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Meta, the parent company of Facebook and Instagram, reported $27.7 billion in second-quarter revenue, down 4 percent compared to the same quarter a year ago, continuing a trend of ad-supported tech companies feeling the pain of a tougher macroeconomic environment and renewed competition from competitors like TikTok.
However, the company beat Wall Street expectations for revenue. The company had previously forecast revenue of $26 billion–28.5 billion for the quarter, so it met its own guidance.
Going forward, however, things look tough. The company forecast Q4 revenue of $30-32.5 billion, below Wall Street expectations, sending its share price lower after hours.
Meta net income fell by 52 percent to $4.4 billion, while its daily active user base rose by 4 percent to 2.93 billion.
The company is in the midst of a strategic pivot toward the “metaverse,” which it seems to define as being driven by virtual reality and augmented reality. However, its early efforts in the space remain niche, even as it has committed billions of dollars toward investing in the space.
In its Q3 earnings report, the company said it was making “significant changes across the board to operate more efficiently,” including shrinking some teams and keeping others flat, so that it is “investing headcount growth only in our highest priorities.”
Those priorities will include developing its AI discovery engine, its ads and business messaging platforms, and its future investment in the metaverse.
In the near-term, the company expects savings as it “rationalizes” its office footprint.
The AI discovery engine is particularly relevant to Meta’s TikTok competitor Reels, which CEO Mark Zuckerberg says is stealing time spent from the other app. Reels is now a $3 billion annual run rate business, he added.
When the discovery engine is built out, the company will be able to “recommend photos, text, links, communities, short and long form videos, alongside posts from family and friends,” Zuckerberg said, differentiating it from TikTok.
“While we face near term challenges on revenue, the fundamentals are there for a return to stronger revenue growth,” Zuckerberg added in a statement. “We’re approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company.”
Still, on the company’s earnings call, Zuckerberg also projected some optimism, telling analysts that “our product trends look better from what I see than what some of the commentary suggests.”
On Facebook specifically, the number of people using it each day is the highest it has ever been,” he added, noting that it now has nearly 2 billion users, and that WhatsApp’s fastest-growing region is now North America.
Meta’s quarterly report follows similarly disappointing results from Snap and Alphabet, which have also been feeling the pinch of the advertising environment. Snap cut about 20% of its staff last quarter, and saw its losses widen, as it seeks to restructure. It did, however, see double digit user growth.
Alphabet, the owner of YouTube and Google, also missed expectations, with YouTube revenue falling year-over-year for the first time since it was broken out by the company.
This article was originally published on THR.com.
AMSTERDAM — While dance music makes up a relatively slim portion of the global music industry — earning a $6 billion valuation in 2021 — the genre felt like the center of the universe last week in the Netherlands.
Or at least the center of Amsterdam’s fairytale Centrum district, with dance/electronic music taking over this canal-lined neighborhood and points beyond for the 26th edition of the Amsterdam Dance Event, or ADE, the world’s largest gathering of the global electronic industry.
Launched in 1996 and returning for its first full-fledged edition since 2019 — with 2020 and 2021 moved online and trimmed down dramatically due to the pandemic — the four-day conference drew an estimated 10,000 agents, managers, label owners, product developers, publicists, execs, data analysts, journalists, veteran and emerging artists, event producers and all other varieties of dance scene professionals from across global markets, with a heavy influx of European and U.S. attendees.
Think of it like the global electronic industry going on a field trip to the Dutch capital together, with one-on-one discussions, panels, product demonstrations, mixers, many stroopwafels and a lot of dancing all on the packed itinerary of the four-day ADE, which spanned Oct. 18-22.
ADE 2022 also featured more than 1,000 club and festival shows, which were geared towards both delegates and the roughly 450,000 fans who took part in the bacchanal.
A Pro portion of the conference — designed for established professionals, with scene newcomers taking part in ADE’s parallel Lab programming — featured more than 130 discussions in 10 meeting spaces located across two stately historic buildings over four days. They addressed a dizzying range of topics, with a few key themes emerging.
One was how a sound fostered by technology is itself keeping up with emerging tech. While other music industry conferences have made Web3 a focal point following the explosion of the sector, ADE programming didn’t linger on the topic, with just a handful of discussions on the metaverse, AI and NFTs. Even without the official spotlight, however, Web3 was a hot topic on the ground, with one representative from an electronic-forward NFT company noting that while non-fungible tokens may not be something every artist is especially passionate about, their company is seeing real evidence of NFT sales allowing for emerging and middle-tier artists to earn a living wage. For them, this revolution in earnings potential adds a very human, and thus widely compelling, dynamic to the sector. (And to a field, they also noted, which could use a diversity influx, given its current domination by “cis, white crypto bros.”)
Others observed that it will take Web3 coalescing into an umbrella company like Google or Apple for the possibilities that the technology presents to be adopted by the wider population. One person involved in signing up attendees of a major U.S. music festival with crypto wallets as part of the event, noted that months later, only a small fraction of the crowd is still using this tool.
Amsterdam Dance Event 2022
Kapa Photgraphy
On a more holistic level, several panel conversations touched on the FOMO-fueled rat race many artists and others in the scene are experiencing as a function of social media. “Perception is the new reality,” noted Jori Lowery of management agency Conflux during a Wednesday afternoon panel discussion, observing that many artists in the scene struggle when comparing their careers with other acts who appear to be busier.
During a Friday afternoon conversation between veteran producer Seth Troxler and journalist Joe Muggs, Troxler observed how the internet has fueled the dance scene’s growth during the last decade, but not always necessarily in a good way. “That switch from the club culture and the localization of culture to these really large events and this kind of FOMO culture, where it’s like, ‘I want to go to a big-ticket event, see everyone, get the picture,’” Troxler said.
“Maybe the party’s not even good,” the DJ continued, “but there’s loads of people there and no dancing, whereas you go to a small party with 100 people and it’s a great vibe, and that’s cool too. It doesn’t have to be this mega thing all the time, even though the mega thing is cool, or it’s accessible, at some point it grows our culture, but also kills our culture.”
A Wednesday afternoon conversation with Ultra Records founder Patrick Moxey — at ADE to speak on the launch of his new label Helix — emphasized that the real necessity for artists to be online, and particularly on TikTok and Instagram, is because both platforms can be powerful tools for fanbase development, even as these platforms present new challenges. One member in the audience observed that while many artists are reluctant to put themselves online, thinking that a heavy digital presence is uncool, it’s necessary for acts to “get over their egos” to gain real traction. The observation drew applause from the crowd.
The audience was quieter during a Thursday afternoon panel on doing business in conflict areas — both in the U.S. and around the world. Panelists discussed if and how artists and brands should work in U.S. states that have banned abortion and in regions with a records of human rights violations like Saudi Arabia. (Members of the team from MDLBEAST, the Riyadh electronic festival launched in 2019, were on the ground at ADE, with many delegates pondering if and how to do business with the fest, with some keen to participate and others remaining more reticent.) While some on the panel and in the audience expressed reasonable ethical qualms about hosting events and sending artists to play in such controversial regions, others argued that it’s unfair to advise on best practices in any area that one hasn’t personally traveled to.
If there was a consensus from this conversation, it was that it’s vital for each sector of the scene to first acknowledge and work on its own issues before engaging in finger-pointing, particularly with respect to the scene’s consistent allegations of sexual misconduct amongst DJs and others involved in nightlife culture and a pervasive lack of diversity. (“It’s still a systemic issue of most agents and managers being white men,” observed one delegate who spoke to Billboard on the condition of anonymity, in regards to why inclusivity isn’t happening more quickly.)
But while ADE demonstrated the scene’s varying challenges, it also highlighted the many people working to solve them. A variety of panels focused on fostering greater diversity in the scene and featured leaders in the dance music space, including Black Artist Database (B.A.D.) co-founder NIKS and BEAUTIFUL label founder SHERELLE, who spoke to how B.A.D., a crowd-sourced list of Black artists, producers and creators, is helping Black artists form community outside of traditional power structures. There was also a full day of ADE Lab programming designed by She.Said.So, an organization that works to connect and empower underrepresented communities in electronic music and beyond.
At a Friday night mixer hosted by Spotify – which ended with a drone show soundtracked by Tiësto — one longstanding ADE attendee noted that in terms of inclusivity, ADE 2022 felt like a legitimate shift. This attendee noted more diversity among attendees and lineups and how delegates also generally seemed more open and interested in chatting. “There’s been a temperate change in the event overall,” they said.
Amsterdam Dance Event 2022
Tom Doms
Meanwhile, a full day’s worth of programming about sustainability initiatives in the scene offered glimmers of hope in the face of climate change. One longstanding attendee noted that in this part of October the canals of Amsterdam used to be frozen over, while last week it was often possible to walk around without a jacket. (A weekend festival by Dutch festival producer DGTL, which has a strong sustainability program, demonstrated that even large-scale events can operate with reusable cups and meat-free food vendors.)
And of course, several conversations turned to Berlin’s iconic techno club Berghain, which has been rumored to be shuttering soon after the closure of both its in-house label and management agency. One source well-connected in the Berlin scene noted that the venue may be converted into residential lofts, and that given the potential revenue of this project, the building’s current owners “are struggling to reject the deal.”
Elsewhere during the week: Tomorrowland premiered its 25-minute after-movie of its 2022 festival at the elegant art deco Royal Theater Tuschinski. (The film’s lessons about the power of community and catharsis in the dance world elicited a few actual tears.) Eric Prydz blew peoples’ minds while performing his much-lauded HOLO shows — a few delegates called the performance the best they’d ever seen. Honey Dijon headlined a buzzy Back to Black showcase with a lineup including Kerri Chandler and TSHA. Claude VonStroke announced that EMPIRE had acquired his previously independent and much-beloved Dirtybird label and Diplo gave a keynote address about his career trajectory, noting that his musical history in Jamaica began when he was booked to play the seafaring Jam Cruise festival and just got off the boat on the island nation because he wasn’t enjoying himself onboard.
Delegates also buzzed about Pioneer DJ’s acquisition of DJ Monitor — the software that tracks what songs artists play during their sets will soon be integrated directly into Pioneer hardware, which many feel will be a big step forward for royalty collection. (ADE is itself sponsored by Dutch collection agency BUMA.)
Ultimately, after a long absence of togetherness, ADE 2022 functioned as an industry show and tell, a four-day reunion and the dance scene’s prevailing place to dissect, solve and celebrate the incredible number of issues, sounds and scenes that exist within it.
Christine Farnon, the Recording Academy’s first full-time employee and one of its longest-serving, died on Monday Oct. 24 in the Los Angeles area of natural causes. She was 97.
Farnon started as an unpaid volunteer in May 1957 – when the Academy was just in its formative stages — and rose to become executive vice president. From 1957 through 1987, she worked alongside a succession of 18 elected, volunteer presidents. These men — and yes, they were all men — served their terms and moved on. Farnon provided continuity and stability. In early 1988, Michael Greene became the Academy’s first paid, permanent president. Farnon stayed on through 1992, to ensure a smooth transition.
Farnon received a trustees award from the Academy upon her retirement. An appreciation in that year’s Grammy program book was fittingly titled “The Recording Academy’s Guiding Light.”
In announcing the honor for Farnon earlier in 1992, Greene said, “The Recording Academy owes much of what it is today to the selfless, conscientious dedication that Christine has exhibited in her years of contributions to the Recording Academy. Chris is a vital member of our [Academy] family and is most deserving of the trustees award.”
The late musicologist George T. Simon, who wrote the aforementioned appreciation, noted, “Chris has always been an integral part of the organization – a seemingly impossible combination of guiding light and steady anchor. Deeply involved from the start in all the Academy’s activities, this warm, intelligent, soft-spoken, sensitive lady has helped tremendously, often leading the way, in chartering and steering the course of [the Academy].”
Simon’s piece quoted Farnon as saying “This has been a rare opportunity, to have one of the most challenging and rewarding careers anyone could wish for, and to work with and for some of the finest people in the recording field.”
Billboard included Farnon in a gallery of groundbreaking female executives that appeared in the Feb. 26, 2022 issue, noting “Decades before Deborah Dugan became the Recording Academy’s first female president/CEO in 2019, Farnon was the top executive at the organization — and while she never held the big title, there was no question of who was in charge.”
Farnon’s responsibilities at the Academy included maintaining contact with disc jockeys and radio personnel and development of annual mailers and special albums designed for radio stations highlighting Grammy nominees. Farnon was a talent coordinator for most of the seven Grammy-branded Best on Record TV shows that aired on NBC. From 1971, when the Grammy Awards became a live telecast, until 1992, when Farnon retired, she was an integral part of the Academy’s TV committee, which oversaw format development, contract negotiations and TV scripts. She eventually received on-screen credit in the crawl at the end of the telecast.
Folklorist and author Bill Ivey, the only person in Academy history to serve two, non-consecutive stints as chairman of the board of trustees (1981-83 and 1989-91), gave Farnon a great deal of credit in an interview with this writer a decade ago for a Grammy.com piece on the Academy’s early days.
“Chris Farnon was central to the Academy’s success,” he said. “She was quite ferocious in protecting the integrity of Grammy and the telecast. …In large part because she was so conservative and protective, Chris handed future leaders an asset of tremendous potential value that converted to earning power as sponsorships and TV revenues really took off in the ’90s.”
In an interview for that same piece, Farnon said that she was “gratified and delighted” to have played a role in the Academy’s growth, though, characteristically, she shared the credit. “The Academy’s present achievements are something that everyone, past and present, can be very proud of,” she said.
“The original vision of what the Academy was meant to be and do hasn’t changed,” Farnon added. “Many of its significant programs had their roots in the Academy’s original goals, although they operate on a much wider and grander scale today.”
Farnon was still able to tick off the Academy’s early goals. “In the early years its goals included the annual Grammy Awards on live TV, scholarships, university courses on the recording arts and sciences, open membership meetings where leading recording individuals explored developments in the recording field, and magazines and/or newsletters to members. Unfortunately, some years most of these programs didn’t come off because there wasn’t enough money or support staff to produce them.”
The Academy was able to realize more of its goals after it struck a better deal with CBS, the long-time network of the Grammy Awards. “By the time I ended my 35-year career at the Recording Academy, the increasing income made it possible for the Academy to be taken to another level,” Farnon said.
Farnon held various positions with the Recording Academy. In the early 1960’s she was named executive director of the Los Angeles chapter. In 1971, she was promoted to national executive director, and in 1986 was appointed executive vice president, a position she held until her retirement.
Farnon also belonged to the local chapter of the American Society of Association Executives (ASAE); the California Copyright Conference; and was a co-founder of the first Toastmistress Chapter in Hollywood – the very name of the latter organization is a sign of the times in which Farnon came up.
Farnon died three years after her ex-husband, Dennis Farnon, who had been the last surviving founder of the Recording Academy. Dennis Farnon died in May 2019 at age 95. Christine Farnon and Dennis Farnon were divorced in 1960.
Dennis Farnon co-founded the Academy in 1957 with Sonny Burke, who died in 1980; Lloyd W. Dunn, who died in 1991; Paul Weston, who died in 1996; and Jesse Kaye, whose date of death is unknown. All five founders were top executives at leading record companies of the period. Farnon was from RCA; Burke, from Decca; Dunn, from Capitol; Weston, from Columbia; and Kaye, from MGM.
Following her retirement, Farnon spent more than 20 years studying painting and was given three commissions of her paintings, plus recognition by the Chatsworth (Calif.) Fine Arts Council for her work.
Farnon is survived by one daughter, Joanna, as well as nieces, nephews and cousins.
A gathering of family and friends will be held at a future date. Condolences to her family may be sent to P.O. Box 150, Ripton VT 05766.
MRC announced on Monday (Oct. 24) that it will not release a finished documentary on Kanye West following his recent spate of antisemitic comments.
“This morning, after discussion with our filmmakers and distribution partners, we made the decision not to proceed with any distribution for our recently completed documentary about Kanye West,” CEO Modi Wiczyk, CEO Asif Satchu, and COO Scott Tenley wrote in a joint statement sent to the media. “We cannot support any content that amplifies his platform.”
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“Kanye is a producer and sampler of music,” MRC’s leaders continued. “Last week he sampled and remixed a classic tune that has charted for over 3,000 years — the lie that Jews are evil and conspire to control the world for their own gain… Kanye has now helped mainstream it in the modern era.”
The decision made by MRC — Billboard‘s former publisher — follows a Financial Times op-ed published by Ari Emanuel, CEO of Endeavor, last week that urged West’s various business partners to halt work with him. “Those who continue to do business with West are giving his misguided hate an audience,” Emanuel wrote. “There should be no tolerance anywhere for West’s anti-Semitism.”
Emanuel went on to note that “West is not just any person — he is a pop culture icon with millions of fans around the world. And among them are young people whose views are still being formed. This is why it is necessary for all of us to speak out. Hatred and anti-Semitism should have no place in our society, no matter how much money is at stake.”
On Sunday, Jeremy Zimmer, CEO of UTA, also sent a memo asking staff to “please support the boycott of Kanye West.” “Regrettably, anti-Semitism, racism and many forms of hate and intolerance are part of the fabric of society,” Zimmer wrote. “… Throughout history some have used their public platform to spew the plague out loud and spread the contagion to dangerous effect. Kanye is the latest to do so, and we’re seeing how his words embolden others to amplify their vile beliefs.”
In addition to announcing their decision to shelve the documentary on West, MRC’s leaders called on others to distance themselves from the star or condemn his statements. “The silence from leaders and corporations when it comes to Kanye or antisemitism in general is dismaying but not surprising,” their statement read. “Why is a group that has historically been brave and unreserved in its fight against antisemitism so quiet on Kanye?”
Read the full MRC memo below:
This morning, after discussion with our filmmakers and distribution partners, we made the decision not to proceed with any distribution for our recently completed documentary about Kanye West. We cannot support any content that amplifies his platform.
Kanye is a producer and sampler of music. Last week he sampled and remixed a classic tune that has charted for over 3000 years – the lie that Jews are evil and conspire to control the world for their own gain. This song was performed acapella in the time of the Pharaohs, Babylon and Rome, went acoustic with The Spanish Inquisition and Russia’s Pale of Settlement, and Hitler took the song electric. Kanye has now helped mainstream it in the modern era.
Lies are an important part of all discrimination, and this one is no different. When well crafted, they create the illusion that the action is just, that the bigot is “punching up” at the victim. It’s critical to antisemites, who must explain why they are attacking a people that comprise less than half of one percent of the world’s population. Not a fair fight, numbers wise. But if the Jews are ultra-powerful because of secret evil plots, well, the argument is, it must be fair and ok.
The silence from leaders and corporations when it comes to Kanye or antisemitism in general is dismaying but not surprising. What is new and sad, is the fear Jews have about speaking out in their own defense.
Why is a group that has historically been brave and unreserved in its fight against antisemitism so quiet on Kanye?
Because of the emergence of a second lie – one that is at the center of what we call Antisemitism 2.0. It is brilliantly crafted, fast becoming part of mainstream thinking, and puts Jews is a terrible philosophical corner. That lie goes as follows:
If you support Israel’s right to exist, you are a racist.If you are a Jew, you support Israel’s right to exist.Therefore, if you are Jewish, you are a racist.
As leaders of this company (a Jew, a Muslim, and a Christian), we feel duty bound to say to all of you this is a pernicious, terrible use of false logic. It marries very well with the first “punching up” lie that all Jews are connected by conspiracy. And it is working, because many Jews are scared to speak up in defense of their religion, or Israel, for fear of being labelled racists. It is no more true than saying that if you support Palestine’s right to exist, you must be an antisemite.
For proof of how quickly a protest of Israel’s policies can jump to antisemitism, look no further than last week’s outrage at Wellesley College. The school is a historical bastion of liberalism and civil rights. But last week its newspaper editorial board saw fit not only to condemn Israel, but actually publish a MAP of Jewish places of worship, organizations and business in the area so that they could be targeted for protest – or worse. This would not be shocking from Neo-Nazis, but Wellesley?
The three of us want to make our position on this very clear.• We support Palestine’s right to exist.• We support Israel’s right to exist.• Both nations represent a dream and an ideal for their peoples – one of safety, freedom, and prosperity.• Both ideals are worthy of protection, even though we have significant objections to the policies of the governments of both nations.• Objections to a nation’s government do not constitute grounds for discrimination against that nation’s citizens or supporters.• We uniformly reject any assertion that we, our colleagues, or anyone else is bigoted or racist based on their support for the sovereignty and existence of any country, all of which have flaws.
If you hear or encounter the perpetuation of these intolerances and falsehoods, please let us know. It is totally unacceptable. And to those who are afraid to use their voice, hopefully this encourages you to do so.
Asif, Modi, Scott
This year, Spotify is making the streamer’s annual year-end Wrapped campaign more artist-friendly.
Called Your Wrapped Soundcheck, the new feature, available via Spotify for Artists, will allow artists to upload videos thanking their biggest fans for a great year on Spotify, list their latest merch and ensure tickets for their upcoming shows are available on the platform. These videos and offers will then be promoted to top fans as a part of their Wrapped experience.
By uploading short, video messages of 30 seconds or less to their Spotify for Artists profiles, artists can let fans know what their support meant to them over the past year, tease what they’re working on next and/or tell a story that defined their year. Artists are encouraged to list merch on Shopify (the e-commerce giant that partnered with Spotify last October), and provide information regarding their upcoming concert dates on one of Spotify’s partner sites, plus set up a Fan Support account to collect end-of-year tips or drive donations to a charitable cause.
Artists are encouraged to prepare their profiles ahead of this year’s Wrapped season. Your Wrapped Soundcheck’s website provides step-by-step instructions to help artists get ready for the big day.
The Ledger is a weekly newsletter about the economics of the music business sent to Billboard Pro subscribers. An abbreviated version of the newsletter is published online.
Music companies face a multitude of pressures as 2022 comes to an end: crippling inflation, a tight labor market, a chaotic environment for breaking new artists, interest rates that are dampening catalog valuations, and high costs of touring amidst a crush of artists on the road, among other challenges. The upcoming slate of corporate earnings provides an opportunity to hear about these opportunities and challenges from leaders of publicly traded music companies who rarely go on the record.
Spotify reports third-quarter earnings after the close of trading on Tuesday (Oct. 25). Universal Music Group and Deezer follow on Thursday (Oct. 27) after the close of trading in the Netherlands and France, respectively. Cumulus Media reports Friday morning (Oct. 28). SiriusXM reports earnings on the morning of Nov. 1. Tencent Music Entertainment announces earnings on Nov. 15. The other 14 publicly traded music companies in the Billboard Global Music Index have not yet announced when they will report.
Look for executives to comment about subscription prices and digital platforms’ ability — or reservation — to raise subscription prices. It’s been a recurring theme from digital and label executives throughout the years, in part because it’s been over a decade since streamers last did it in any meaningful way. “Music is a good value” seems like a popular position when streaming video on-demand services are engaged in cut-throat competition and undercutting one another’s prices to attract new customers and prevent current customers from departing. But the industry has arguably moved past that stage, with many now interested in other means to grow revenue. Still, expect music streaming companies to be reticent to hike prices while inflation is running at a 40-year high.
On Tuesday. Spotify could offer a bevy of information and insights about its progress toward its drive to improve margins, as laid out in its June 9 investor presentation: goals for 35% gross margins in music and 30-35% gross margins in podcasting within the next three to five years. Music margins will be helped by improvements in ad monetization in developing markets as well as price increases in mature markets.
More pressing will be Spotify’s opinions on macroeconomic forces that could affect its growth. The company’s advertising business was roiled by an advertising slowdown during the first year of the pandemic, and now many experts are predicting a recession in 2023 that could again dampen online advertising. On Alphabet’s July 26 earnings call, the company repeatedly used the word “uncertain” when talking about the economy, while reporting that YouTube ad sales grew at their slowest pace since the company started disclosing metrics in 2018. Meta’s second-quarter revenue, meanwhile, was 1% lower than a year earlier — its first decline in a decade. If the same market conditions affect Spotify, how will it react? Even though advertising accounted for only 12.6% of the company’s total revenues in the second quarter, it’s critical to the podcasting business that’s expected to deliver margin relief in the coming years.
If social media company Snap’s third-quarter results Thursday are any indication, a weak advertising market will be a recurring theme throughout October and November earnings reports. In a letter to shareholders, Snap warned its “advertising partners across many industries are decreasing their marketing budgets, especially in the face of operating environment headwinds, inflation-driven cost pressures and rising costs of capital.” At the same time, Snap announced a stock repurchase program of up to $500 million “to protect shareholder value from the impact of dilution.” Investors reacted quickly and decisively by sending Snap shares down as far as 32% to $7.33 on Friday — 87.9% below its 52-week high of $60.78.
Also, expect questions about Spotify’s long-awaited HiFi subscription tier. Last week, reports surfaced that Spotify could be prepping a “platinum” subscription plan that bundles high-fidelity audio with other products. The reports were based on an online survey that sought consumers’ opinions on various product bundles, not hard evidence of an upcoming product launch. But the fact that Spotify would sweeten the offer with reduced advertising in podcasts and other items could suggest it realized demand for a standalone HiFi tier is weaker than hoped — especially when Apple Music and Amazon Music are offering it at no additional cost. What CEO Daniel Ek will say is another matter, however, as Spotify is unlikely to discuss details about a product before an official announcement.
High-fidelity audio is pertinent to Spotify investors because it could help improve gross margins. The June 16 acquisition of audiobook distributor Findaway led to the Sept. 20 launch of an audiobook download store. As both retailer and distributor, Spotify can get 60% margin in audiobook purchases, more than double its current gross margin. Of course, the more important question is how many margin dollars audiobooks will ultimately deliver. With only a few weeks of audiobook sales under its belt, and no audiobook sales in the third quarter earnings, Spotify will have few tangible results for a progress report.
Universal Music Group reports earnings on Thursday (Oct. 27) after the end of the trading day in Amsterdam, where UMG shares are listed. UMG’s share of the U.S. recorded music market dropped slightly from 38.3% in the first half of 2022 to 37.1% at the end of the third quarter, which was lower than its 38.4% share in the prior-year period. UMG’s biggest competitor, Sony Music Entertainment, meanwhile, saw its share boosted from 26.3% to 26.7% thanks to the runaway success of Bad Bunny‘s Un Verano Sin Ti, the biggest album of 2022. UMG biggest releases were Kendrick Lamar’s Mr. Morale and the Big Steppers and The Weeknd’s Dawn FM (Republic). A handful of albums released in 2021 were also in the top 10 in total consumption: Morgan Wallen‘s Dangerous (Jan. 8, 2021), The Weeknd’s The Highlights (Feb. 5, 2021) Olivia Rodrigo’s Sour (May 21, 2021) and Drake‘s Certified Lover Boy (Sept. 21, 2021).
During UMG’s last earnings call, on July 27, CEO Lucian Grainge recounted a string of recent releases (Drake’s Honestly, Nevermind got off to a great start), partnerships (HYBE’s first release through its deal with UMG’s Ingrooves/Geffen), how it planned to get a return on investment on some recent acquisitions (Frank Zappa and Neil Diamond) and how the new Mercury Studios (which produced documentary films on The Rolling Stones and Shania Twain) had helped lift catalog streams.
More important to investors and industry professionals are concrete examples of UMG moving its business forward. Last quarter, Grainge announced UMG’s new licensing deal with Meta and revealed the company had become one of its top 10 revenue-generating digital platforms. He also announced the creation of the New Music Media Network, a service that connects brands and partners with proprietary data and exclusive media from UMG. Given the vital role advertising plays in today’s streaming-led music business and the platforms of tomorrow, a progress update on the New Music Media Network would be helpful.
Less important are comments made about Web3, NFTs and metaverse initiatives. Despite initial enthusiasm around NFTs, these businesses are a work-in-progress and represent an immaterial amount of revenue to a major music company. Conversation about these businesses merely shows that a company is looking ahead and taking the proper steps to capitalize — somehow — on them in the future. That requires hiring the right people, making investments, striking partnerships and trying new things to learn and gain experience. But as of now, Web3, NFTs and the metaverse are solidly in the experiment phase.
Elon Musk plans to lay off most of Twitter’s workforce if and when he becomes owner of the social media company, according to a report Thursday by The Washington Post.
Musk has told prospective investors in his Twitter purchase that he plans to cut nearly 75% of Twitter’s employee base of 7,500 workers, leaving the company with a skeleton crew, according to the report. The newspaper cited documents and unnamed sources familiar with the deliberations.
San Francisco-based Twitter and a representative for Musk attorney Alex Spiro did not immediately respond to messages seeking comment.
While job cuts have been expected regardless of the sale, the magnitude of Musk’s planned cuts are far more extreme than anything Twitter had planned. Musk himself has alluded to the need to cull some of the company’s staff in the past, but he hadn’t given a specific number — at least not publicly.
“A 75% headcount cut would indicate, at least out of the gates, stronger free cash flow and profitability, which would be attractive to investors looking to get in on the deal,” said Wedbush analyst Dan Ives. “That said, you can’t cut your way to growth.”
Ives added that such a drastic reduction in Twitter’s workforce would likely set the company back years.
Already, experts, nonprofits and even Twitter’s own staff have warned that pulling back investments on content moderation and data security could hurt Twitter and its users. With as drastic a reduction as Musk may be planning, the platform could quickly become overrun with harmful content and spam — the latter of which the Tesla CEO himself has said he’ll address if he becomes owner of the company.
After his initial $44 billion bid in April to buy Twitter, Musk backed out of the deal, contending Twitter misrepresented the number of fake “spam bot” accounts on its platform. Twitter sued, and a Delaware judge has given both sides until Oct. 28 to work out details. Otherwise, there will be a trial in November.
Universal Music Group divisions Decca Records, Verve Label Group and Globe Soundtrack & Score joined forces to launch Mercury Classics Soundtrack & Score, a new boutique record label “dedicated to the art of soundtrack & score” and designed to “support today’s leading score composers and artists as they undertake major audio-visual projects globally,” according to a press release. Lana Thompson has been appointed as label manager. The label’s first major releases, slated for this year, include scores for Orion Pictures films Till, composed by Abel Korzeniowski, and Women Talking, composed by Hildur Guðnadóttir. Releases set for 2023 include the soundtrack to MGM’s A Good Person.
Republic Records promoted Tim Hrycyshyn to senior vp of digital strategy; he was previously vp of digital marketing. He is based in New York.
Epidemic Sound named Rikard Herlitz chief technology officer and Julian Persaud chief commercial officer. Both will start in January. Herlitz, who joins from Google, where he served as engineering director for Google Meet, will provide tech leadership and strategic direction across all Epidemic Sound markets. Persaud, who joins from European travel platform Omio, where he was chief commercial officer, will lead the company’s commercial strategy.
°1824, Universal Music Group’s youth-driven creative solutions division, named Possum Hill vp of content. Hill will oversee °1824’s content creation efforts while also working to scale UMG’s livestreaming capabilities. Hill, who joins °1824 from Capitol Music Group, where she was senior director of video production, will be based in Santa Monica and report to °1824 senior vp and head Todd Goodwin.
The College of Music and Media at Loyola University New Orleans — recently named a top music business school by Billboard — appointed music supervisor, music executive and independent film and TV producer and director Jonathan McHugh as its new Hilton-Baldridge eminent scholar and chair. McHugh will enjoy an endowed professorship, steering the university’s music industry studies program. His first initiative at Loyola is the launch of a “Composing for Video Games and Visual Media” major. “Since our student population is 55% diverse and the studios are having trouble filling the diverse hiring quotas and we have so much amazing talent, it makes perfect sense to do it next year,” says McHugh. “I am excited about helping to build next generation of entertainment and music stars at Loyola College of Music and get connected into internships and jobs in the entertainment business.” McHugh will continue in his various other roles outside the school. He recently directed two documentary films — Long Live Rock…Celebrate the Chaos and Cosplay Universe — and is music supervising season two of the animated series Freak Brothers (Lionsgate/Fox/Tubi). He is a member of the Television Academy and the Producers Guild documentary jury.
A2IM announced its 2022-23 executive committee, including Victor Zaraya (Concord Records) as chair, Louis Posen (Hopeless Records) as vice chair, Mariah Czap (Yep Roc Music Group) as treasurer and Heather Johnson (Ninety9Lives/Fixt) as secretary. The organization additionally announced four new board members including Mary Jurey (chief business officer at Blue Elan), Tony Kiewel (president at Sub Pop), Wilson Fuller (head of digital at Merge Records) and Dee Diaz (vp of digital strategy at Reach Records), who will join returning board members Marie Clausen (head of North America & global streaming at Ninja Tune), Steven Hill (director of North America & global projects at Warp Records) and Tony Alexander (president & managing director at Made In Memphis Entertainment). The new advisory board, meanwhile, consists of Talya Elitzer (co-founder of GodMode), Gina Miller (senior vp & general manager at MNRK), Jason Peterson (chairman & CEO at GoDigital Media Group) and Glen Barros (CEO at Exceleration Music).
Create Music Group named Brian Glover to the newly-created role of senior director of streaming. He will oversee streaming strategy for the hip-hop, R&B and pop artists that Create distributes. Based in Los Angeles, Glover arrives at the company from indie label Cinematic Music Group, where he served as director of commerce and artist marketing.
Sophia Sansone and Jarrod Holley were promoted to managing partners at Chris Kappy‘s Make Wake Artists. Sansone manages Luke Combs and his wife, Nicole Combs. Holley leads all A&R responsibilities for the company and manages Drew Parker, Jackie Lee, Cooper Alan and Colby Acuff.
Hazel Savage, music intelligence vp at SoundCloud, joined B2B streaming technology solutions company Tuned Global as a non-executive board member.
Music licensing technology company Audoo hired Matthew Fackrell as senior vp and general manager, Asia Pacific and Eric Nguyen as senior vp and general manager, North America. Based in Sydney and Toronto, respectively, and reporting to Audoo founder and CEO Ryan Edwards, the two will provide industry expertise in their respective territories to execute the adoption and rollout of Audoo’s technology. Fackrell comes from APRA AMCOS and Nguyen joins from Richter Consulting. They can be reached at matthew@audoo.com and eric@audoo.com.
A16z crypto, a venture capital fund managed by Andreessen Horowitz that invests in crypto and Web3 startups, hired Richard Rosenblatt as a senior advisor. Rosenblatt serves as the chairman of ADIM and Autograph, two a16z crypto portfolio companies.
For over a decade, Taylor Swift has been offering fans a multitude of options when it comes to purchasing her albums across physical formats with exclusive editions available through a longstanding partnership with Target. But with her new album, Midnights, out Friday (Oct. 20), she’s truly outdone herself.
There are over 20 different versions of the album available on CD, LP and cassette in various colors, with different cover artwork, censored and uncensored, with and without autographs. That plethora of options is great for fans who may want a different version than their friends, or who — as many seem to — feel driven to collect them all. It’s also great for Swift, who’s earning more money from increased sales that will impact her performance on the Billboard charts and likely add up to one of the year’s best album debut weeks.
Few artists, if any, attract as much attention as Swift does for her promotion and sales strategy, thanks largely to her close relationship with her fans. In turn, she is brilliant at developing physical goods they want to buy, in addition to just streaming her music. Last year, following the release of her re-recordings of Fearless and Red, she accounted for one out of every 50 albums sold in the U.S., according to Luminate. She knows Swifties are collectors, and is now providing not only the multiple Midnights versions but elaborate containers to put them in, like a $39 CD clock or vinyl clock for $49, which display the four albums in a timely format, or $79 faux-leather vinyl collector’s case.
In today’s streaming-centric music industry, physical albums have become collectible tokens of fandom, and artists have been responding to growing demand. BTS and other K-pop megastars regularly rack up huge numbers by selling CDs and LPs with different colors and exclusive postcards and photos sold as collectible items, with the music as a secondary benefit. When South Korean boy band Stray Kids’ MAXIDENT topped the most recent Billboard 200 chart for the week of Oct. 22, it did so with 10 CD versions, including autographed CDs and exclusive Barnes & Noble and Target releases. Increasingly, it’s becoming a mainstream strategy for acts in the U.S., too. Such disparate acts as Denzel Curry and Slipknot have recently released various physical versions of their new albums as well. It just so happens that these sales all count towards an album’s Billboard chart performances. So by offering four different versions of Midnights per format, Swift is at least quadrupling her revenue from some super fans, as well as their impact on the charts.
Based on Billboard‘s research, here is a full rundown of the different Midnights versions fans can buy:
CDs:Moonstone BlueBlood MoonMahoganyJade Green
Signed CDs:Moonstone Blue (Webstore Exclusive)Blood Moon (Webstore Exclusive)Mahogany (Webstore Exclusive)Jade Green (Webstore Exclusive)
Clean-version CDs:Moonstone BlueBlood MoonMahoganyJade Green
Vinyl LPs:Moonstone BlueBlood MoonMahoganyJade Green
Signed Vinyl LPs:Moonstone Blue (Webstore Exclusive)Blood Moon (Webstore Exclusive)Mahogany (Webstore Exclusive)Jade Green (Webstore Exclusive)
Cassettes:Moonstone Blue
Target Exclusives:Lavender Deluxe CD (With Three Bonus Tracks)Lavender Vinyl LP
Digital:Moonstone Blue (Webstore Exclusive)Moonstone Blue (Clean) (Webstore Exclusive)Standard – 13 TracksStandard – 13 Tracks (Clean)Standard – 14 TracksStandard – 14 Tracks (Clean)
While HarbourView Equity Partners has acquired the publishing or master recording royalties of an array of big-name artists such as Brad Paisley, Florida Georgia Line and Luis Fonsi since founder and CEO Sherrese Clark Soares launched the firm a year ago, her likely biggest deal to date—and one of the biggest deals by any acquirer in 2022— was for a bundle of music assets with far less star power but with a large economic punch.
Earlier this year, HarbourView Equity Partners, launched in October 2021, bought the little known but economically large SoundHouse Acquisitions LLC catalog, which includes some rights to some master recordings by the likes of Tech N9ne, Trey Songz, George Jones, Tenth Avenue North, Whiskey Myers and a heavy Latin music presence through the likes of Eslabon Armado, Natti Natasha, Lenin Ramirez and other Latin artists, sources say. Billboard estimates the deal went for about $325 million.
While that catalog consists mainly of royalty income payments for streams of sound recordings, the catalog is said to contain recordings from over 100 artists, consisting of about 10,000 songs that generate more than 10 billion streams annually. All told, SoundHouse’s 2021 income was put at about $24 million. Sources say that Shot Tower Capital shopped the catalog.
Prior to its acquisition by HarbourView, SoundHouse, founded in 2016, was known for approaching distressed labels and offering to buy their royalty income, mainly from the streaming of master recordings, at bargain-basement prices, sources say. SoundHouse also did deals with artists as well, but mainly by buying their streaming revenue from master recordings, leaving the artists to retain other income streams associated with their records. SoundHouse also sometimes only acquired income streams from some of the songs in an artist’s catalog, not all of them, one source suggested.
In addition, SoundHouse also acquired the assets of InPop Records, an indie contemporary Christian label based in Nashville. At the time of that deal, in February 2018, a press release said InPop was SoundHouse’s 15th acquisition and brought its catalog to over 3,500 recordings. MusicRow.com reported that deal represented SoundHouse’s third Christian music acquisition, and added that SoundHouse was backed by Spark Capital, Columbia Capital and Pinnacle Bank.
In any event, sources suggest that the HarbourView deal for SoundHouse carried a price tag that ranged anywhere from $250 million to $400 million. These days, master recording rights are trading for a 12-15 times multiple, although superstar recordings have been known to reach a 20-times multiple of net income, also known as net label share. Considering the catalog’s annual income and artist caliber, a 12-times multiple would price the catalog at $288 million, while a 15-times multiple would price it at $360 million. Consequently, Billboard estimates that the catalog sold for about $325 million.
That price puts it in the same size area as the deal for the Genesis/Phil Collins et al. master recordings/publishing catalog acquired by Concord in September. However, unlike that deal, the SoundHouse deal doesn’t include any publishing revenue, so that puts the SoundHouse deal up there as possibly the biggest deal of 2022 for recorded master assets, at least so far this year.
SoundHouse was founded by Michael Rosenblatt, an executive producer of 20 feature films such as Valley Girl and Teen Wolf. With the sale of the SoundHouse catalog, the company principals have started a new vehicle, with apparently the same mission of buying music income streams. That company is named round2media, and aside from CEO and president Rosenblatt, it also lists among its leadership team COO/CFO Jeff Patterson, formerly with Columbia Capital; senior vp of finance, accounting and administration Vanessa Jolie, who held a similar position at SoundHouse; and vp of business affairs Shara Yolkut, whose background includes a stint at EMI Music Publishing as vp of product operations.
Clarke Soares declined to comment for this story. Likewise, round2media’s Rosenblatt declined to comment for his story, beyond emailing a statement: “As a company, SoundHouse, and now round2media, considers the confidentiality of our transactions to be one of our ethical cornerstones. I can confirm that round2media is in the business of acquiring rights and royalties and has made multiple acquisitions to date. Please visit our website to learn more.”