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LONDON — Utopia Music is planning to rebrand as Proper Group AG, named after its core physical music distribution business, to reflect changes to the Swiss-based firm’s “strategic direction,” the company said Thursday (March 28).
The proposed name change, which needs to be approved by shareholders, comes almost two months after co-founder and former head Mattias Hjelmstedt exited Utopia Music following a shake-up of its executive ranks.
“As Utopia has evolved under new leadership, we recognize the need to align our brand with our new strategy and as a result, new market positioning,” said Michael Stebler, who was appointed CEO in January, in a statement sent to Billboard.
“Our previous brand identity doesn’t accurately reflect who we are today and where we aim to go in the future,” said the chief executive – a former managing director of Investment Advisors Zug AG, which operated on behalf of Utopia’s majority shareholder group. Like Utopia Music, Investment Advisors Zug AG is headquartered in the scenic Swiss town of Zug, located close to Zurich.
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Utopia Music acquired Proper Music Group, the United Kingdom’s biggest independent physical music distributor, which provides distribution services for nearly 6,000 indie labels and service companies, for an undisclosed sum in January 2022.
Eight months later, the company bought up the assets of U.K.-based Cinram Novum — which provides warehouse, fulfillment and distribution services to music labels and home entertainment companies, including Universal Music Group, Sony Music Entertainment and [PIAS] — and renamed it Utopia Distribution Services (UDS).
Both acquisitions took place during a period of intense hyper-growth between 2020 and 2022 when Utopia rapidly acquired 15 companies spanning music tech, finance, publishing, marketing and distribution.
A well-documented downsizing followed, encompassing multiple rounds of job cuts, company divestments and ongoing legal actions, eventually leading to the appointment of a new CEO and executive team at the start of the year.
Changing the company’s name to Proper Group “represents a fresh start,” said Stebler, “and reflects the changes to our strategic direction, where distribution sits at the core of the commercial value chain.”
Under the new arrangement, Billboard understands that Utopia/Proper Group will be divided into four main departments: Proper Distribution, Proper Payments, Proper Processing and Proper Music Data.
Together, the company says, they will provide clients with a “comprehensive suite of tech services” — including cross-platform analytics and royalty tracking, processing and payments — all built around the firm’s music distribution business, which has long generated the bulk of its revenue.
“By leveraging the Proper brand,” the company will “benefit from the positive and strong brand equity Proper has in the music industry,” said Stebler.
The company’s executive team remains unchanged with Stebler supported by deputy CEOs Alain Couttolenc and Drew Hill, a long-serving veteran of the U.K. physical music industry, who doubles as Utopia/Proper Group’s chief of distribution.
Hill’s responsibilities include overseeing the U.K.’s biggest distribution warehouse for physical music and home entertainment — a 25,000-square meter facility in the town of Bicester with handling capacity of up to 250,000 units per day — which Utopia opened last year as part of a £100 million ($125 million) long-term deal with international logistics company DP World.
More recently, Utopia successfully secured around half of a Series C funding round (understood to total more than 15 million euros) with a second tranche of C-round funding underway. The funds will be used to drive commercial growth, enhance product development and strengthen the company’s balance sheet, Stebler told Billboard in January.
Shareholders will get to vote on the proposed name change when Utopia holds its Annual General Meeting at the start of May.
Hipgnosis Songs Fund, the troubled publicly traded music royalty company that owns full or partial rights to song catalogs from the Red Hot Chili Peppers, Shakira, Justin Bieber and Neil Young, issued a damning report Thursday (March 28) compiled by a third party that details missteps the fund and its investment advisor made leading to a 26% portfolio downgrade earlier this month.
The London-listed fund, which became the poster child for music as an investable asset class, cut the value of its portfolio earlier this month and told investors not to expect the resumption of dividends “for the foreseeable future” while the company focuses on paying down debts.
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Compiled by the board’s lead independent adviser, Shot Tower Capital, the report found that Hipgnosis Song Management, run by Hipgnosis founder and music manager Merck Mercuriadis, materially overstated the fund’s revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) and supported catalog acquisitions with financial analysis that failed to meet “music industry standards.” Hipgnosis Songs Fund itself overstated the scope of its music assets — the kinds of royalties and administration rights it owned and its share of those rights — in disclosures to investors and regulators. And in a pitch last September to investors to sell some 29 catalogs to a sister Hipgnosis company, the fund included a better-than-could-be-expected post-deal valuation, the report found.
In a statement announcing the report, the fund’s board said it is exploring “all options for the future of the company,” and that it will release its strategic review and proposals by April 26.
Hipgnosis Song Management said it was still reviewing the report, which it received late yesterday. “However, there are aspects of the report that HSM strongly disagrees with and considers to be factually inaccurate and misleading,” the company stated.
“Throughout the life of the company, HSM has worked constructively, and in good faith, with the company’s board and other advisers to deliver the best outcome for the company’s shareholders,” the company continued. “Each adviser was recruited by the company’s board to advise on their specific area of expertise and with clear areas of responsibility.”
Investors found heart in the report; at the close of London markets on Thursday, Hipgnosis Songs Fund was trading at 0.69 pounds ($0.87), up 8.3% on the day and 30.43% above its 52-week low of 0.53 pounds ($0.69) set on March 4.
Here are some of the most revealing findings from Shot Tower’s report:
“The Fund overpa(id) for the majority of the catalogs it acquired.”
Hipgnosis Songs Fund, at the investment adviser’s direction, famously paid top-dollar for music assets — more than $2.2 billion overall. Today, those assets are worth $1.948 billion, with 67 of 105 acquisition deals currently worth less than their purchase price.
The investment advisor’s “diligence and underwriting standards” are the reason why.
Hipgnosis Song Management predicted aggressive growth, but three-quarters of its catalogs missed those expectations “by an average of 23% annually” and the overall annual royalties the fund earned from catalogs has fallen to $121.6 million from $134.2 million.
“Passive catalogs grew significantly better than catalogs managed by the Investment Advisor.“
A significant portion of the rights the fund had in its portfolio included passive rights. However, Mercuriadis and Hipgnosis Songs Fund’s board frequently touted that their industry expertise would be a valuable tool to make these rights outperform passive catalogs.
“The fund’s public reports contain disclosures that imply greater ownership control over songs… than would have been the case.”
Multiple reports from the fund presented that it had 100% “interest ownership” in acquired catalogs, which suggests ownership and control. “In fact, a material number of catalogs represent only a fractional, non-controlling income stream in the compositions without any copyright ownership,” the report reads.
Despite promoting itself as a caretaker of artists’ and songwriters’ works, Mercuriadis’ investment advisory group “failed to invest in systems and provide the services required to effectively manage a catalog of 40,000+ songs generating +120 million of royalty income annually.”
Hipgnosis Songs Management has not tracked or managed the catalog at the song level, and its legal bookkeeping included numerous oversights and missing files that could present complications to the collection of royalties.
The report found “multiple areas where fund expenses appear unrelated to the fund and/or are excessive.”
These costly items included $1.5 to $2 million spent annually for awards shows and public relations, “including significant payments to multiple music industry periodicals”; $1.2 million in fees in 2023 from deals the fund ended up not doing; and $5.7 million in fees related to the abandoned deal to sell catalogs to its sister fund, Hipgnosis Songs Capital.
SM Entertainment, home to such K-pop stars as aespa and RIIZE, promoted Tak Young-jun to co-CEO alongside existing CEO Jang Cheol-hyuk, the company announced Wednesday (March 27). Tak was also named executive director of the company’s board. Tak, who joined SM Entertainment in 2005, has served as COO since May 2023. Prior to that, he […]
Back in the 1980s and even the 1990s, Spanish artists like Raphael, Julio Iglesias and Camilo Sesto were hugely popular both in Latin America and among U.S. Latin audiences — a situation replicated in the 1990s and 2000s by the likes of global superstars like Mecano and Alejandro Sanz, both of whom hailed from Spain. […]
With performances by Lizzo, Queen Latifah, Ben Platt and Cynthia Erivo, plus appearances by former presidents Barack Obama and Bill Clinton, a fundraiser for Joe Biden at Radio City Music Hall on Thursday (Mar. 28) in New York could jump-start the incumbent’s so-far minimal public support from Democratic-leaning music stars for the upcoming 2024 presidential election.
“You’ll see more of that in the next couple of months,” predicts Hilary Rosen, former head of the Recording Industry Association of America (RIAA) and a longtime Democratic-leaning political analyst, referring to support from artists for the Biden campaign.
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It’s still early in the presidential campaign, but at this point, Biden’s endorsements from top music stars are a shadow of those he received in 2020, including from Taylor Swift, Beyoncé, Madonna, Ariana Grande, Cher and Melissa Etheridge. James Taylor and Lenny Kravitz performed at late-2023 fundraisers for the incumbent president, but beyond that, artists have mostly been silent.
That’s partially by design. Campaign representatives say the most impactful time for celebrity endorsements is late summer and fall, when more voters are paying attention to the election. A prime example of this timing was Bruce Springsteen‘s narration of an ad about Biden’s hometown, Scranton, Pa., that came out on Halloween 2020. “When it comes to celebrities, as you get closer to the election, more [of them] get engaged,” says Chris Korge, national finance chairman for the Biden Victory Fund. “Some help us with fundraising, others help us with grassroots and campaign events.”
But several Democratic supporters in the music business say they’re concerned about the lack of stars’ involvement in the election thus far. Part of that has to do with an uneventful primary season, with little rivalry within the candidates’ parties — President Obama drew early support from artists and celebrities when he was battling Hillary Clinton for the Democratic nomination in 2008, but not as much in 2012 when he was an incumbent running essentially unopposed. “I would not be surprised [by] a very high level of engagement as time goes on,” says Cliff Chenfeld, who founded Razor & Tie Records and created Kidz Bop and hosts events for Democratic candidates. “But I’ve seen two or three shows a week this year and I have yet to hear one artist mention one word about anything political or topical. I’ve heard somebody say, ‘Wow, we could be in for a tough year,’ but I haven’t really heard anything beyond that.”
In 2020, as was the case with Obama in 2008, Biden was the “change” candidate — an alternative to a Republican president after years of policies that were largely unpopular among young voters, on topics ranging from climate change to LGBTQ rights. Due to a primary battle that year with a more progressive rival, Sen. Bernie Sanders, Biden had to wait a few months for artists to support his candidacy. As late as August of that year, John Legend, Andra Day and Dave Matthews were among his few prominent music-star supporters.
Eventually, artists lined up to support Biden in 2020, but the president faces stronger headwinds among progressive artists and young voters in 2024, due in part to the Israel-Hamas war in Gaza. “I understand the frustration. He’s older, he hasn’t gotten any more inspiring and the idea that [he’ll be] a transitional candidate to bridge the gap from one generation to the next, that’s obviously not ringing true,” says Jordan Kurland, manager for Death Cab for Cutie and The Postal Service who has organized top artists on behalf of Democratic candidates. “But I’m voting for him because he’s our candidate, and obviously I’m going to choose democracy over what comes next under Trump. And I do think [Biden] has done a good job.”
Some Democrats in the music business say both of Biden’s campaigns, unlike Obama’s in 2008 and 2012, haven’t spent much time on outreach to music stars and their representatives. But they encourage the campaign to deploy artists with dependable fan bases in swing states from Pennsylvania to Arizona as quickly as possible. A music-business source who worked with the Biden campaign in 2020 on planning events and generating artist support came away frustrated: Biden campaign reps, he says, were “not enthusiastic four years ago, I can tell you that much. I have no reason to think they’re going to be more enthusiastic now.” The source adds that he wishes this year’s Biden campaign was “further ahead” in working with politically engaged artists.
Biden’s campaign plans to employ a celebrity-heavy “surrogate” program to oversee its artist outreach, as it did in 2020 when Olympic figure-skating champion Michelle Kwan served as director. Although that program has yet to kick in, many in the music business are confident the campaign won’t need to take elaborate measures to garner artist support. “You always hear about malaise and unenthusiasm,” says Peter Shapiro, a New York concert promoter and 20-year board member for Headcount, a nonpartisan group that has registered 1 million voters since 2004. “We always see it ramp up. People will realize the choices in front of them are significant.”
Several Biden supporters in the music business say that even if Democratic-leaning artists are hesitant to wholeheartedly endorse the president, they can speak in favor of down-ballot candidates or issues like abortion or climate change. Or they can criticize former President Donald Trump, who has artist supporters of his own, including conservative musicians Kid Rock and Jason Aldean.
Will any of it matter? In 2016, Beyoncé, Jay-Z, Springsteen, Katy Perry and other music stars performed at Hillary Clinton rallies days before the election, and she lost. “Will Taylor Swift save Joe Biden? Will she be that magic bullet that will save him from being six points down from Donald Trump?” Rosen asks facetiously.
“Let’s be realistic — most artists are not going to change a single person’s vote,” Rosen adds. “What they do is draw a crowd for voter registration and raising money. That’s what all campaigns want them for.”
BMG reported record high revenues of 905 million euros ($998 million) in 2023 as catalog acquisitions and growth in its publishing division from hit songs and albums by Bebe Rexha, the Rolling Stones and Lewis Capaldi contributed to 5.7% in organic revenue growth.
Operating earnings before interest, taxes, depreciation, and amortization (EBITDA) adjusted — BMG’s preferred metric for profit — was flat at 194 million euros ($214 million, based on the foreign exchange rate as of Dec. 31, 2023) compared to last year’s 195 million euros ($208 million, based on the year-end foreign exchange rate), as the German-owned music company incorporates a slew of changes introduced by new chief executive Thomas Coesfeld. Coesfeld said his strategy is improving revenue and operating EBITDA going forward, two metrics the company said have risen by roughly a third from 2021 to 2023.
“Many of these changes are having an immediate impact,” Coesfeld said in a letter to staff viewed by Billboard. “In the first two months of 2024 we have already seen a strong double-digit increase in revenue and an increase in EBITDA versus prior year.”
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Since Coesfeld took the helm in mid-2023, BMG announced a plan to take over digital sales of its artists’ music, a new physical distribution deal with UMG and increased investments in technology for a new client-facing mobile app, improved data analytics and speedier processing of royalties.
Catalog acquisitions have been a key component of Coesfeld’s contributions since he became BMG’s chief financial officer in 2021. Backed by the deep pockets of its parent company, the European media conglomerate Bertelsmann, BMG continued its steady pace of buying in 2023 with 30 catalog acquisitions, including those by The Hollies, Jet, Dope Lemon, Martin Solveig and Paul Simon’s music interests in Simon & Garfunkel’s recordings.
Major hits for the publishing division in 2023 included “I’m Good (Blue),” co-written by Bebe Rexha, and “Boy’s A Liar Pt. 2,” by BMG songwriter Mura Masa and performed by Pink Pantheress and Ice Spice, and the release of Hackney Diamonds by the Rolling Stones and Broken By Desire To Be Heavenly Sent by Capaldi.
Country music was a big driver for BMG’s label business in 2023 thanks to Jason Aldean‘s “Try That In A Small Town,” which hit No. 1 on Billboard’s Hot 100 chart during the first week of August, and three country chart-topping hits from Jelly Roll, including “Save Me,” recorded with Lainey Wilson, another of BMG’s country stars.
Here are some of BMG’s 2023 highlights:
Operating EBITDA adjusted remained stable at 194 million euros ($214 million) from the previous year of 195 million euros ($208 million).
From 2021 to 2023, revenue has risen by more than 36% and operating EBITDA adjusted has risen by more than 34%.
EBITDA margin was 21.4 percent compared to the previous year of 22.5%.
BMG made 30 catalog acquisitions in 2023.
The annual Music Biz Conference will move from its current Nashville home to Atlanta in 2025.
Specific dates and venues for Music Biz 2025 will be announced later. The conference will continue in its usual May timeframe.
Music Biz, which attracts more than 2,300 music business professionals each year, has been held in Music City for nearly a decade, and returns this year, from May 13-16.
“We’ve had a wonderful 10 years in Nashville. We love Nashville,” Music Business Association president Portia Sabin tells Billboard. “It’s been such a great place for us to grow and we are so appreciative and are very much looking forward to this year’s conference in Nashville.”
The move was inspired by the September 2022 launch of the Music Biz Roadshow program, which has traveled to cities including Atlanta, Dallas and Miami.
“With the Music Biz Roadshow, we bring our members to different cities across the U.S. for free educational programs for artists and musicians,” Sabin says. “We got inspired by doing that because there are so many great music cities out there in the U.S.”
Atlanta felt like a natural evolution for Music Biz. “When we first brought the conference to Nashville, it was a smaller version of what it is now. We feel like Atlanta has that growth potential,” Sabin adds, noting that music industry professionals from more than 30 countries attend Music Biz each year. “Atlanta has that great international hub airport, which will make it easier for people from abroad to get to [the conference]. We are excited to showcase another great American music city.”
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In 2013, the organization formerly known as the National Association of Recording Merchandisers (NARM) rebranded as the Music Business Association. Following a four-year stint in Los Angeles from 2011-2014, the Music Biz conference has been in Nashville since 2015. The Music Business Association headquarters continues to be located in Nashville.
Beginning in 2025, the Music Biz event will revert to the way it was scheduled in its NARM days when the conference frequently moved to a new city.
“We will be on probably a two-year schedule, staying in a town for two years before going to another town,” Sabin says, noting the conference could potentially be hosted in cities such as Miami and San Diego in the coming years.
“And I’m sure we will be back in Nashville at some point,” Sabin adds. ‘Nashville’s a fabulous city and we are so grateful to have been here for 10 years. We’re looking forward to this year’s conference in Nashville. Atlanta has so much going on in terms of the music industry there, and I think it has somewhat been overlooked in general. It’s a great spot to have the conference and have this important group of people showing up to do business there.”
Recorded music revenue in the United States grew 7.7% in 2023 over the prior year, reaching a high-water mark of $17.1 billion at retail, according to the RIAA. Within that headline number, $14.4 billion — or 84% — was driven by streaming, a figure that was also up 8% over 2022.
It’s the eighth straight year of revenue growth for the U.S. business, and the rounded 8% growth over last year’s $15.9 billion represents an uptick from 2022, when the business grew 6.1% over the prior year. And while the headline figure marks the third straight year that the business has set a record for revenue — previously set in 1999, when revenue hit $14.6 billion prior to Napster taking hold — when adjusted for inflation, it still falls far below that 1999 figure, which would be $26.9 billion at current rates.
Still, the U.S. business has been growing steadily over the past several years, and streaming has settled into being a fairly consistent piece of the revenue pie: This marks the fourth straight year that overall streaming accounted for between 83% and 84% of revenue, showing that streaming and the overall revenue picture are growing in lockstep. Within the streaming category, paid subscription streaming accounted for $11.2 billion, or 78% of all streaming revenue, up 9% over the $10.2 billion it accounted for last year; and the average number of full-tier U.S. subscriptions grew 5.7% to 96.8 million, up from 91.6 million last year.
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However, limited-tier subscription revenue — the bucket into which Amazon Prime, Pandora Plus, fitness services and other paid subscriptions that don’t include access to full, on-demand catalogs falls — dropped 4% to $1.0 billion. Meanwhile, ad-supported streaming service revenue grew 2%, to $1.9 billion, up from $1.8 billion in 2022; and digital and customized radio revenue, which includes services like SiriusXM and SoundExchange distributions, picked up 8% year over year, to $1.3 billion. Synch revenue grew by a similar rate, up 7.4% to $411 million.
In terms of sales, digital downloads continued their slide, with revenue down 12.2% year-over-year to $434.1 million, now representing just 3% of the overall industry. On the flipside, physical sales once again surged, up 10.5% to $1.91 billion (from $1.73 billion last year). That was largely driven by vinyl sales growth, which was up 10.3% year over year to $1.35 billion in revenue — an increase from $1.22 billion in 2022, as units jumped to 43.2 million from 40.5 million. CD sales revenue also grew by double-digit percentages, increasing 11.3% to $537.1 million from a $482.6 million mark in 2022, even as the number of CDs sold fell. The format saw 37 million sales in 2023, down from 37.7 million the year prior, suggesting a rise in average price per unit year over year.
Overall, the percentage breakdown between digital revenue and physical revenue — 89% to 11% — remained essentially the same as it has since 2018, only fluctuating 1% one way or the other in the intervening years. At wholesale, overall revenue grew by 7%, up to $11 billion from last year’s $10.3 billion, marking the second straight year that metric crossed the $10 billion plateau.
For the fifth consecutive year, Australia’s recorded music industry posted growth in 2023 – all thanks to streaming and Aussies’ love of wax.
According to wholesale data published by ARIA, the nation’s record market lifted by 10.9% to A$676 million ($442 million), powered by subscriptions to music streaming brands.
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That rate of growth for Australia, a top 10 market, the IFPI confirms in its newly-published Global Music Report, is in line with international trends.
Spotify, Apple Music, YouTube Music, Tidal, and the full slate of subscription platforms now generate 69% of the industry’s total value, or $467.6 million ($305 million), up by 13.9% year-on-year, reports ARIA, the labels trade association.
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Also reporting gains for 2023 is the space for ad-supported streaming models, up 15.3% jump to $68.3 million ($44 million).
All digital products combined, including downloads and video streams, account for a sum upwards of A$616.1 million ($403 million), a 12% year-on-year lift. In other words, more than 90 cents in the record industry’s dollar is generated by digital.
Vinyl albums are an ongoing sweet spot, posting gains of 14.1% to A$42.1 million ($27 million), a sum more than twice that of the dwindling market for CD albums (A$17 million or $11 million, down 16%), for decades the record industry’s diesel engine. The rate of growth for vinyl, however, appears to be slowing.
An overall strong market report is masking a problem that Australia’s music community is trying desperately to crack — how to break more homegrown in Australia and abroad?
Where the IFPI’s GMR is flush with case studies on the success of Afrobeats, Latin music, K-pop, and blockbuster acts from North America and the U.K., acts from the land Down Under aren’t stealing the limelight.
“While Australia remains the 10th largest music market in the world – and Aussies clearly love music,” comments ARIA CEO Annabelle Herd, “it remains harder than ever for our local artists to reach these audiences.”
ARIA’s end-of-year charts “paint a clear picture of this,” notes Herd, with only four Australian albums impacting the top 100 for 2023, led by INXS‘ hits collection The Very Best (at No. 58), and three singles, none of which were released during the reporting period. The best-placed Australian artist on the year-end singles tally was The Kid Laroi with his 2021 Justin Bieber collaboration, “Stay.”
“Achieving cut-through becomes increasingly difficult for artists as the growth rate of subscription and ad supported streaming models continues to increase year on year,” notes Herd, “while nearly all other growth rates have eased compared to 2022.”
The Albanese federal government listened to the industry’s dilemmas, and, in 2023, activated Creative Australia, the centerpiece of the federal National Cultural Policy, Revive, which its architects hope will turn Australia into a music powerhouse.
Among the government’s promises is the launch of Music Australia, a reimagined national music development agency that would support and invest in the development of Australian contemporary music, and now led by founding director Millie Millgate. The Music Australia Council, effectively the Music Australia board, includes legendary concert promoter Michael Chugg and Future Classics founder and CEO Nathan McLay.
The government’s National Cultural Policy is an ambitious year-long action plan, structured around five interconnected pillars and underpinned by a commitment for new, additional investment totaling A$286 million (US$202 million) — record levels of arts funding. Music Australia alone is funded to the tune of A$69 million ($44 million) over four years.
“We are fortunate that compared to other major global markets, our growth rates paint a favorable picture for the future of music in Australia,” adds Herd. “Music is valuable, it is popular and it is growing. We look forward to working with the industry and government to ensure that message is heard and that value is increasingly used to support our incredible local talent.”
Read more here.
Believe‘s board of directors on Monday (Mar. 25) asked Warner Music Group (WMG) to submit a formal bid for the French music company after stating that French financial regulators found an offer by a group that includes Believe CEO Denis Ladegaillerie violated certain securities rules. WMG said earlier this month that it approached Believe in […]