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LONDON — BMG’s revenues jumped 11.5% to 414 million euros ($450 million) in the first half of 2023, fueled by strong growth in the company’s publishing business and a number of high-profile acquisitions, including a major interest in Paul Simon‘s portion of the Simon & Garfunkel catalog and a deal for George Harrison’s solo recordings.
The record label and publisher’s operating earnings before interest, taxes, depreciation and amortization (EBITDA) were up 23% (on a constant currency basis) to 90 million euros ($98 million) at the mid-year point ended June 30, according to figures released Wednesday Aug. 30 by BMG’s German parent company Bertelsmann.
Classic songs from Blondie, Kurt Cobain, Daryl Hall & John Oates, Mick Jagger and Keith Richards – coupled with hit releases by contemporary artists like Lewis Capaldi and Austrian rapper RAF Camora — helped drive the company’s 62% of revenues that come from publishing. That equates to around 257 million euros ($280 million) by Billboard’s calculation (the company didn’t break out revenue numbers).
Recorded music represented 34% of revenue (around $152 million) with Jelly Roll, Kylie Minogue, Godsmack and Rita Ora among BMG’s top-selling recording artists. Among its most listened-to catalog titles were tracks by Motley Crue, Black Sabbath and George Harrison.
In total, BMG said its digital businesses accounted for 63% of revenue, down from 69% in the first half of the previous year. The company said the decrease was due to higher digital revenues being offset by stronger growth in live revenues, driven by a post-pandemic surge in touring.
BMG CEO Thomas Coesfeld, who took over from longstanding chief executive Hartwig Masuch July 1, said the double-digit percentage growth reflected the company’s “strong performance in the face of an increasingly tough market.”
“Against the background of a soft advertising market, a maturing subscription streaming business and a physical music market impacted by inflation-driven cost increases, this is a very positive result,” said Coesfeld in a statement.
Breaking down the revenues on a regional basis, the U.S. was BMG’s biggest market, generating 217 million euros ($236 million), a rise of £14 million euros ($15 million) on the first half of 2022. Germany was BMG’s second biggest market with revenues of 49 million euros ($53 million), followed by the United Kingdom, which brought in 42 million ($46 million).
BMG completed 15 acquisitions in the six-month reporting period, including a deal for Paul Simon’s royalty and neighboring rights income to the full recorded Simon & Garfunkel catalog. Other deals closed in the first half of this year included the acquisition of the song catalog of 1960s British band The Hollies and a share of the writer’s royalties from the heavily synced German Eurodance group SNAP!
In February, BMG reached an agreement with Dark Horse Records over George Harrison’s solo works, marking the first time that the former Beatle’s recorded and publishing rights have sat together under the same roof. To commemorate Harrison’s Feb. 25 birthday, Dark Horse and BMG released Harrison’s entire catalog in Dolby Atmos surround sound exclusively on Apple Music.
Alongside BMG, Bertelsmann’s media holdings include RTL Group, Penguin Random House and service provider Arvato. Bertelsmann reported total revenue of 9.7 billion euros ($10.6 billion) for the first six months of the year, up 4.5% on the previous year. Organic revenue growth was 2.3%.
City of Hope held its third annual Closing the Care Gap event Monday evening (Aug. 28) in association with its Music, Film and Entertainment Industry (MFEI) fundraising group. Focusing on the progress that’s being made while overcoming the challenges that still exist in bringing quality health care to underserved communities, the event was hosted by YouTube and Google global head of music Lyor Cohen and Epic Records chairperson/CEO Sylvia Rhone. Cohen is also MFEI’s 2023 Spirit of Life honoree. He’ll accept the award at City of Hope’s annual gala on Oct. 18.
Held at the Los Angeles home of real estate agent and TV personality Josh Flagg, Closing the Care Gap began with a welcome from Evan Lamberg, president of North America for Universal Music Publishing Group (UMPG). Among the healthcare experts, entertainment industry professionals and prominent music industry executives on hand were City of Hope’s Dr. John D. Carpenter and Kristin Bertell, 300 Entertainment CEO Kevin Liles, UMPG CEO Jody Gerson, CAA head of music and past Spirit of Life honoree Rob Light, former BET CEO Debra Lee, Republic Records executive vp Danielle Price Sanders, 50/50 Music Group Management CEO Willie “Prophet” Stiggers and songwriter Justin Tranter.
Kristin Bertell, Willie “Prophet” Stiggers, Jonathan Azu, Sylvia Rhone, Lyor Cohen, Danielle Price Sanderson, John D. Carpten, Gail Mitchell and Evan Lamberg attend City of Hope’s 3rd Annual Closing the Care Gap Event on August 28, 2023 in Los Angeles, California.
Lester Cohen/Getty Images for City of Hope
In addressing the audience, Cohen said, “The more you give, the more you receive. And today we are all in the business of giving — of our time, our influence, our connections and experiences. It’s our responsibility to do the work to close the care gap. We need to provide access to early detection with routine screenings and better treatment and, of course, resources and education that help increase health equity.”
Rhone, MFEI’s 2019 Spirit of Life honoree, introduced Cohen to the audience. “I’m grateful to have the privilege to help solve these challenges with our industry and give everyone fighting cancer the hope they deserve,” she said.
According to statistics shared by City of Hope, only 20% of cancer patients in the United States are treated at National Cancer Institute-designated cancer centers like City of Hope. In the meantime, economically disadvantaged and racially diverse communities face systemic barriers that limit their ability to find and sustain specialized, lifesaving care.
Dr. John Carpten, director of City of Hope’s National Cancer Institute-designated comprehensive cancer center and director of the Beckman Research Institute of City of Hope as well as the organization’s chief scientific officer and the Irell & Manella Cancer Center Director’s Distinguished Chair, further amplified the equity issue. “Too many people needlessly suffer due to lack of access to the latest medical innovations and systemic barriers that prevent them from getting the best cancer care,” he said. “At City of Hope, we are working to carry out solutions that increase the likelihood that every person living with cancer — regardless of race or region — can get the best care.”
Jacqueline Saturn, Sylvia Rhone, Dina LaPolt and Jody Gerson attend City of Hope’s 3rd Annual Closing the Care Gap Event on August 28, 2023 in Los Angeles, California.
Lester Cohen/Getty Images for City of Hope
Culture Collective CEO and MFEI board member Jonathan Azu added a personal note by sharing his journey after being diagnosed with prostate cancer at age 44. Growing up in a family of medical professionals, he had access to resources and health care that many don’t.
“My outcome is going to be a lot better because of the prostate cancer screening and active surveillance I was able to receive,” Azu said. “There’s nothing I’m more passionate about than breaking the barriers that prevent those who look like me from getting access to screenings and treatment that could save their lives.”
Bertell, City of Hope’s chief philanthropy officer, closed the evening by noting, “You are part of the movement. Your philanthropic partnership supports us in removing obstacles to care for everyone. We cannot cure cancer if we don’t cure it for all.”
Closing the Care Gap is part of a year-long fundraising initiative by City of Hope that will conclude with MFEI’s Spirit of Life Gala honoring Cohen. The gala will celebrate 50 years of philanthropic partnership with MFEI on Oct. 18 at the Pacific Design Center in Los Angeles.
Grimes is among the first wave of featured speakers for the 2024 South by Southwest (SXSW) conference, an event which promises to lean into AI-focused programming.
Announced today (Aug. 29), the multidisciplinary artist will join a session dubbed “AI and the Independent Artist,” which will explore how artificial intelligence is changing the way artists create and market their music, engage with their fans, and, of course, the challenges and responsibilities for the music industry that come with it.
The Canadian artist is known for pushing boundaries in the creative space. She enhanced that reputation by unveiling her Elf.Tech project earlier in the year, an open-source software program which encourages fans to make music (and money) with replications of her voice.
TuneCore CEO Andreea Gleeson and CreateSafe CEO Daouda Leonard are also confirmed for the panel, on which they will “present principles for companies to consider” and share results and lessons learned from early AI pilot programs, according to a SXSW statement.
The conversation on AI is only getting started. Just last week, streaming giant YouTube and Universal Music Group, the world’s biggest music company, announced a new initiative with artists and producers for an “AI Music Incubator,” and YT unveiled its own set of principals as it promised to “embrace” AI “responsibly together” with its music partners.
Other SXSW daytime discussions will drill into “AI and Humanity’s Co-evolution,”” with speakers venture partner at SignalFire Josh Constine and OpenAI’s VP of consumer product and head of ChatGPT Peter Deng; “Building the Next Era of the Internet” with author, general partner at Andreessen Horowitz, and founder/managing partner at a16z crypto Chris Dixon; and a conversation with creator, host, and executive producer of the podcast Call Her Daddy Alex Cooper and founder and CEO of ACE Entertainment Matt Kaplan.
Also slated for the conference schedule, CEO of the Future Today Institute and professor at NYU Stern School of Business Amy Webb will launch the 2024 Emerging Tech Trend Report.
SXSW 2024 will take place March 8–16 in Austin, TX.
Established in 1987, SXSW celebrates the convergence of tech, film and television, music, education, and culture and is recognized as an important destination for professionals who play in those spaces.
SXSW 2024 is sponsored by Porsche, C4 Energy, and The Austin Chronicle.
Visit sxsw.com for more.
Of his previous trips to Africa, Larry Jackson says simply, “[They have been] tattooed on my heart.” Now, with his latest venture, he’s looking to put his own stamp on the continent.
Gamma, Jackson’s recently launched media company, announced in May that it was expanding operations into Africa and the Middle East with Sipho Dlamini and Naomi Campbell onboard as president and special advisor for Africa and the Middle East, respectively. And this month, the company named Larry Gaaga vp/GM for Africa and Dany Neville as vp of A&R for the Middle East. One of Gaaga’s primary focuses will be spearheading initiatives to develop local talent, and he’s already begun discussions with Dlamini and Campbell on how they’ll discover and develop more African female artists. In his role, Neville will be identifying and nurturing Middle Eastern talent.
The move into both regions comes at an opportune time. According to the 2023 IFPI Global Music Report, Sub-Saharan Africa became the fastest-growing region in the world last year, with a 34.7% increase in revenue largely driven by South Africa’s booming market, where sales were up by 31.4%. Meanwhile, the Middle East and North Africa (MENA), 2021’s fastest-growing region, experienced a 23.8% increase in revenue driven almost entirely by streaming, which has a 95.5% share of the region’s recorded music market — the highest of any in the world.
Gamma is joining a long list of Western music companies to have set up shop in both territories over the last few years. UMG Nigeria and Sony Music Entertainment West Africa have both established offices in Lagos, Nigeria. In 2020, EMPIRE signed a distribution and publishing deal with Olamide’s independent label YBNL Nation, leading to the launch of EMPIRE Africa in Lagos two years later. Elsewhere on the continent, Warner Music Africa is based out of Johannesburg, South Africa, where Universal Music Africa also established one of two regional headquarters (the other is in Abidjan, Côte d’Ivoire). UMG has also been making inroads in the MENA region, from Republic Records partnering with Wassim “Sal” Slaiby to launch Universal Arabic Music to becoming the first major music company to open operations in Casablanca, Morocco. Universal Music MENA and Sony Music Middle East have headquarters in Dubai, United Arab Emirates, while Warner Music Middle East is based out of Beirut.
Gamma will have staff in Johannesburg, Lagos and Dubai, with plans for a physical office in Lagos. Dlamini will be based in Lagos and Dubai while frequently traveling to South Africa, Saudi Arabia and other countries in the markets; Campbell will also be frequently present in both regions, says a company spokesperson. On the African continent, Gaaga will help guide teams in Johannesburg and Lagos (where he’ll be based). And in the Middle East, Neville will be stationed in Dubai, where he’s established himself as one of the UAE’s groundbreaking on-air radio personalities/DJs.
The company has already gained a foothold in Africa thanks to its acquisition of music distribution service Vydia in December. Vydia’s founder/gamma chief technology and product officer Roy LaManna says that since Vydia launched on the continent in 2017, it’s become the company’s second-largest territory in the world thanks to partnerships with local record labels like Mr. Eazi’s emPawa Africa and Don Jazzy’s Mavin Records — which gamma is now using to further expand there. In April, gamma exclusively distributed and marketed a re-release of Mavin artist Rema’s Rave & Roses debut album in African territories, marking the company’s first regional move. The album includes Rema’s latest smash “Calm Down” with Selena Gomez, which has amassed 7.52 billion total on-demand streams globally, including user-generated content (UGC does not count toward Billboard’s charts). Vydia says the single has garnered 482 million streams across the African continent, while Rave & Roses has amassed more than 580 million streams across all tracks.
By owning Vydia, gamma will be able to support African artists in building careers in their home countries and beyond by offering technology and data that “can identify where tracks and artists are performing and then support and elevate them into a better space,” says Dlamini, while also offering staff on the ground where they are.
Dlamini has an impressive track record. For 24 years, he has been a music industry leader in Africa, including the seven years he spent at UMG, first as MD and then as CEO, along with a four-year stint at the Southern African Music Rights Organization (SAMRO), where he was eventually promoted to CEO. Prior, Dlamini was vp of operations at CSM Sport & Entertainment in Dubai, where he oversaw the largest concerts and music festivals in the region. In his previous role as MD of Universal Music South Africa and Sub-Saharan Africa, he launched Def Jam Africa — where he hired Gaaga as vp of A&R last year — with headquarters in Lagos and Johannesburg.
Jackson says he “had always admired” Dlamini’s hustle as CEO of Universal Music South Africa and Sub-Saharan Africa. “[He] built them into the No. 1 market share of any company in music in Africa,” he says. When the two eventually met through a mutual friend, music industry veteran Marc Byers, he continues, “I knew that I wanted to work together.”
While Campbell may not be known for her music industry experience — which has been limited to music video cameos and one studio album — she has long been a champion of developing opportunities in both Africa and the Middle East. She’s founded several charitable organizations benefiting emerging markets, including Fashion for Relief, which helps develop fashion, technology, business, entertainment and arts industries around the world, as well as the Emerge Initiative, which supports the next generation of creatives and entrepreneurs through apprenticeships, after-school programs and more.
“Naomi is truly one of the most powerful and impressive dignitaries in the world,” says Jackson. “She’s really rising to the challenge of being an executive and really has foresight, energy, ambition, ideas, influence – all of it.” Before gamma, Campbell helped him sort out “some work visa issues” when he traveled to South Africa with Drake in 2016 (during his stint as global creative director at Apple Music) by tapping her contacts within the country’s government as well as with Nelson Mandela’s family. Since then, she has introduced him to some of the most notable figures in Africa and the Middle East, from Afrobeats superstars Wizkid and Burna Boy to the Saudi Arabian minister of culture, Prince Badr bin Abdullah bin Mohammed bin Farhan Al Saud.
“I’m proud that a brother, a man of color and culture, is taking the reins and starting his own company,” says Campbell. “When he offered me this gig, I said yes because it’s a challenge for me. Yes, it’s not my day job, but at the end of the day, it’s about if you care. And I care, as everyone knows, about the continent and all the emerging markets.” Campbell also signed a podcast deal with gamma, according to Jackson, with the show expected to launch later this year.
For all of their promise, the African and Middle Eastern music markets come with significant hurdles. Chief among them is the issue of low streaming service subscribers in Africa, which Jackson is currently focused on finding solutions for.
“Streaming services in one of the biggest [African] territories, if not the biggest territory, Nigeria, have very low subscriber growth and very low subscribers in general,” says Jackson, adding that he’s already been speaking with his former Apple colleague Oliver Schusser about solving what he calls the biggest issue limiting that growth: payment.
While “the value of music and people’s willingness to pay for music” on the continent “is a lot less than in other territories,” Jackson admits, part of the payment issue stems from the fact that more people in Africa are likely to own a mobile phone than a bank account — which is why streaming services have been relying on telecommunications deals to significantly grow their subscriber bases. Through partnerships with local wireless providers in key markets — Vodacam in Tanzania, Airtel in Nigeria and MTN in Nigeria, Ghana and South Africa — Africa-focused streaming service Mdundo can bypass the issue of low penetration of payment cards in Africa and reach 185 million wireless subscribers, according to the company’s June 2023 guidance report. Other streamers have developed alternative payment methods, such as M-Pesa, which transforms a user’s SIM card and phone into a virtual banking system. Spotify allowed users in Kenya to pay using M-Pesa when the company began operating in the country two years ago.
While Jackson certainly sees the value in streamers making telco deals in Africa, he believes more can be done to convert music fans into streaming subscribers by, for example, making exclusive deals with artists — a strategy he successfully implemented during his previous gig. “Nothing has more relevance than Drake’s album being exclusive on Apple,” he says. “You can debate that all day, [but] there’s no carrier deal that’s going to bring you that level of audience. Bringing the artists and the culture and the community together with the streaming services I think is a missing part that hasn’t been done.”
Sony Music Nashville artist Nate Smith, who earned a No. 1 Billboard Country Airplay hit with “Whiskey on You” early this year, signed with The Neal Agency for booking representation. He is also represented by The Core Entertainment for artist management. The Neal Agency’s roster also includes Morgan Wallen, Bailey Zimmerman, HARDY, Ernest, Chase Rice, Anne Wilson, Ella Langley and Jake Worthington, as well as lifestyle brands Whiskey Jam and Stevenson Ranch. – Jessica Nicholson
Genre-agnostic singer-songwriter Atlus signed with UTA for global booking representation. The Denver native is preparing to hit the road on his nine-stop High Expectations tour and will release his latest single, “Tom Petty,” on Friday (Aug. 1). He’s represented by Brett Saliba and Mackenzie Coberley at UTA.
Warner Music China signed Chinese R&B artist Elva Hsiao. The label will work to strengthen Hsiao’s domestic following while using its international network to boost her fanbase throughout Asia and the rest of the globe. According to a press release, Hsiao was the first native Mandarin-speaking artist to release an R&B album into the Chinese market and is one of the country’s biggest-selling artists.
The Familie signed singer-songwriter sombr (born Shane Boose) to its roster. Sombr signed with Warner Records earlier this year and will be releasing an EP in September. He’s best known for the track “Caroline,” which was propelled by TikTok where he boasts over 258,000 followers and 8.7 million likes.
Artist-songwriter-producer JHart (a.k.a. James Abrahart) partnered with United Masters for the distribution of his upcoming D’Mile-produced EP, The Wishing, The Wanting, The Longing, which is slated for release on Oct. 27. As a songwriter, he has co-written songs for artists including Justin Bieber, Jason Derulo, Rita Ora and Little Mix. He is managed by Lucas Keller, Danny Herrle and Nic Warner at Milk & Honey Music + Sports.
Songwriter-executive producer-vocalist Trey Campbell signed a worldwide management deal with SILO: Music. The Grammy-nominated Campbell has collaborated with artists including Kim Petras, Giveon, Ellie Goulding, Ariana Grande, Lola Young and John Legend. He was brought to the company by SILO: Music director of A&R, management/publishing Jessica Thomas.
Cincinnati-based singer-songwriter Nolan Taylor (“68”) signed with Atlantic Records, which released his latest single, “Wicked Ways,” on Friday (Aug. 25). He’s represented by Kanan Vitolo at WME for booking and managed by Julian Wilkey at Unlikely MGMT.
Chicago band Friko — comprised of Niko Kapetan (vocals/guitar) and Bailey Minzenberger (drums) — signed with ATO Records. The label re-released a new 7-inch vinyl of the band’s “Crimson to Chrome,” limited to 500 copies worldwide, and will put out its debut album early next year. Friko is represented by manager Dawn White and booking agent Erik Selz at Arrival Artists.
LONDON — Located around 65 miles outside London, Bicester in leafy Oxfordshire is far removed from the bustling world of rock and roll. Despite its lack of star power, the historic market town is nevertheless set to play a key role in the British record industry as home to the United Kingdom’s biggest distribution warehouse for physical music and home entertainment.
Due to begin trading today (Aug. 29), the new 25,000-square meter facility is being opened by Swiss-based Utopia Music as part of a £100 million ($125 million) long-term deal with international logistics company DP World. With handling capacity of up to 250,000 units per day, operators say the state-of-the-art warehouse will distribute over 30 million CDs, vinyl records and Blu-ray discs a year across the United Kingdom and export markets on behalf of clients, including Universal Music Group, Sony Music Entertainment and [PIAS].
For Utopia Music, the opening of the Bicester site provides a much-needed boost after a troubled 12 months that has seen the company undergo multiple rounds of job cuts, executive departures, office closures, legal action over a stalled acquisition deal and the offloading of three of its businesses — Absolute Label Services, U.S.-based music database platform ROSTR and U.K.-based publisher Sentric.
For the wider music industry, the new warehouse facility acts as further proof of the continued demand for physical music formats, driven by the ongoing vinyl boom.
Last year, vinyl sales climbed 2.9% to 5.5 million units in the United Kingdom, marking the 15th consecutive year of growth, according to labels trade body BPI. In contrast, CD sales fell 19% year-on-year to 11.6 million units in 2022, though the format still accounted for more than two-thirds (67%) of all physical music purchases. Total revenue from physical music sales stood at £280 million ($352 million) in the United Kingdom last year — down 3.8% versus 2021 but up £9 million ($11 million) on 2020’s total, according to trade organization the Entertainment Retailers Association (ERA).
The latest year-to-date figures from BPI, meanwhile, show slight growth across the U.K. physical music market in 2023 compared to last year, while vinyl sales are up by around 15% versus the first 33 weeks of 2022 in volume terms. The trade body says that physical music revenues are on track to record double-digit percentage growth in 2023.
“A lot of people were too quick to write off physical and maybe now realize there is still a large and viable business here,” says Utopia Music vp of distribution Drew Hill on the eve of the new facility opening.
Fintech firm Utopia Music has owned a large stake in the U.K. physical music distribution business since January 2022, when it acquired Proper Music Group, the United Kingdom’s biggest independent physical music distributor, for an undisclosed sum. Eight months later, Utopia bought up the assets of Cinram Novum — which provides warehouse, fulfillment and distribution services to music labels and home entertainment companies — and renamed it Utopia Distribution Services (UDS).
Drew Hill
Utopia Music
Over the summer, stock has been transported from UDS’ previous warehouse in Aylesbury to the new Bicester site, which will handle 70% of all U.K. physical music sales, as well as 35% of domestic physical video (DVD and Blu-ray discs) sales each year, according to Utopia. Proper Music Group, which trades as a standalone entity within the Utopia group and provides distribution to over 5,000 indie labels and service companies, will continue to operate from its existing warehouse in Dartford.
Hill says the multi-million-pound investment that UDS is making in physical music will help ensure the survival of CD and vinyl formats for future generations. “Lots of other distributors have either gone to the wall or they have been massively underfunded. The physical music business is still a quarter of a billion-pound industry, and it really needed someone to come in and upgrade the infrastructure to be able to support that,” he says.
Utopia Music co-founder and interim CEO Mattias Hjelmstedt says the Bicester facility “marks a new beginning for the U.K.’s physical distribution market.”
The continuing shift away from physical formats toward streaming does, however, present considerable challenges to any company operating in the physical market. In 2022, Proper Music Group recorded revenue of £30.1 million ($38 million) for the nine-month period ending Dec. 31, down from £42 million ($53 million) in the prior 12-month accounting period, according to its latest financial records. The company says lower sales and increased operating costs were behind the £1.9 million ($2.4 million) net loss it posted last year.
In response to inflationary pressures, Proper raised its prices for the first time in over 15 years in late 2022, with UDS also increasing prices on what Cinram Novum was previously charging clients. Hill declines to reveal how much prices have increased but is confident that the measures taken will help Proper return to profitability in 2024, while the new Bicester facility will enable UDS to grow its client base through increased capacity and a greater focus on direct-to-consumer sales.
By tapping into DP World’s global network, which spans 75 countries on six continents, UDS will also be looking to grow physical music exports outside the United Kingdom. It also, says Hill, has long-term plans to replicate its centralized distribution model overseas, possibly in North America or Europe.
Commenting on Utopia’s well-publicized recent difficulties, Hill says support from the Swiss-based tech firm has been “unwavering” and both Proper and UDS have been “ring-fenced” from the cuts Utopia has implemented elsewhere over the past year.
“[CEO] Mattias [Hjelmstedt] has talked internally about how physical distribution is the engine room of Utopia. We provide a funnel through which it can present and sell its other products and services,” says Hill, who has worked for Proper for more than 15 years.
Hill adds that he has no concerns about the financial stability of Utopia and points to the growing popularity of vinyl, deluxe boxsets and special edition releases among music fans as a thriving growth area for the physical music business.
“Over time, maybe we will start to shift fewer units, but they will be units of higher value,” he says. “As long as you create a beautiful package with valuable content in it, people will always want to buy it.”
In his Washington, D.C. office, Michael Huppe rolls his chair past gold records, an Elvis Costello poster and an electric guitar to a back shelf to locate a key and unlock a drawer. “Let me see if I still have it here,” the SoundExchange president/CEO says before pulling out a black vest with capital yellow letters that read “RIAA Anti-Piracy Unit” and draping it over his coat.
Prior to collecting performance royalties from digital radio stations, as well as broadcast companies such as SiriusXM and distributing them to creators for non-interactive digital streaming through SoundExchange, Huppe helped hunt down piracy rings around the country for the RIAA to ensure artists weren’t losing out on revenue. “I have gone on raids — flea markets, cassette operations, some CD operations,” he says.
Since Huppe joined SoundExchange in 2007, his tactics have changed — but his primary goal of getting performers and rights owners paid has not. Over the past two decades, he has helped raise their royalty rates and helped track them down at locations from music festivals to Mississippi Delta homes to distribute earned royalty payments. Now SoundExchange is marking its 20th anniversary and, in May, announced it had distributed $10 billion overall in payments. According to the organization’s most recent annual report released in July, SoundExchange collected $1 billion in digital royalties from more than 3,600 digital streaming platforms and distributed them to over 600,000 creators and rights holders in 2022 alone.
“You recognize you’re really making a difference in people’s lives,” Huppe says.
Explain what it means for SoundExchange to cross what it calls the “$10 billion distribution milestone.”
The growth rate of our payments surprised everyone, including me. When I came over to SoundExchange, I saw streaming was going to grow. We pay significant amounts of money to the big superstars, but also good amounts to working-class musicians that you may or may not have heard of. It makes a difference as to whether they stay in the industry. During the pandemic, for a lot of those musicians, we were the only revenue stream. The emails we received … it’s really gratifying.
What are some examples of those messages?
One band with regional popularity had been driving around trying to make it in a van, crashing on friends’ couches, barely getting by. We were trying to find them because we had money for them. They were literally about to hang it up — they were at the end of their run, running out of steam. That initial SoundExchange payment made all the difference and incentivized them to keep going.
There was a widow of a Delta blues singer we had been trying to find forever. We finally found her, and she was in tears because they were about to foreclose on her house and because of that [payment], they saved her house.
Country artist Randy Travis (seated), his wife, Mary Travis, and Michael Huppe.
Courtesy of SoundExchange
After working at the RIAA, you joined SoundExchange in 2007, which had been operating for four years. What were those early days on the job like?
We were still sending out paper checks. Back then, they were quarterly or semi-annually, and half the staff would gather into a room and run the distribution. That makes me think how far we’ve come, from paper checks to a system that processes 35 billion [digital] performances a month from 600,000 accounts. We were like, “Oh, my God — the next $100,000 [comes in] this quarter!” Now we’re regularly doing $1 billion [in payouts] per year.
It’s SoundExchange’s 20th anniversary. What have been the company’s biggest achievements during your tenure?
When I first started working — I guess I was still at the RIAA — SiriusXM was paying 2% of revenue, and now it’s 15.5%. And streaming rates we get from webcasting have more than quadrupled. We’ve done a really good job of demonstrating and achieving the value for music. [Editor’s note: In August, SoundExchange filed a lawsuit against SiriusXM claiming the platform is “gaming the system” to “grossly underpay the royalties it owes” to the amount of $150 million by manipulating how it bundles satellite services with web streaming services. A representative for SiriusXM has denied the allegations.]
How has SoundExchange helped those rate increases?
For the first few years, we would go before this three-judge panel at the Copyright Royalty Board. We’ve had a good track record of convincing them why we should be paid higher rates for music, which is so important to these services. The last satellite radio proceeding we had went from 11% to 15.5% overnight. So Dec. 31 of one year [2017], it was 11%, and the next day, they were paying us 15.5%. For the most part, it has been a gradual uptick.
What is SoundExchange’s general strategy for helping to persuade the CRB to raise the rates?
You put on artist witnesses and people from the union and record-label folks who explain what goes into the making of sound recordings. You bring in experts who can talk about the profitand-loss situation or what the future five years of the industry is projecting. You do all that the right way and make a convincing case, and the court increasingly recognizes the value music plays in the services. They are big, long, expensive cases, but it’s worth it because we have to look out for the value of music.
How quickly does SoundExchange make those payments?
Ninety percent of our royalties are out the door in 45 days, whereas around the world, on average, folks pay out annually, semi-annually or quarterly. We’re working for the creators. Our job is to take their money from the digital service providers and get it to them as accurately and efficiently as possible.
Are you a musician?
I’ve played piano since I was 4 years old. My chops are not what they used to be! So don’t ask me that. I played in different bands through high school. I’ve always loved music.
I’ll be honest with you: I never thought I’d end up in the music industry. I’m a recovering lawyer. When I was in law school, I got really interested in intellectual property [IP]. It’s this thing you can’t touch, you can’t hold, it’s not tangible — but the government vests a property right in it because they want to incentivize investment in creation. It just was a really interesting concept. [Without it], you wouldn’t have research in the next cancer treatment. You wouldn’t have people investing in music or movies or software.
Rapper Armani White (left) and Michael Huppe.
Courtesy of SoundExchange
After Harvard Law School, you started at the RIAA in 2000. How did you get to that job?
I clerked in court in the Eastern District of Virginia. We saw a lot of IP — when someone’s infringing your patent, you could be losing millions of dollars a day or tens of millions, and it makes a difference going to a quick court. When I started out as a lawyer in a law firm here, I tried to do IP if I could, but I was just doing general litigation. I got this headhunter to [help me] come over to work at this place called the RIAA, which happened to be across the street from where I was working. I came in to do litigation and piracy work and a lot of other things at the RIAA.
Like what?
There were still full-blown, big, commercial pirate cassette operations. I was helping to develop processes and cases. Slowly, that work moved from cassettes to commercial CDs to burnable CDs and downloads, and by the time I left, it was all streaming. We had eight offices around the country, probably 60 people in the department, tons of investigators. I helped create a system where we could build our own cases against pirates because we started to move toward the civil side instead of just criminal.
Any stories about busting flea markets?
The more tense times are when you’re going to someone’s house and they’ve got a CD-burning factory in the basement. Then you move on to the internet. It’s a whole different ball of wax. You’ve got people hiding behind 14 different anonymizers who may not even be based in this country. It was an interesting way to get into the business, that’s for sure.
In addition to Michael Huppe, SoundExchange is guided by an executive leadership team consisting of (from top) chief business officer Tommy Korpinen, CFO/COO Anjula Singh, general counsel Tim Dadson and chief technology officer Luis Bonilla.
Elliot O’Donovan
What are the next big goals for SoundExchange?
SoundExchange, 10 years from now, is going to be an even bigger part of the industry than we are today. When we moved into publishing in June 2022, part of that was to bring some of the same philosophy and perspective and transparency into the publishing world that we brought into the sound-recording world. The ultimate thing is to marry up the metadata. Wouldn’t it be great if there was one central nonprofit place where you had all the authoritative data about who wrote the song, who owns the publishing, what are the splits, who played [in the] background, who sang vocals? It’s interesting and a little crazy we don’t have that as an industry. If we can move in that direction, that removes friction.
Obviously, [artificial intelligence] is a big topic. There are a lot of benefits and a lot of threats. We would like to play a part in making sure AI is rolled out responsibly so we can take advantage of all the benefits, but also set up guardrails so it doesn’t hurt creators — and, by the way, society.
I would love to continue our work in making the business side of music flow more smoothly. The sign of success, in 10 years, is that no one’s even talking about transparency or metadata or mistaken lineups or not knowing who wrote a song. I hope in 10 years, we’re not even talking about that because we’ve solved the problems that got us here.
How has SoundExchange changed over 20 years?
In those early years, people didn’t necessarily know who SoundExchange was. We would have money for somebody and contact them: “Just give us your name and number and bank account.” Understandably, people rarely give that up unless they get to know you. I think people know who we are now. At South by Southwest, we get a list of all the bands, we cross-reference bands, we put up fliers: “Do you know this band? Send them here. We have money for them.” If you’re commercially active in the industry and you don’t know who SoundExchange is, that’s kind of more on you than it is on us.
SoundExchange’s Fight for Fairness
Visitors are cast in silhouette at the top of stairs near the Capitol Visitors Center at the United States Capitol on Wednesday, Oct. 5, 2022 in Washington, DC.
Kent Nishimura/Los Angeles Times/Getty Images
Under its president/CEO, Michael Huppe, SoundExchange has consistently supported the American Music Fairness Act — which would, for the first time ever, impel terrestrial radio companies to pay performers and copyright holders when airing their songs.
Since U.S. Reps. Ted Deutch, D-Fla., and Darrell Issa, R-Calif., introduced the bill in June 2021, it has slowly progressed through Congress. In December 2022, the House Judiciary Committee approved the legislation. “For decades, broadcast corporations have made hundreds of billions of dollars while denying creators royalties for music played on AM/FM radio stations,” Huppe said in a statement at the time. “That’s fundamentally wrong.” In February, Sens. Marsha Blackburn, R-Tenn.; Alex Padilla, D-Calif.; Thom Tillis R-N.C.; and Dianne Feinstein, D-Calif., reintroduced the bill into the U.S. Senate.
On its website, SoundExchange summarized a key exception for small, local broadcasters: Those making less than $1.5 million in annual revenue and whose parent companies make less than $10 million annually would pay just $2 per day to rights holders so they could play any song they want over the air.
The National Association of Broadcasters, which opposes the bill, last December called the legislation an “onerous performance fee” and a “new performance tax” that would “irrevocably damage local radio.” Since the Copyright Act of 1909, broadcasters have consistently won this argument. In the 1930s, top bandleaders Fred Waring and Paul Whiteman formed an advocacy group called the National Association of Performing Arts; in the late 1980s, Frank Sinatra wrote letters to fellow pop stars to build a unified artist coalition; and in the 1990s, Congress passed laws forcing digital services to pay royalties and exempted over-the-air broadcasters from doing the same.
In a December 2022 Billboard op-ed, Huppe countered the NAB: “Corporate broadcasters argue that a ‘mutually beneficial relationship’ exists between AM/FM radio and music creators,” he wrote. “Yet their actions belie that claim, as they spend millions to fight this legislation and avoid sharing the billions of dollars they make in advertising from music.”
This story originally appeared in the Aug. 26, 2023, issue of Billboard.
A new social action platform, ShowUp, wants to make it easy for artists to integrate activism into album releases, touring strategies and other components of their work.
Launching Monday (Aug. 28), ShowUp connects artists with organizations supporting the causes they care about in order to create, support and scale activism in the music industry. The platform is currently linked with more than 300 hand-selected nonprofit organizations across climate justice, social justice, women’s rights, LGBTQ activism and more. (Using a broader search, users can access more than 1.7 million international organizations.)
ShowUp will be activated by artists as the demand for projects that incorporate activism grows within the industry and among fans. This connection to artists is being facilitated by ShowUp’s partners at launch: ADA Worldwide, Downtown, EMPIRE, The Orchard and Symphonic Distribution.
“Ultimately, ShowUp is an artist services tool, and collectively our partners act as a broadcast point for us to over 100,000 artists and growing,” says ShowUp co-founder/CEO Mat Hall. “ShowUp provides timely and forward-thinking, actionable information and tools to our partners to inform and activate artists.”
Hall continues, “How can artists help our neighbors in Maui? What local organizations can artists support during Hispanic Heritage Month? How can an artist support women’s reproductive health in Mississippi? The teams and leaders we work with daily at our partners help us identify artists across their roster interested in this work and help shape the campaigns we create.”
ShowUp also makes it possible for qualifying artists to select an organization to dedicate a portion of their royalties to via a new release or catalog track. Admin for this function happens seamlessly through existing split-share technology on each partner’s backend.
ShowUp will also provide artists with data regarding who gave what, where and when so that artist teams can identify the activism-oriented segments of their fanbases.
“Our goal isn’t to turn every artist into an activist,” says Hall. “This work isn’t for everyone. However, we do want to make sure that any artist practicing activism, or who may be inclined to do so, has the tools and support so that, when they decide to speak out about what’s important to them, their message reaches the broadest possible audience and drives the greatest financial impact possible to the communities and concerns they are supporting.”
Hall adds that this goal makes label and distribution partners essential to ShowUp’s work.
“Providing a scalable platform for artists to raise awareness and engagement while delivering impactful, measurable results for causes they support enhances our value proposition in meaningful ways,” The Orchard president/COO Colleen Theis adds in a press release. “We are proud to partner with ShowUp to make advocacy and fundraising integral components of The Orchard’s client offering.”
“We all know ‘why’ this work is imperative, but many of us get lost at ‘what’ and ‘how,’” added ADA Worldwide president Cat Kreidich. “ShowUp helps answer these questions, and has been a valuable and practical starting point for our artists and teams as we all consider our potential for impact.”
Added Downtown Music Holdings chief commercial officer Tracy Maddux: “Activism is becoming an increasingly important part of how creators interact with their audience and the world around them. ShowUp provides them a platform to do this authentically and effectively and Downtown is a proud partner in helping make their voices heard.”
“Integrating the ShowUp platform allows our artists to seamlessly support the things that matter to them,” said EMPIRE chief product officer Stephen White. “When artists make these commitments, our artist teams have an incredibly powerful new marketing tool that not only drives advocacy and fundraising, but new channels of fan and streaming engagement. Everyone benefits.”
Live music companies’ stocks fell an average of 4.4% on this week’s Billboard Global Music Index despite their optimism about sustained consumer spending and healthy revenue and ticket sales in the second half of the year. While Live Nation shares rose 0.5% to $84.79, the other promoters and ticketing companies in the index had down weeks: Madison Square Garden Entertainment fell 2.7%, CTS Eventim dropped 5.7% and Sphere Entertainment Co. plunged 9.6%.
Sphere Entertainment shares have gained over 19% since the company turned on the external display on its state-of-the-art Las Vegas venue and showcased the potential inside the structure on July 5. The company’s second quarter results, released Tuesday, showed revenue of $129.1 million — with the Sphere contributing just $700,000 and the remainder coming from MSG Networks. Sphere’s share price rose nearly 8% to $39.58 following Tuesday’s earnings results but fell nearly 15% over the next three days. The $2.3-billion Sphere will open on Sept. 29 with a 25-date residency by U2.
iHeartMedia shares rose 6.6% for the week to close at $3.56 on Friday (Aug. 25), making the radio giant the week’s greatest gainer on the Billboard Global Music Index. However, radio companies’ struggle with weak national advertising has hurt their share prices overall in 2023. Year to date through Friday, iHeartMedia was down 41.9% and Cumulus Media had lost 41.9%. Audacy, troubled by debt on top of the soft advertising market, was de-listed by the New York Stock Exchange on May 16 and currently trades over the counter at 75 cents per share despite a reverse stock split on June 30 raising the price from 7 cents to $2.13. Audacy was removed from the Billboard Global Music Index following the de-listing.
Overall, the 21-stock Billboard Global Music Index was flat this week at 1,298.80. Ten stocks finished the week in positive territory, ten stocks lost ground and one stock, Round Hill Music Royalty Fund, was unchanged. Record labels and music publishers were the top performing sector with an average gain of 1.7% and only one company, Universal Music Group (down 0.7%), finished in negative territory. Streaming companies and radio companies suffered average weekly losses of 1.3% and 1.7%, respectively.
Year-to-date, the index has increased 11.2%, even as it’s now on its fifth straight week without a gain.
Stocks in general performed better than music stocks. In the United States, the S&P 500 gained 0.8% and the tech-heavy Nasdaq composite gained 2.3%. In the United Kingdom, the FTSE gained 1%. South Korea’s KOSPI composite index gained 0.6%.
The week’s biggest loser, streaming company Anghami, fell 17.5% to 94 cents per share. The stock traded below $1 per share from Wednesday to Friday, marking the first time since July 18 the stock has dropped below $1. On Monday, Anghami announced the sale of a convertible note worth $5 million to SRMG Ventures, a venture arm of Saudi Research and Media Group. The company plans to use the proceeds for working capital, growth and other corporate purposes.
How long will consumers keep spending $200 on concert tickets, $15 on a cocktail at the venue (and God knows what for parking) and $11 on a music subscription? Judging from recent comments by some executives, people may be dealing with inflation, but they will still pay to be entertained.
“After another quarter of record-breaking [gross order value], it is clear consumers continue to prioritize live events experiences,” said Vivid Seats CEO Stan Chia on the company’s Aug. 8 earnings call.
Investors, though, seem worried about the potential effects of millions of American student loan borrowers resuming payments this fall after years of pandemic-era forbearance. In over three years, the forbearance on student loan debt totaled about $185 billion that was spent elsewhere or saved, according to an estimate by Goldman Sachs. Asked by an analyst about the possibility that loan payments will put a crimp in concert spending, Live Nation president/CFO Joe Berchtold said the company doesn’t expect a problem. Live Nation’s analysis is that the positive impact of fans returning to live events after the pandemic “is about 10 times the impact of any potential headwind coming from the student loan payments needing to get made,” Berchtold said during the company’s July 27 earnings call.
Chia echoed Bechtold’s optimism. Vivid Seats sees “resiliency” in consumer demand and strong trends for live music, he said. To that point, Vivid Seats increased its guidance for 2023 for the second time this year and now expects marketplace gross order value (GOV) of $3.4 billion to $3.6 billion and revenues from $630 million to $650 million.
What’s more, Live Nation expects people won’t be shy about opening their wallets. Full-year concerts margin will increase in 2023 thanks to an “increase [in] the per-fan profitability” from on-site spending — things such as food and drink — and “containing to focus on the costs,” said Berchtold. Price-conscious consumers “are continuing to spend strongly,” he said, and Live Nation is seeing an increase in both the number of fans per show and per-head spending.
Eventbrite, which increased the mid-point of its 2023 revenue guidance from $323.5 million to $325 million, is finding people are still eager to do things in the real world after COVID-19 lockdowns moved much of their lives online. In an Aug. 3 earnings call, CEO Julia Hartz said the company’s improved outlook comes from “strong demand signals across the board, particularly for categories like music, film and media, food and drink, nightlife, performing and visual arts.” What’s more, Eventbrite is seeing “people really want to get out and connect with one another,” she added: “Singles and dating events are 50% up year over year. Independent singer-songwriter-hosted events were up 60%.”
German promoter CTS Eventim expects moderate growth in internet ticket volume and live entertainment revenue this year. And while CTS believes its future is clouded by unquantifiable effects of geopolitical security uncertainty, persistently high inflation and a potential economic stagnation or recession, the company said in its mid-year earnings report that “earnings figures should improve substantially compared with 2022.”
Consumer spending on music subscriptions also appears to be strong going into 2024. Spotify, which raised the price of its individual plan by $1 per month in the United States in July, expects to have 224 million subscribers by the end of September, after adding 15 million in the first half of the year. Its third quarter revenue guidance of 3.3 billion euros ($3.56 billion) would mark a nearly 9% gain from the prior-year period, although analysts surveyed by StreetAccount expected guidance of 3.4 billion euros ($3.67 billion). And its gross margin guidance of 26% would be a marked improvement from 25.2% and 24.1% in the first and second quarters, respectively.
While consumer spending continues unabated, brands’ spending on advertising — an important revenue stream for labels and publishers — is a different story. A soft advertising market has hurt everything from radio revenues to online advertising (though Live Nation’s advertising and sponsorship revenue has rebounded nicely from the pandemic and has seen no slowdown, according to Berchtold). iHeartMedia expects third-quarter revenue, excluding the impact of political advertising, to decline in the low-single digits, as July revenue was down about 5% year over year.
But radio advertising could rebound in the second half of the year, according to B Riley Securities analyst Daniel Day, and Cumulus Media’s better-than-expected second quarter earnings results were a positive sign. While iHeartMedia investors weren’t enthusiastic about the company’s second quarter earnings — its share price fell 17% the day earnings were announced and dropped another 6% through Thursday — the company remains optimistic. “While there was some softness in our larger advertisers, in Q2 our smaller advertisers remained resilient,” said iHeartMedia CEO Bob Pittman during the Aug. 8 earnings call. “And we saw a gradual improvement from our larger advertisers as well, which leads us to believe that we’ll continue to see improvements in the business through the remainder of the year.”