digitally connected audience — mostly notably Eslabon Armado, Peso Pluma and Grupo Frontera.
About 99% of regional Mexican consumption comes from streaming. Through May 25, on-demand audio streaming from services such as Spotify and Apple Music accounted for about 90% of consumption of regional Mexican music. The remaining streaming consumption came from video streaming platforms such as YouTube and programmed streams from Pandora and other non-interactive radio services. Physical sales are not important for the genre — some artists are digital only — accounting for about 1% of total consumption.
Collaborations have driven success for regional Mexican artists, with Elsabon Armado and Pluma’s hit single, “Ella Baila Sola,” and Grupo Frontera’s collab with Bad Bunny both reaching the top 5 of the Billboard Hot 100 in May. Both songs are currently part of a handful of regional Mexican songs that are surging on the Billboard Global 200 chart, where representation of the genre went from notably absent to now comprising nearly 10% of the entire ranking. Sixteen regional Mexican songs have debuted on the Hot 100 as of June 2; the chart dated May 6 set a record, with 14 positions occupied by regional Mexican tracks and another held down by a remix of Latin urban artist Ynvg Lvcas’s “La Bebe” featuring Pluma.
Latin music has soared in recent years with the help of artists such as Puerto Rico’s Bad Bunny and Colombia’s Karol G. In 2022, Latin music consumption grew 28.2% and was the No. 5 genre in the U.S. behind R&B/hip hop, rock, pop and country. Bad Bunny alone accounted for 6.7% of Latin consumption in 2022 when his album Un Verano Sin Ti finished the year as the top album in the United States and put 24 tracks into the Hot 100 chart.
Regional Mexican represented 18.2% of Latin consumption in 2022, about the same as the prior two years (19% and 18.7%). But through May 25, a handful of standout successes helped regional Mexican increase its share of Latin consumption to 20.1%.
Eslabon Armado is the leading regional Mexican act thus far in 2023. The four-piece group from California’s central valley accounted for about 8% of regional Mexican consumption through May 25 and boasted the second-highest consumption of any Latin artist behind Bad Bunny. That’s translated into chart success, including reaching No. 4 on the Hot 100 with “Ella Baile Sola” and reaching No. 6 on the Billboard 200 albums chart with Desvelado on DEL Records. The second- and third-leading regional Mexican artists, Ivan Cornejo and Junior H, both rank amongst the 11 most popular Latin artists in terms of EAUs — behind Colombian superstar Shakira and ahead of American-born Puerto Rican rapper Eladio Carrion.
This year, the top regional Mexican albums are dominated by artists, not compilations. Sony Music Latin’s Fuerza Regida has both the top album, Pa Que Hablan, and the No. 4 album, Sigan Hablando. Last year’s top albums, Modo Despecho and Cantina Mega Mix, rank at No. 6 and No. 7, respectively. In the same period in 2022, nine of the top 10 regional Mexican albums were compilations such as Universal Music Group’s Modo Despecho, Cantina Mega Mix and Cumbias de Microbusera. Corta Venas by DEL Records’ Eslabon Armado was the lone artist album in last year’s top 25 regional Mexican albums.
Collaborations have added to regional Mexican artists’ success in 2023. Eslabon Armado’s share of the subgenre increases from about 8% to 9.6% when collaborations with Cornejo, Junior H, Grupo Frontera, Fuerza Regida and Luis R. Conriquez are counted. Fuerza Regida’s standalone recordings and collaborations with Grupo Frontera, Natanael Cano, Peso Pluma, Juanpa Salazar, Marca Registrada, Cornejo, Becky G and others in the top 200 regional Mexican artists give the group a 9.2% share of regional Mexican consumption.
After topping the chart for five weeks in late 2022 — including a decade-best debut in November, with over 1.5 million equivalent album units moved — Taylor Swift‘s Midnights returns to No. 1 on the Billboard 200 albums chart this week (chart dated June 10), interrupting Morgan Wallen‘s 12 straight weeks atop the ranking with One Thing at a Time.
While the album didn’t have far to climb — it was No. 3 on the June 3 chart, and has spent all of 2023 in the top 10 — Midnights‘ return to No. 1 comes off a 389% spike in equivalent album units in the United States this week, up to 282,000. That’s thanks to a variety of new physical and digital re-issues of the album, released May 26. Those included the new “love potion” purple marble variant of Midnights that was available in independent stores (and was also briefly for preorder sale on her web store earlier in the week), as well as two new deluxe editions.
There’s also the Til Dawn edition of Midnights that includes three bonus tracks: another version of the original album’s Lana Del Rey-featuring “Snow on the Beach” (this time with more Del Rey), a remix of “Karma” featuring buzzy rapper Ice Spice and “Hits Different,” previously available only on the Target-exclusive physical edition of Midnights.
And there’s also Midnights (The Late Night Edition) — which was very briefly for sale as a digital download on Swift’s web store, and then in CD form at her three live shows at New Jersey’s MetLife Stadium on May 26-28 — which includes those new takes on “Snow” and “Karma,” and an original bonus cut, “You’re Losing Me,” which is not yet available for streaming.
This is all in addition to the previously existing 3am Edition of Midnights, originally released just hours after the set’s standard edition.
All those variants combined to give Midnights its biggest week of the year, as well as — in terms of pure sales — the biggest single-week number for any album since Midnights debuted in November. Of the week’s 282,000 equivalent album units, nearly 70% came from album sales (196,000) — with a decent chunk also coming in streaming equivalent albums (SEA) and a much smaller sliver also in track equivalent albums (TEA).
Of those 196,000 total unit sales, 62% were digital with 122,000 units, while the venue sales during those three MetLife dates also contributed about 22% for 43,000 units and internet/mail order purchases made up almost 11% for 21,000 units.
Breaking it down by format, digital still ruled the day for Midnights the past week, with 122,000 units sold — followed by CD (45,600) and vinyl (27,300), with cassette sales (100) making up only a small fraction of the pie.
Of the four editions of Midnights available for sale, the most purchased version was the Late Night Edition that was for sale at the MetLife shows and featured the previously unreleased “You’re Losing Me.” That version accounted for almost 75% of all sales with 146,300 units. The album’s standard edition sold 30,600 units, making up almost 16%; and the Til Dawn Edition sold 18,500 units for over 9% of all sales.
When you look at total sales of all four editions of the album since its Oct. 21 release, however, the standard edition is still dominant. That version has sold over 2 million units, while the 3am Edition and Late Night Edition follow with 162,800 and 146,300 units, respectively.
Breaking down Midnights’ total overall sales since release, vinyl leads with 1,167,300 units, followed by CDs with 786,900 units and digital sales with 391,300 units.
* Midnights (standard edition) = (13-tracks, physical + digital) – inclusive of: the newly released the “Love Potion” color vinyl variant; plus the previously released iTunes-exclusive version with a bonus spoken word track, four standard CD editions (each with a different cover); four vinyl LP editions (each with a different cover and colored vinyl) and a cassette tape; a Target-exclusive “Lavender” edition of the album on CD and colored-vinyl LP, with the CD including three bonus tracks; signed copies of the four standard CD albums and the four standard vinyl LPs; and a deluxe boxed set with a CD edition of the standard album and a Swift-branded T-shirt, exclusively for Capital One cardholders; four digital alternative cover variants, each with a “behind the song” spoken word bonus track from Swift.
Midnights (The 3am Edition) = (20 tracks: 13 standard tracks + 7 bonus tracks; digital sales only, not available as a physical album)
Midnights (The Til Dawn Edition) = (23 tracks: 13 standard tracks + 7 ‘3am Edition’ tracks + 3 new bonus tracks; Digital Sales Only, not available as a physical album)
Midnights (The Late Night Edition) = (21 tracks: 13 standard tracks + 5 ‘3am Edition’ tracks + 3 bonus tracks; Physical + Digital)
Additional reporting by Keith Caulfield.
Stock markets ended the week on a positive note as investors showed optimism believing that Congress can negotiate a deal to increase the nation’s debt limit and avoid a historic default. The S&P 500 increased 1.3% to $4,205.45, up 0.3% on the week, while the Nasdaq composite climbed 2.2% on Friday (May 26) to finish […]
As 2023 heads into summer, multiple signs point to a healthy and growing live music business for the rest of the year. In recent weeks, executives from the publicly traded concert promotion and ticketing companies have signaled that surging consumer demand won’t slow down, and there will be enough tours to satiate music fans’ appetite for live events.
Demand has been strong “and is showing no signs of letting up,” said Live Nation CEO Michael Rapino during the company’s May 4 earnings call. Live Nation expects to sell more than 600 million tickets in 2023, up from 550 million in 2022. To date, the concert promoter has sold more than 100 million tickets to Live Nation events, a 20% increase from the prior-year period, and expects to host a record number of fans in 2023.
Vivid Seats, the publicly traded secondary ticketing marketplace, shares Live Nation’s sentiment. “Consumers continued to crave live experiences in the first quarter,” said CEO Stan Chia during a May 9 earnings call, “and we believe this trend will continue for many years.” Vivid Seats does business primarily in the U.S. while German promoter and ticketing provider CTS Eventim focuses on Europe. “Both in Germany and internationally, we are pursuing organic growth and anticipate that our business performance will continue on its successful course,” said CTS Eventim CEO Klaus-Peter Schulenberg in the quarterly results released May 24 that reiterated the positive outlook in its 2022 annual report of “moderately higher earnings” for the live entertainment segment 2023.
The concert business is meeting — and perhaps surpassing — some lofty expectations. In 2022, as the concert business exited the pandemic, the widespread belief was that pent-up demand for in-person experiences would drive the concert business beyond pre-pandemic levels. That turned out to be true. Concert promoter Live Nation posted record revenue of $6.2 billion in the third quarter that was 67% above the same period in 2019. What’s more, the volume of fans returning to concert venues was augmented by an unmatched willingness to absorb higher prices. Frenzied demand — and sky-high prices on the secondary market — for tours by Taylor Swift, Beyonce and Bruce Springsteen have showed A-list artists have yet to find their ceiling on prices.
Concert promoters have posted strong quarterly earnings that fit their narratives. Live Nation’s first-quarter revenue was up 71% to $3.1 billion. CTS Eventim’s online ticket sales increased 58% to 18 million as consolidated revenue improved 163% to 366.2 million euros ($393 million). At Vivid Seats, which also does business in major sports such as baseball and basketball, first quarter revenue grew 23.2% to $161 million and adjusted earnings before interest, taxes, depreciation and amortization doubled to $42.4 million.
Investors absorb past earnings history while figuring out what to expect in the future, and according to JP Morgan analyst David Karnovky they often ask two questions about Live Nation: First, is there enough supply to meet growing, healthy demand? Yes, Live Nation president and CFO Joe Berchtold said at JP Morgan’s Global Technology, Media and Communications conference on Tuesday. That’s because global streaming platforms such as Spotify and social media apps like Instagram and TikTok allow artists to build global followings in ways that weren’t previously possible, he explained. K-pop and other up-and-coming genres of music “that maybe once were regional are now going global,” he said, and artists that used to sell out mid-sized venues are now selling out stadiums. “So, you’re seeing that supply continue to build.”
The second thing investors want to know is how demand will respond during a softer economy. Live Nation closely follows the indicators — such as on-sales show closings — Berchtold said, “but we’re not seeing anything that gives us pause.” Separately, Berchtold noted that Live Nation’s research indicates getting back to concerts are one of fans’ top priorities after the pandemic and will be “one of the last things they’re going to cut back on.”
Vivid Seats CFO Lawrence Fey also addressed the possibility of an economic downturn — a scenario becoming increasingly likely in the U.S. should Congress fail to find a compromise to raise the debt ceiling by early June. “[T]here’s a lot of chatter and concern out there” that demand will weaken “in the not-too-distant future,” said Fey, “but it continues to be the case that we’re seeing very robust demand across our event categories [and] across price points.” Beyond the consistently strong demand, Vivid Seats has “been pleasantly surprised by the supply calendar,” particularly a concert schedule that includes recently announced tours by Drake and Aerosmith, he added, “and [that] gives us optimism.”
Now that the pandemic is over, “it is anything but ‘business as usual’” at CISAC, the international trade organization for copyright collecting societies, according to director general Gadi Oron in its 2023 annual report.
In a time of change for collecting societies, which bring in a combined 9.6 billion euros a year, CISAC’s priorities include lobbying governments in support of member societies, continuing its campaign to support the ISWC code system to identify works, and navigating the challenges of AI, which Oron calls “our biggest priority now in terms of policy.”
The biggest news in the report about a particular market is the success of Autodia, the Greek collecting society that has become prominent since the 2018 dissolution of AEPI. “In 2018, I gave a presentation to the board [of CISAC and said we must do something,” Oron remembers. AEPI’s collapse was epic, complete with a 2017 police raid and a failure to pay out 42.5 million euros (more than the total amount it distributed some years), according to an audit ordered by the Greek Ministry of Culture. Oron feared the potential collapse of a market that had been worth about 50 million euros a year in the late 1990s, so he asked the CISAC’s board to support a plan to fund and help Autodia, which was then a small nonprofit society that in 2018 collected less than a million euros.
In 2022, Autodia collected 16.2 million euros, and it now collects for all three major publishers, BMG, and many of its sister societies, according to CEO Margarita Panagiotopoulou. “We are growing fast and gaining market share,” Panagiotopoulou says, “and that is on track to continue.”
Autodia now faces competition from EDEM, which mostly represents Greek repertoire and took in about 8 million euros last year.
The first phase of CISAC’s plan was to get Autodia loans from its member societies and send to Athens consultant Declan Rudden, who became interim CEO of Autodia to get the society running. He helped make reciprocal agreements with international societies and court publishers, as well as compete with EYED, a government-controlled entity that was designated as the temporary successor to AEPI. (Some major publishers originally signed with EYED but most of them are now with Autodia.) One day, as Rudden and team were putting together desks in the Autodia office, it was raided by the Greek department of labor and fined for keeping employees after 5pm without notifying them in advance. (This is illegal in Greece, but raids are uncommon.) “They did everything to make our life difficult,” remembers Rudden, who runs the consultancy SaorServices.
Gradually, the local team took over, and Autodia took in more than 4 million euros by 2019, then more than 12 million euros by 2022, as the pandemic subsided. “The contribution of CISAC was very important,” Panagiotopoulou says, in terms of funding, legitimacy and lobbying both the Greek government and songwriters themselves.
Greece is still a contested market. “Market share is a matter of disagreement,” says EDEM COO George Myzalis. (Panagiotopoulou says Autodia has more than 85% market share, but the respective royalty collection numbers imply a lower number.) Along the way, the technology company Orfium, which has some operations based in Athens, almost entered the market as well, but it ultimately withdrew. (The company operates in other sectors and did not respond to a request for comment.) Right now, venues and broadcasters in Greece need licenses from both Autodia and EDEM, especially if they want to play both the international repertoire that Autodia dominates as well as the Greek compositions that EDEM tends to have.
Some big publishers believe that the growing success of Autodia limits the possibilities for the kind of direct licensing model that they see as more efficient. One idea that at least some of them favored was to establsh EDEM as an organization that would offer more optionality by requiring less exclusive grants of rights – and a model for what they believe could be a more efficient future for the publishing business. As Autodia grows, that is becoming less likely – which some publishers see as a wasted opoortunity and other societies and some other publishers and songwriters see as a win for the current structure, which for all of its complexity offers more of a balance of power between big players and small ones.
The only things most executives seem to agree on is that the situation in Greece is far better than it was under AEPI and that it is getting better, even if it’s not where it should be. “AEPI was a disaster,” says Peermusic European president Nigel Elderton. “Autodia have their act together and they’re paying royalties through and they’re starting to grow.”
At a time when the traditional collecting society model is being challenged by direct licensing and a growing number of for-profit royalty organizations, both the other societies that supported Autodia and the publishers that favored another model agree that the implications of the society’s success go beyond Greece. Now that CISAC has showed it can help turn around a society in a market that’s perceived to be dysfunctional, it could potentially do so again.
“This was 10 times harder than I could have imagined,” Oron says. “But we’ve proven to ourselves that we can do it. Whether we can do it in other countries depends, but we have proof that we can do it.”
The Contenders is a midweek column that looks at artists aiming for the top of the Billboard charts, and the strategies behind their efforts. This week (for the upcoming charts dated June 4), a veteran rock group looks to score its first Billboard 200 No. 1 of the 2020s, with competition from a U.K. singer-songwriter, a couple hard rock outfits, and – of course – Morgan Wallen.
Dave Matthews Band, Walk Around the Moon (RCA): It might not be the first group that comes to mind when naming the biggest acts of the past 30 years, but few rock bands have ever enjoyed as consistent success as the Dave Matthews Band on the Billboard 200. The group has reached No. 1 with each of their last seven studio albums — a streak dating back to 1998’s Before These Crowded Streets – and hopes to make it eight with the release of last Friday’s (May 19) Walk Around the Moon, its first album of the 2020s.
However, the DMB’s chances to unseat Morgan Wallen (11 weeks and counting with his One Thing at a Time) will be impacted by a change in Billboard’s charts since the last time it released an album: the 2020 elimination of ticket bundles from Billboard 200 calculations, which previously provided a big boost to the exceedingly popular live outfit. (Recent rule changes have reintroduced “fan pack” bundles to Billboard chart calculations, but through merch rather than tickets, and with much stricter rules about eligibility.) Instead, the band will have to rely largely on physical sales — to which end, it has released multiple vinyl variants, including exclusive color variants for the band’s fan club, Barnes & Noble, independent record stores and Target.
Lewis Capaldi, Broken by Desire to Be Heavenly Sent (Vertigo/Universal/Capitol): Though Scottish singer-songwriter Lewis Capaldi reached the apex of the Billboard Hot 100 with his late-’10s breakthrough hit “Someone You Loved,” he topped out at No. 20 on the Billboard 200 with debut album Divinely Uninspired to a Hellish Extent. After a few years of steady fanbase building, he may fare a little better with sophomore set Broken by Desire to Be Heavenly Sent — which features a more modest Hot 100 success with lead single “Forget Me” (No. 58) but has multiple vinyl LPs, four CD editions and even five cassette variants available for purchase.
Summer Walker, Clear 2: Soft Life (LVRN/Interscope): R&B star Summer Walker is on her way to being one of the most consistent LP artists of her generation — 2019 debut set Over It hit No. 2 on the Billboard 200 and its 2021 sequel, Still Over It, made it to No. 1, both also drawing considerable critical acclaim – but her EP success has been less resounding, with 2020’s Life on Earth tapping out at No. 8, with no real breakout hits. Her latest EP is Clear 2: Soft Life, a nine-track offering with a pair of big-name guests in J. Cole and Childish Gambino — but again, the set’s songs have not performed on the streaming charts the way Still Over It’s tracks did in their first week, suggesting fans still want to enjoy a longer Summer.
In the Mix
Ghost, Phantomine (Loma Vista) / Sleep Token, Take Me Back to Eden (Spinefarm): The streaming era has not been particularly generous to hard rock and heavy metal, but two bands from those genres that have found real success are Ghost and Sleep Token. Both will impact the charts next week with new releases: Ghost with a covers EP (featuring takes on Genesis, Iron Maiden and Tina Turner) and Sleep Token with their first LP since going viral with advance track “The Summoning” earlier this year. Those built-in streaming numbers will boost Eden, while Phantomine is aided by multiple vinyl LP variants and (somewhat ironically) a Spotify-exclusive cassette.
Beyoncé, Renaissance (Parkwood/Columbia): Whether it can spark the kind of extended catalog-wide gains that Taylor Swift’s Eras Tour has in its first couple months remains to be seen, but the launch of Beyoncé’s Renaissance Tour has already given its titular album a nice bump on the Billboard 200, lifting it 49-34 on this week’s chart. It may rise even higher next week with the Friday release of her new “America Has a Problem” remix, featuring rap superstar Kendrick Lamar, which is off to a good start on streaming and whose metrics will be rolled in with the original Renaissance album cut.
A couple of years after the COVID-19 pandemic took radio listeners out of their vehicles and a recession caused an advertising slowdown, the radio industry is experiencing another decline. That has complicated the financial position of Audacy, the second-largest radio company in the United States and a major player in the podcast market.
Warning lights appeared again last week when the company revealed in its May 10th 10-Q filing that “current macroeconomic conditions” such as rising inflation and interest rates and lower advertising revenue “have created, and may continue to create, significant uncertainty in operations.” Those factors “have had, and are expected to continue to have, a material adverse effect” on Audacy’s forecasted revenue, which is “unlikely to be sufficient” to maintain compliance of the financial debt covenants its lenders impose to ensure it can make its interest payments. As a result, Audacy explained, the company could default on its debt — which could then cause that debt to become immediately payable.
On Tuesday (May 16), a week after the March 10 filing, the New York Stock Exchange (NYSE) decided to halt trading of Audacy’s shares in order to delist the company. It was an expected move. Audacy, which changed its name from Entercom in March 2021, last traded at $0.09 per share — down nearly 63% year-to-date — before trading on the NYSE was halted. The NYSE, which has rules to maintain minimum share prices, issued a warning to Audacy on July 31 because its average closing price over a consecutive-day trading period was below $1. Audacy last closed above $1 per share on July 5, 2022 — meaning it remained below $1 for 218 consecutive trading days.
Investors have lost some faith in radio companies’ stocks as advertising growth weakened in 2022. Year-to-date, shares of iHeartMedia, the nation’s largest radio company, have fallen 55.3%. Likewise, shares of Cumulus Media, the third-largest radio company, are down 47.5%. Market conditions appear to be improving, however. iHeartMedia expects its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to improve throughout 2023, CEO Bob Pittman said during the company’s May 2 earnings call. “And if this advertising market recovery trend continues in 2024,” Pittman added, “we expect to resume our growth trajectory that was interrupted by this period of advertising softness.”
The advertising market is part of Audacy’s problem, but it’s not the entire problem, according to Craig Huber, media analyst at Huber Research Partners. “The number one issue is too much debt in a secular declining industry,” says Huber. Audacy acquired most of its $1.9 billion of long-term debt from its 2017 merger with CBS Radio. That deal increased Audacy’s revenue more than four-fold, from $367 million in 2016 to $1.7 billion in 2018, but also increased its debt from $468 million at the end of 2016 to $1.86 billion at the end of 2017.
The debt has been a drag on Audacy’s cash flow. In 2022, Audacy’s net interest expense was $107.5 million — about 8.6% of the company’s annual revenue of $1.25 billion. After paying interest to service its debt, Audacy’s free cash flow in 2022 was -$31.8 million. “They haven’t done enough to take out costs” to achieve positive free cash flow, says Huber, and revenue hasn’t met the company’s own expectations.
When the merger with CBS Radio was announced in 2017, the combined companies had adjusted EBITDA of $500 million, including “expected transaction synergies,” according to the press release. In 2022, adjusted EBITDA was just $138 million. Even though Audacy was in compliance with its debt covenants on March 31, the company has expressed concern about its ability “to continue as a going concern” over the next 12 months.
Audacy operates in a difficult business that’s losing listening time as people change their listening habits and migrate to streaming platforms. Although Audacy, like iHeartMedia and Cumulus, has invested in digital platforms — it acquired podcasting companies Pineapple Street and Cadence13 in 2019 and was the No. 8 podcasting network in Q3 and Q4, according to Edison Research — revenue fell about 14% between 2018, the first full year after the CBS Radio merger, and 2022.
With no way around the soft advertising market, Audacy has started cutting costs and selling non-core assets. The company expects its costs will decline 4%, or $35 million, in the last three quarters of 2023, chairman/president/CEO David Field said during the May 10 earnings call. He also said the company raised $17 million in the first quarter from sales of broadcast towers and expects to close on the sale of two stations for $15.5 million in the second or third quarter.
As for Audacy’s stock, trading volume will decrease now that it’s been delisted. Since it started selling only over the counter (through a broker-deal, not on an exchange), the share price has fallen: On Wednesday, Audacy shares declined nearly 24% to $0.04, and they ended the week at $0.06.
The company will now take steps to get back to the NYSE. “While we are disappointed by the NYSE’s decision, we are hopeful we will find our way back to the exchange later this year as we execute our action plans which include a reverse stock split to satisfy NYSE rules, the continued execution of our liability management plans and working with our financial advisors to refinance our debt,” Field said in a May 16 press release. Shareholders will vote on the reverse stock split at the annual meeting on May 24. By working with the factors it can control, Audacy can soften the impact of the broader market conditions it cannot control.
The Contenders is a midweek column that looks at artists aiming for the top of the Billboard charts, and the strategies behind their efforts. This week (for the upcoming charts dated May 20), new albums from big names in the worlds of pop, hip-hop and country look to impact the Billboard 200’s top tier — along with a reissued dance chart-topper from a decade ago.
Jonas Brothers, The Album (Republic): The brothers band already had one of the century’s most successful comebacks after a decade-long hiatus in 2019, topping both the Billboard 200 and the Billboard Hot 100 with their Happiness Begins album and its single “Sucker.” Now the trio looks to do it again with The Album — a set heavily influenced by ‘70s and ‘80s top 40, as well as by their lives as family men.
The Album lacks a lead single as popular as “Sucker,” but the addictive “Waffle House” has started to scale the Hot 100, climbing to No. 82 this week. The group has also been extremely visible in its promotional lead-up to the album, performing two songs from it on Saturday Night Live in April, and kicking off its Five Albums, One Night Tour at Yankee Stadium, playing all of not only The Album, but also their other four albums before it.
YoungBoy Never Broke Again, Richest Opp (Never Broke Again/Motown): Surprise: Three weeks after his second full-length of 2023, April’s Don’t Try This at Home, YoungBoy is back with the new mixtape Richest Opp. At just 17 tracks, it’s about half the running time of Home, and with none of its big-name features. But it does come with some drama: Opp, announced just days before its release, was set to drop the same day as a (later delayed) new album from fellow star rapper Lil Durk, who YoungBoy has been taking shots at over social media, and who is one of the rappers YoungBoy calls out in the new set’s antagonistic “F–k the Industry Pt. 2.”
Bailey Zimmerman, Religiously. The Album (Warner Nashville/Elektra): As Morgan Wallen continues his still-uninterrupted reign atop the Billboard 200 — now at 10 weeks and counting for his One Thing at a Time — he faces a challenge from a breakout artist whose sound and ascent both mirror his own. Bailey Zimmerman has become one of the most consistently viral artists in country music — with radio success now to match, now that Hot 100 top 10 hit “Rock and a Hard Place” also topped the Country Airplay chart for six weeks — thanks to a delivery that similarly mixes power and vulnerability and lyrics that feel both personal and clever.
Whether the student can depose the master depends on if the rest of his debut album Religiously. The Album streams as well as its advance singles, “Rock” and fellow Hot 100 hits “Fall in Love” and “Fix’n to Break,” all of which are included among the set’s 16 tracks. Zimmerman will also get a boost from several sales variants, including a signed CD (available via his web store), as well as digital and cassette releases.
In the Mix
Daft Punk, Random Access Memories (Columbia): Though the duo of Thomas Bangalter and Guy-Manuel de Homem-Christo officially went their separate ways two years ago, the robots are back this week with a 10th anniversary edition of their Billboard 200-topping, album of the year Grammy-winning 2013 album Random Access Memories. The set features a new disk of bonus cuts — including demos, alternate versions and even sequels to some of the original’s tracks – and can be purchased digitally, or as a triple-LP vinyl or double-disc CD set.
Lauren Daigle, Lauren Daigle (Centricity/Atlantic): It’s been five years since CCM breakthrough artist Lauren Daigle crashed the charts with her No. 3-peaking Look Up Child LP and its surprise No. 29 Hot 100 hit “You Say,” but the powerhouse artist often referred to as “the Christian Adele” is now back with her self-titled third album. Lauren Daigle has yet to spawn a crossover hit like “You Say,” but lead single “Thank God I Do” topped Billboard’s Hot Christian Songs listing, and is available for sale in three CD versions and a whopping six vinyl variants, as well as digitally.
Is there another $1 billion in global publishing royalties that rights holders can gain by using better technology? That’s what Kobalt CEO Laurent Hubert says.
When Kobalt was bought by Francisco Partners last September, the disruptive innovator known for its publishing administration clients like Karol G, Phoebe Bridgers and Max Martin said that a primary goal of this next chapter would be growing its little known and even less understood global digital rights collections society for compositions, the American Music Rights Association.
In the months since, Kobalt and its new owners have refined their strategy for scaling this “unpolished gem,” as Francisco Partners and Kobalt board director Matt Spetzler calls AMRA. Their first hurdle? Explaining what exactly the global mechanical and performance rights society focused on collecting digital-specific income can accomplish. “Too few people know what AMRA does,” says Hubert.
In an industry where, according to CISAC’s 2021 annual report, over 36% of global music publishing revenue royalties come from digital sources — a figure AMRA says will grow to 80% within five years — Kobalt believes AMRA can better leverage its technology and its direct agreements with digital service providers to streamline digital royalty collection across 212 countries, cutting out the friction or delays of a traditional performing rights organization (PRO). Their biggest licensees include some of the largest DSPs, like Spotify and Apple Music, but they are also working with promising new brands like China-based TikTok rival Kuaishou and others.
AMRA says it is a one-of-a-kind service, providing clients faster turnarounds for royalty collection (in six to nine months), more precise accounting for digital royalties and audit rights, and greater transparency that its executives say make AMRA clients and the wider industry a lot more money.
How much? AMRA CEO Tomas Ericsson estimates that clients can gain “as much as 30%” more royalties in certain regions. Hubert contends that if his companies can reduce the percentage of money that leaks from the $8 billion to $9 billion of royalties collected by the global music industry on the publishing side, excluding writer’s share — “leakage” that stems from high intermediary costs, poor matching, undercollection and underlicensing — AMRA and other players in the industry could grow the pie by another $1 billion for collection and distribution. AMRA could be a tool to help accomplish that, Hubert says.
Ericsson explains that AMRA can go to streaming services and “offer the entire catalog for Kobalt music publishing and an additional three publishers and an additional 180 writers to these streaming services, and we can give them those rights globally under one license. [The streaming services] report to us directly, and they pay us directly.
“In doing so, we can avoid a lot of noise, high fees, inefficiencies, poor technology and local issues,” Ericsson says.
Since its acquisition by Kobalt in 2015, AMRA has distributed almost $500 million in digital royalties on behalf of songwriters and rights holders. Managed as a separate entity under the Kobalt umbrella, AMRA generated $117.3 million in revenue in the fiscal year ending June 30, 2022, and the company currently expects AMRA will generate $150 million in revenue during this fiscal year. Hubert declines to provide specific financial targets but says he expects double-digit revenue growth this year from AMRA, and that its growth rate will substantially exceed Kobalt’s.
Apart from its DSP licensees, AMRA works with songwriters such as Julia Michaels, Lindsey Buckingham, Sam Hollander and independent publishers like Sundae Music Publishing, Anthem and Spirit. It’s also partnering with functional or mood-music companies, such as Strange Fruits, Vanity Snare Music, Lullify Music and Acrylic Records, whose music is popular on passive-listening playlists. Kobalt remains AMRA’s largest licensee, Ericsson says.
Kobalt, AMRA and its new owners are aligned on their aim to massively scale AMRA. Those owners are Francisco Partners, a California-based private equity firm that favors tech-forward music companies; MUSIC, the firm of music industry veteran and investor Matt Pincus; and Dundee Partners, the quietly influential family office of Stephen and Sam Hendel whose investments range from The Knitting Factory to the Fela! musical to music investing platform JKBX. Kobalt founder and chairman Willard Ahdritz and Hubert also have equity stakes in the company and have signed long-term contracts to remain in their roles.
Through interviews with all those stakeholders, AMRA’s emerging growth strategy has three prongs. The first is to expand its list of publishing clients, looking for small, medium and large indie publishers.
At a faster and larger clip, AMRA also aims to exploit opportunities with other niche music genres in the Latin and African markets in a bid to replicate the success it had partnering with mood-music companies. It also aims to take on more clients on the “long-tail end of the business” — songwriters who may not be published or affiliated but have steady streaming income.
This last prong of the strategy reflects the influence of Francisco Partners. In the past two years or so, the firm has invested $2 billion in six music companies, five of which are geared toward music creators, ranging from audio production and DJ’ing software and hardware to a plugin platform with marketing, distribution and authorization services. Managed under the umbrella of SoundWide, Francisco Partners says these companies have a combined 7 million users.
“We have seen the marketplace has shifted and grown around the creator community,” Hubert says. “We have the capabilities from a scaling and tech stack perspective to go after that market.”
AMRA faces hurdles if it’s to maintain formidable growth. Tracking digital royalties is challenging, given metadata errors and fast-growing use cases. The association is also held back when it comes to nondigital royalties, where existing laws and collection societies prevent it from operating as swiftly or accurately as it can with digital revenue. Songwriters in particular are the most restricted: They can use AMRA to collect their digital performance and mechanical royalties, as well as offline royalties, but the offline royalties still pass through a traditional PRO before reaching AMRA, meaning the writer will be charged two fees: one from the traditional organization, then a “significantly lower” fee from AMRA. Also, although AMRA collects in 212 countries, two of the world’s most royalty-rich nations, China and the United States, are not part of their offering due to local laws.
Still, AMRA will bring all of its promised efficiencies to the digital side, which is what the company anticipates will far outweigh offline royalties soon. The company believes it to be uniquely positioned to collect those royalties. As it likes to say: “AMRA is a category of one.”