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Subscription gains and a string of acquisitions helped Reservoir Media’s fiscal year revenue grow 18% to $144.9 million, beating the company’s guidance from February of $140 million to $142 million, the company announced Thursday (May 30). Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the period ended March 31 climbed 20% to $55.6 million, topping guidance of $53 million to $55 million.
Organic growth, which strips out the impact of acquisitions made during the year, was 14% for the full year. Among the company’s catalog purchases during the fiscal year were four members of R&B group The Spinners, Latin music artist Rudy Perez, hip-hop producer Mannie Fresh and 2Pac collaborator Big D Evans. Reservoir also invested in Egyptian company RE Media and Saudi Arabian hip-hop label Mashrex.
Among Reservoir Media’s signings during the year were songwriter Steph Carter, who shares a co-writing credit on Sabrina Carpenter’s “Espresso,” and Rob Ragosta, co-writer of “Need a Favor” by Jelly Roll. The company also landed publishing deals with rock band Kings of Leon and rock legend Joe Walsh.
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The company said it expects fiscal 2025 revenue to be between $148 million and $152 million, which would reflect 3.5% growth at the midpoint. Adjusted EBITDA is expected to be $58 million to $61 million, which implies 7.0% growth at the midpoint.
“Our financial guidance reflects our confidence in growth driving organic growth with our value enhancement efforts and capitalizing on the projected growth of the music industry,” CEO Golnar Khosrowshahi said during Thursday’s earnings call. Some of that organic growth will come from additional price increases at music subscription services, she added: “Looking forward, we are poised to benefit from what we believe will become a regular cadence of price increases across streaming platforms.”
Shares of Reservoir Media jumped 15.5% to $9.00 Thursday morning before falling to $8.26, up 6.1%, by late afternoon.
Elsewhere, full-year publishing revenue at the company rose 15% to $96.2 million. Digital revenue grew 17% to $51.6 million and performance royalties jumped 36% to $22.8 million. CFO Jim Heindlmeyer said the “improvement is largely derived from higher royalty rates and price increases at multiple music streaming services, as well as the expansion of our catalog through M&A.”
Recorded music revenue grew 22% to $42.4 million in the full fiscal year largely due to price increases at subscription services and the timing of Reservoir Media’s release schedule, Heindlmeyer said. While physical revenue climbed 49% to $8.9 million, digital revenue rose 17% to $26.9 million and accounted for the majority of recorded music’s $7.6 million in revenue growth.
Fiscal fourth-quarter revenue grew 12% to $39.1 million. Operating income grew just 2%, however, to $8.8 million, while adjusted EBITDA improved 6% to $16.0 million.
Reservoir’s pipeline of potential acquisitions dropped by 50% to $1 billion, down from $2 billion at the end of December. Khosrowshahi downplayed the change, however, noting the company is seeing “ample deal flow” despite “a couple of larger deals” having moved. Liquidity at the end of the year of $132.3 million from $18.1 million of cash and $114.2 million available in a revolving credit facility “gives us the capital to fund our strategic objectives,” said Heindlmeyer. Added Khosrowshahi, “I’m generally quite optimistic about what that pipeline looks like.”
Megan Thee Stallion is firing back at a lawsuit that claims the superstar forced a cameraman to watch her have sex with a woman inside a moving vehicle, calling them “false and fabricated” allegations filed by a “con artist.”
In a scathing first response to the April accusations, attorneys for Megan (Megan Pete) said that Emilio Garcia’s lawsuit “consists almost entirely of falsehoods, misrepresentations of fact, and outlandish claims that have no basis in fact or law and no merit.”
“Plaintiff is a con artist who is manipulating the judicial system to act as his publicist and bullhorn in a desperate attempt to boost his failed singing career while trying to tear down the successful career of Megan Thee Stallion,” wrote the star’s attorney, Alex Spiro.
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In his lawsuit last month, photographer Emilio Garcia accused the superstar and Roc Nation of subjecting him to a hostile work environment due to the alleged car-sex incident, which he says took place while on tour in Spain in 2022. Garcia claims the incident left him “embarrassed, mortified and offended,” and that Megan and Roc Nation later retaliated against him by reducing his work and eventually terminating him.
But in Thursday’s response, Spiro painted a very different picture — of a former contractor who was terminated after he repeatedly “falsified his invoices and overcharged Ms. Pete for services he never completed.”
“Angry at the loss of this high-profile gig and his exile from the inner circles of stardom, plaintiff filed a factually and legally frivolous Complaint,” Megan’s attorneys wrote. “Plaintiff took a run of the mill wage and labor dispute and trumped up his frivolous claims with sensationalist false allegations of sex, debauchery, and workplace harassment for the sole purpose of creating a media firestorm to tarnish the career and reputation of Ms. Pete.”
Beyond rebutting the lawsuit’s allegations, Megan’s attorneys also argued Thursday that the case was filed in entirely the wrong place. In a motion seeking to have the case moved to federal court, they argue the case has “absolutely no connection to California state court” — citing the fact that Garcia lives in Texas and Megan lives in Florida.
“Plaintiff was more concerned with staging his lawsuit in an improper forum than accurately pleading the facts underlying his claims,” Megan’s lawyers wrote.
Attorneys for both sides did not immediately return requests for comment on Thursday.
Madonna is facing another class action lawsuit over delayed concerts on her Celebration Tour, this time from a ticket buyer who also claims she forced fans to watch “pornography” during the show.
Like several previous cases, the new lawsuit claims that the Queen of Pop violated false advertising laws by taking the stage more than an hour later than expected, leaving fans to wait in an “uncomfortably hot” arena and get home later than expected.
But the new case, filed in Los Angeles on Wednesday (May 29) by a fan named Justen Lipeles, also includes a bold new accusation: that Madonna should have warned fans that the show would include “topless women” who were “engaging in simulated sexual acts.”
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“Forcing consumers to wait hours in hot, uncomfortable arenas and subjecting them to pornography without warning is demonstrative of Madonna’s flippant disrespect for her fans,” lawyers for the aggrieved fan wrote. “Plaintiff felt like he was watching a pornographic film being made.”
Madonna and promotor Live Nation are already facing similar cases in New York and Washington, D.C., over claims that late starts to her Celebration concerts broke the law. Both were filed as class actions, seeking to represent potentially thousands of other fans who also faced the alleged delays.
The New York case, focused on December shows at the Barclay Center, made headlines because it claimed the fans “had to get up early to go to work” the next day — a claim Madonna’s lawyers have since argued is not the kind of “cognizable injury” that can form the basis for a lawsuit. The D.C. case, targeting tour dates at the District’s Capital One Arena, added claims that the arena was “uncomfortably hot” and that she had lip-synched portions of the show.
In his new lawsuit, Lipeles echoed all of those claims about Madonna’s March 7 performance at the Kia Forum. He claims he paid more than $500 per ticket for a show that was supposed to start at 8:30 p.m. but that Madonna didn’t take the stage until after 10 p.m., leaving fans to wait in an arena that was overheated due to “Madonna’s requirement that venues not turn on air conditioning.”
“Plaintiff and members of the class were profusely sweating and became physically ill as a result of the heat,” his lawyers write. “When fans complained about the heat, Madonna unreasonably told them to take their clothes off.”
When the show finally did start, Lipeles claims, “it was apparent to plaintiff that Madonna was lip synching” during “most of the performance.” And he says he was given no warning that “there would be nudity and pornography on stage during Madonna’s concerts.”
In technical terms, the lawsuit accuses Madonna of breaching her contract with ticket buyers, negligent misrepresentation, false advertising and several other forms of legal wrongdoing under California law.
You’ve most likely heard by now the news that Spotify, through a surprising bundling maneuver, has unilaterally decided to give songwriters a substantial pay cut. As part of our ongoing efforts to provide the songwriting community with data and details related to this incredibly important income stream — which at this point must feel like a continual moving target — we have reviewed and analyzed Spotify’s reporting for the first month where they instituted this change (March), and compared it with the month prior (February).
What Is Happening?: Spotify has decided to bundle audiobooks in its premium tier offerings (affecting 85% of total Spotify subscribers). By doing so, they are now claiming that nearly half of total subscriber revenue is attributed to audiobooks, reducing reported service revenue to music to 52%. This results in a substantial decrease in payments to songwriters, which we explain below.
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In March, total mechanical revenue paid by Spotify was reduced by 33.9% (from $36.7 million in February to $24.3 million). This is where the reported yearly $150 million reduction comes from — an estimate built on Spotify’s prior-year performance and payment reports to the Mechanical Licensing Collective. The twist here is that Spotify reported that performance royalties increased 18.75% from February to March (from $31.2 million to $37 million).
Spotify’s performance royalties always fluctuate from month to month (by as much as +/- 10%) but the magnitude of this change is unusual (and unexplained). Was March’s unexpected growth in Spotify’s performance royalties an anomaly, or a precursor to a new level of payments for that royalty? Due to the structure of the mechanical royalty payment formula, an increase in performance payments results in a decrease in mechanical payments.
For many songwriters who have agreements with music publishers, performance royalties are beneficial because half are paid directly to the songwriter and not through their publishing agreement, whereas mechanical royalties run through the publisher.
So, while mechanical payments in March were reduced by 33.9%, the total reduction in payments to songwriters was 9.75% ($67.9 million to $61.3 million), which on an annual basis comes out to $80 million.
Historical Performance vs. Mechanical Payments for CRB III: This harkens back to prior reporting (and confusion) a couple of months ago when the streaming services reported an increase in performance revenue over the prior five-year period (2018-2022). While we cannot explain exactly why performance revenue changed in this historic accounting period, we can presume that it had something to do with deals that were being negotiated during that time and were finalized and took retroactive effect by the time the final remanded reporting was provided and required by the final determination of the appeal.
If Spotify Cut Revenue in Half, Why Aren’t We Seeing a 50% Reduction? The payment structure has various protections so that Spotify and other similar digital service providers cannot unilaterally adjust their prices to the detriment of songwriters, as Spotify has done here. One of those protections is an obligation to pay songwriters a portion of what they pay record labels, to the extent that that amount is greater than the service revenue percentage. This is called the “TCC Prong,” or “Total Content Cost Prong.” Because Spotify’s deals with the record labels apparently do not give them the flexibility to choose what they can bundle into offerings and make price reductions, what they pay the labels has not changed. In fact, in March, that percentage increased by 5.86%, or $13.1 million.
So is the Total Yearly Reduction 150M or 80M? This will most likely land somewhere in the middle, as it depends on what Spotify reports paying on performance (i.e., if March’s performance royalty growth was an anomaly) and what it pays to the labels. Over the course of the next several months, if Spotify does not change its position, we will be monitoring and reporting trends in percentage and actual results as part of our ongoing effort to provide the songwriting community with actual and up-to-date information related to their royalties. You can also check the current going rate of publishing revenue yourself at any time with our royalty calculator, updated monthly.
Spotify spent five years litigating against publishers and songwriters to establish rates for 2018-2022. The result was a positive increase but a major delay in payment. In total, the mechanical increase from all digital service providers came out to about $250 million over that period. Of that, Spotify contributed $98.6 million more, and that’s just from its restated 2021-2022 period. Songwriters did not receive the eventual rate increase until earlier this year.
When Spotify, the NMPA and NSAI reached an agreement for 2023-2027, we thought the fight was over. We were wrong.
At the end of March, Spotify reported yearly revenue of $15 billion. This audiobook bundling maneuver, which affects 100% of all musical content on its service, reflects less than a 1% cost savings for the tech behemoth. And for a limited time, at that, since the settlement referenced above ends in 2027. This begs the question to Spotify analysts and shareholders alike as to whether it is worth it — and leads to the obvious answer: “It is not.” Spotify should reverse course immediately and find 1% savings somewhere else that doesn’t work to decimate the revenue of millions of American songwriters, the lifeblood of our treasured American music industry.
Jordan Bromley leads Manatt Entertainment, a legal and consulting firm providing services to the entertainment industry for over 45 years. He sits on the Board of Directors for the Music Artists Coalition, an artist first advocacy coalition established in 2019.
Trent Smith is a financial analyst at Manatt Entertainment with extensive experience in the streaming economy.
On May 24, Sexyy Red and Drake teamed up on the track “U My Everything.” And in a surprise — Drake’s beef with Kendrick Lamar had seemingly ended — the track samples “BBL Drizzy” (originally created using AI by King Willonius, then remixed by Metro Boomin) during the Toronto rapper’s verse.
It’s another unexpected twist for what many are calling the first-ever AI-generated hit, “BBL Drizzy.” Though Metro Boomin’s remix went viral, his version never appeared on streaming services. “U My Everything” does, making it the first time an AI-generated sample has appeared on an official release — and posing new legal questions in the process. Most importantly: Does an artist need to clear a song with an AI-generated sample?
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“This sample is very, very novel,” says Donald Woodard, a partner at the Atlanta-based music law firm Carter Woodard. “There’s nothing like it.” Woodard became the legal representative for Willonius, the comedian and AI enthusiast who generated the original “BBL Drizzy,” after the track went viral and has been helping Willonius navigate the complicated, fast-moving business of viral music. Woodard says music publishers have already expressed interest in signing Willonius for his track, but so far, the comedian/creator is still only exploring the possibility.
Willonius told Billboard that it was “very important” to him to hire the right lawyer as his opportunities mounted. “I wanted a lawyer that understood the landscape and understood how historic this moment is,” he says. “I’ve talked to lawyers who didn’t really understand AI, but I mean, all of us are figuring it out right now.”
Working off recent guidance from the U.S. Copyright Office, Woodard says that the master recording of “BBL Drizzy” is considered “public domain,” meaning anyone can use it royalty-free and it is not protected by copyright, since Willonius created the master using AI music generator Udio. But because Willonius did write the lyrics to “BBL Drizzy,” copyright law says he should be credited and paid for the “U My Everything” sample on the publishing side. “We are focused on the human portion that we can control,” says Woodard. “You only need to clear the human side of it, which is the publishing.”
In hip-hop, it is customary to split the publishing ownership and royalties 50/50: One half is expected to go to the producer, the other is for the lyricists (who are also often the artists, too). “U My Everything” was produced by Tay Keith, Luh Ron, and Jake Fridkis, so it is likely that those three producers split that half of publishing in some fashion. The other half is what Willonius could be eligible for, along with other lyricists Drake and Sexyy Red. Woodard says the splits were solidified “post-release” on Tuesday, May 28, but declined to specify what percentage split Willonius will take home of the publishing. “I will say though,” Woodard says, cracking a smile. “He’s happy.”
Upon the release of “U My Everything,” Willonius was not listed as a songwriter on Spotify or Genius, both of which list detailed credits but can contain errors. It turns out the reason for the omission was simple: the deal wasn’t done yet. “We hammered out this deal in the 24th hour,” jokes Woodard, who adds that he was unaware that “U My Everything” sampled “BBL Drizzy” until the day of its release. “That’s just how it goes sometimes.”
It is relatively common for sample clearance negotiations to drag on long after the release of songs. Some rare cases, like Travis Scott’s epic “Sicko Mode,” which credits about 30 writers due to a myriad of samples, can take years. Willonius tells Billboard when he got the news about the “U My Everything” release, he was “about to enter a meditation retreat” in Chicago and let his lawyer “handle the business.”
This sample clearance process poses another question: should Metro Boomin be credited, too? According to Metro’s lawyer, Uwonda Carter, who is also a partner at Carter Woodard, the simple answer is no. She adds that Metro is not pursuing any ownership or royalties for “U My Everything.”
“Somehow people attach Metro to the original version of ‘BBL Drizzy,’ but he didn’t create it,” Carter says. “As long as [Drake and Sexyy Red] are only using the original version [of “BBL Drizzy”], that’s the only thing that needs to be cleared,” she continues, adding that Metro is not the type of creative “who encroaches upon work that someone else does.”
When Metro’s remix dropped on May 5, Carter says she spoke with the producer, his manager and his label, Republic Records, to discuss how they could officially release the song and capitalize on its grassroots success, but then they ultimately decided against doing a proper release. “Interestingly, the label’s position was if [Metro’s] going to exploit this song, put it up on DSPs, it’s going to need to be cleared, but nobody knew what that clearance would look like because it was obviously AI.”
She adds, “Metro decided that he wasn’t going to exploit the record because trying to clear it was going to be the Wild, Wild West.” In the end, however, the release of “U My Everything” still threw Carter Woodard into that copyright wilderness, forcing them to find a solution for their other client, Willonius.
In the future, the two lawyers predict that AI could make their producer clients’ jobs a lot easier, now that there is a precedent for getting AI-generated masters royalty-free. “It’ll be cheaper,” says Carter. “Yes, cleaner and cheaper,” says Woodard.
Carter does acknowledge that while AI sampling could help some producers with licensing woes, it could hurt others, particularly the “relatively new” phenomenon of “loop producers.” “I don’t want to minimize what they do,” she says, “but I think they have the most to be concerned about [with AI].” Carter notes that using a producer’s loops can cost 5% to 10% from the producer’s side of publishing or more. “I think that, at least in the near future, producers will start using AI sampling and AI-generated records so they could potentially bypass the loop producers.”
Songwriter-turned-publishing executive Evan Bogart previously told Billboard he feels AI could never replace “nostalgic” samples (like “First Class” by Jack Harlow’s use of “Glamorous” by Fergie or “Big Energy” by Latto’s “Fantasy” by Mariah Carey), where the old song imbues the new one with greater meaning. But he said he could foresee it being a digital alternative to crate digging for obscure samples to chop up and manipulate beyond recognition.
Though the “U My Everything” complications are over — and set a new precedent for the nascent field of AI sampling in the process — the legal complications with “BBL Drizzy” will continue for Woodard and his client. Now, they are trying to get the original song back on Spotify after it was flagged for takedown. “Some guy in Australia went in and said that he made it, not me,” says Willonius. A representative for Spotify confirms to Billboard that the takedown of “BBL Drizzy” was due to a copyright claim. “He said he made that song and put it on SoundCloud 12 years ago, and I’m like, ‘How was that possible? Nobody was even saying [BBL] 12 years ago,’” Willonius says. (Udio has previously confirmed to Billboard that its backend data shows Willonius made the song on its platform).
“I’m in conversations with them to try to resolve the matter,” says Woodard, but “unfortunately, the process to deal with these sorts of issues is not easy. Spotify requires the parties to reach a resolution and inform Spotify once this has happened.”
Though there is precedent for other “public domain” music being disqualified from earning royalties, so far, given how new this all is, there is no Spotify policy that would bar an AI-generated song from earning royalties. These songs are also allowed to stay up on the platform as long as the AI songs do not conflict with Spotify’s platform rules, says a representative from Spotify.
Despite the challenges “BBL Drizzy” has posed, Woodard says it’s remarkable, after 25 years in practice as a music attorney, that he is part of setting a precedent for something so new. “The law is still being developed and the guidelines are still being developed,” Woodard says. “It’s exciting that our firm is involved in the conversation, but we are learning as we go.”
This story is included in Billboard‘s new music technology newsletter, Machine Learnings. To subscribe to this and other Billboard newsletters, click here.
Artificial Intelligence is one of the buzziest — and most rapidly changing — areas of the music business today. A year after the fake-Drake song signaled the technology’s potential applications (and dangers), industry lobbyists on Capitol Hill, like RIAA’s Tom Clees, are working to create guard rails to protect musicians — and maybe even get them paid.
Meanwhile, entrepreneurs like Soundful’s Diaa El All and BandLab’s Meng Ru Kuok (who oversees the platform as founder and CEO of its parent company, Caldecott Music Group) are showing naysayers that AI can enhance human creativity rather than just replacing it. Technology and policy experts alike have promoted the use of ethical training data and partnered with groups like Fairly Trained and the Human Artistry Coalition to set a positive example for other entrants into the AI realm.
What is your biggest career moment with AI?
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Diaa El All: I’m proud of starting our product Soundful Collabs. We found a way to do it with the artists’ participation in an ethical way and that we’re not infringing on any of their actual copyrighted music. With Collabs, we make custom AI models that understand someone’s production techniques and allow fans to create beats inspired by those techniques.
Meng Ru Kuok: Being the first creation platform to support the Human Artistry Coalition was a meaningful one. We put our necks out there as a tech company where people would expect us to actually be against regulation of AI. We don’t think of ourselves as a tech company. We’re a music company that represents and helps creators. Protecting them in the future is so important to us.
Tom Clees: I’ve been extremely proud to see that our ideas are coming through in legislation like the No AI Fraud Act in the House [and] the No Fakes Act in the Senate.
The term “AI” represents all kinds of products and companies. What do you consider the biggest misconception around the technology?
Clees: There are so many people who work on these issues on Capitol Hill who have only ever been told that it’s impossible to train these AI platforms and do it while respecting copyright and doing it fairly, or that it couldn’t ever work at scale. (To El All and Kuok.) A lot of them don’t know enough about what you guys are doing in AI. We need to get [you both] to Washington now.
Kuok: One of the misconceptions that I educate [others about] the most, which is counterintuitive to the AI conversation, is that AI is the only way to empower people. AI is going to have a fundamental impact, but we’re taking for granted that people have access to laptops, to studio equipment, to afford guitars — but most places in the world, that isn’t the case. There are billions of people who still don’t have access to making music.
El All: A lot of companies say, “It can’t be done that way.” But there is a way to make technological advancement while protecting the artists’ rights. Meng has done it, we’ve done it, there’s a bunch of other platforms who have, too. AI is a solution, but not for everything. It’s supposed to be the human plus the technology that equals the outcome. We’re here to augment human creativity and give you another tool for your toolbox.
What predictions do you have for the future of AI and music?
Clees: I see a world where so many more people are becoming creators. They are empowered by the technologies that you guys have created. I see the relationship between the artist and fan becoming so much more collaborative.
Kuok: I’m very optimistic that everything’s going to be OK, despite obviously the need for daily pessimism to [inspire the] push for the right regulation and policy around AI. I do believe that there’s going to be even better music made in the future because you’re empowering people who didn’t necessarily have some functionality or tools. In a world where there’s so much distribution and so much content, it enhances the need for differentiation more, so that people will actually stand up and rise to the top or get even better at what they do. It’s a more competitive environment, which is scary … but I think you’re going to see successful musicians from every corner of the world.
El All: I predict that AI tools will help bring fans closer to the artists and producers they look up to. It will give accessibility to more people to be creative. If we give them access to more tools like Soundful and BandLab and protect them also, we could create a completely new creative generation.
This story will appear in the June 1, 2024, issue of Billboard.
When Republic Records offered Tyler Arnold a full-time assistant role five months into his six-month internship with the label in 2014, taking it was “a no-brainer” — even if it meant dropping out of Northeastern University one year before graduating. “This is my dream,” Arnold recalls thinking. “I have to go for it.”
Arnold quickly became an A&R executive extraordinaire: His first signing to the label, in 2015, was a young Post Malone (“I signed him on my 23rd birthday,” Arnold recalls); his second was superproducer Metro Boomin in late 2016. By 2020, Arnold was Republic’s executive vp of A&R. “I really loved discovering music in high school and college, finding new artists and seeing them grow,” he says. “I also wanted to work really closely with the artists, and I felt like A&R, if you do it right, there’s such a personal connection that you can build.”
Today, the fast-rising executive is applying that same mentality as president of Mercury Records, the Republic division that relaunched in April 2022 with major names like Post and Noah Kahan and strategic partnerships with Big Loud (Morgan Wallen) and Imperial Music (Bo Burnham). And though Arnold says he wasn’t sure he was ready to head a label, “I wanted to grow as an executive.” (Along with Republic co-founders Monte and Avery Lipman, Arnold credits Big Loud partner/CEO Seth England for encouraging him to take his current role.)
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Given Republic’s existing infrastructure, Arnold, 31, says he didn’t have to worry as much about key departments like radio, commerce and international. As a result, he and GM Ben Adelson (a fellow Republic vet) had runway to try something new. “I asked a lot of my artists what they felt was missing, or I asked managers who had artists at other labels, and tried to create solutions to what the modern record label might look like,” Arnold says. “We really dove into creating a label that is fully led by A&R, creative and marketing.”
Tyler Arnold
Michael Tyrone Delaney
In just two years, Mercury has become an undeniable force. In its first year alone, the label scored a major success with Kahan’s Stick Season; the album’s extended deluxe version, Stick Season (Forever), featured artists including Kacey Musgraves, Hozier and Post. By the end of 2023, Kahan had secured a best new artist Grammy nomination. Meanwhile, Wallen’s 2023 album, One Thing at a Time, finished as the No. 1 year-end Billboard 200 album; in March, Big Loud announced a multiyear distribution deal with Mercury Records/Republic for all releases, including artists like HARDY and ERNEST.
As for Post, the star has already released a pair of projects on Mercury (2022’s twelve carat toothache and 2023’s Austin) and is teasing a third on the way — a country album. In April, he made his Stagecoach debut, performing a set of country covers, and the following night, he joined headliner Wallen to unveil their much-anticipated duet, “I Had Some Help”; the song debuted at No. 1 on the Billboard Hot 100 upon its May release, marking Post’s sixth topper on the chart (and Wallen’s second). (The single is the latest in an impressive 2024 collaborative run for Post, who has already appeared on Beyoncé’s Cowboy Carter and Taylor Swift’s The Tortured Poets Department; the latter’s “Fortnight” scored him another Hot 100 No. 1.) “It has been a dream of mine for Post and Morgan to work together for years,” Arnold says, “and to see that come to fruition, it was truly a goose bumps moment.
“When we make a commitment to an artist, we’re hoping we work with them for the next 10 to 15 years and beyond,” he continues. “That’s the goal for us. It’s not knocking off hit songs. It’s building real careers.”
It’s also building lifelong bonds: Post welcomed his daughter two years ago, and Arnold recently became a first-time father. “We swap photos and videos and we definitely talk about it,” Arnold says. “My relationship with [Post] is one of the most special things I’ve gotten out of my career, just because of how far we’ve come and how close we still are — and continue to get. I think it’s rare to have that continuity.
“At the end of the day, I’m still an A&R,” he adds. “It reflects how we want to build Mercury. We’ve been lucky to work with some of the biggest and most influential artists over the last decade across all genres, and we want to extend that. [This role] allows me to still be a kid in a candy store, but also have more autonomy.”
This story will appear in the June 1, 2024, issue of Billboard.
Spotify is facing a class action lawsuit over its recent decision to kill its short-lived “Car Thing” device, filed by angry consumers who say the streaming company’s move left them “with nothing more than a paperweight that cost between $50 and $100.”
The case came just days after Spotify announced that the Car Thing – a device launched in 2021 for playing music in a car but discontinued just a year later – would be rendered fully non-usable in December. Spotify has offered no refunds or trade-in options.
In a complaint filed Tuesday in Manhattan federal court, attorneys for the jilted customers accused Spotify violating state and federal laws by essentially of duping their clients into buying a “useless product.”
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“Had plaintiffs and other members of the class known that Spotify manufactured the Car Thing with the ability to brick the product at any point after its introduction to the marketplace and in Spotify’s total discretion, they would not have bought a Car Thing, or would have paid substantially less for them,” the lawsuit reads.
The lawsuit was filed by three Car Thing buyers — Hamza Mazumder, Anthony Bracarello and Luke Martin – but aims to represent thousands of other consumers who experienced “the forced obsolescence of their purchase.”
Spotify announced the Car Thing in April 2021, saying it would provide users with a “seamless and personalized in-car listening experience.” The product – a touch screen with a physical dial that still requires access to a smartphone — rolled out February 2022 at a price point of $89.99. But just months later, Spotify said it would cease production, telling investors that they “frankly haven’t seen the volume at the higher prices that would make the current product financially viable.”
Last week, Spotify alerted users last week that it would stop supporting the devices. Then this week, the company confirmed that the move, set to take effect Dec. 9, would render the devices fully inoperable. The company told users it was “not offering any trade-in options” and urged them to consider “safely disposing of your device following local electronic waste guidelines.”
“The goal of our Car Thing exploration in the U.S. was to learn more about how people listen in the car,” Spotify said in a statement. “In July 2022, we announced we’d stop further production and now it’s time to say goodbye to the devices entirely. Users will have until December 9, 2024 until all Car Thing devices will be deactivated.”
In the new lawsuit, Spotify’s customers say they couldn’t have expected that the company would shut down the devices just a few years after they were purchased. The decision to do so “unilaterally and without recourse” has left buyers nothing more than a paperweight that cost between $50 and $100.”
“Plaintiffs and class members would not have purchased a Car Thing if they knew that Spotify would stop supporting the product within just a few months or years of purchase,” attorneys for the users write.
In technical terms, the lawsuit includes allegations that Spotify violated state consumer protection and false advertising laws in New York, Florida and Pennsylvania, as well as the federal Computer Fraud and Abuse Act and various other forms of civil wrongdoing.
A spokeswoman for Spotify did not immediately return a request for comment on the lawsuit’s allegations.
Read the entire complaint here:
After nearly a decade at Universal Music Latino, Colombian superstar J Balvin is moving to Interscope Records. Sources tell Billboard that Balvin’s much anticipated new album will be released via Interscope Capitol Miami, the newly-minted division headed by Nir Seroussi in Miami.
Balvin’s album is expected to be released some time this year, with a date still to be announced.
Balvin is the second high profile artist to move from Universal Music Latin to sister label Interscope in the past year. Last year, Karol G, who had also long been signed to Universal Music Latino, signed to Interscope Capitol, which is also home to rising regional Mexican stars Xavi and Iván Cornejo and is run by Seroussi. Now, that division has been renamed Interscope Capitol Miami after Interscope and Capitol merged earlier this year.
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Interscope Capitol declined to comment, but sources say Balvin’s project will be worked by the Interscope Capitol Miami team together with Tom March’s Capitol team.
For Balvin, it’s a full circle moment. At the beginning of his career, he was originally signed to Capitol EMI, which was acquired by Universal, triggering his shift to Universal Music Latin, under which he soared to international stardom. In 2017, Balvin’s “Mi Gente” became the first-ever Spanish song to top Spotify’s global charts and rose to No. 3 on the Billboard Hot 100, aided by a remix with Beyonce. In 2018, he hit No. 1 on the Billboard Hot 100 with “I Like It,” his bilingual collaboration with Cardi B and Bad Bunny.
It’s also a big change moment for the Colombian star, who hasn’t released an album since 2021’s José. Now, after a brief management stint as the first Latin act on Scooter Braun’s roster, he signed last year to management with Roc Nation and, after performing an acclaimed set in Coachella this year, is currently touring Europe.
Earlier this month, another Universal Music Latin artist, acclaimed Chilean singer/songwriter Mon Laferte, signed with Sony Music US Latin.
Free music streaming shouldn’t be so free, Rob Stringer, CEO of Sony Music Entertainment, suggested Wednesday during a presentation to Sony Corp. analysts and investors.
The value of paid subscription “remains incredible,” said Stringer in prepared remarks during parent company Sony’s Business Segment Meeting 2024. But recent price increases — by Spotify, Apple Music, Amazon Music, YouTube and, most recently, Pandora — have widened what Stringer called the “price gap” between free and paid streaming. Now, Sony wants streaming companies to get more from their free listeners.
“In mature markets, we hope that our partners close that gap by asking consumers using ad-supported services to additionally pay a modest fee,” said Stringer. “This would help develop this segment of the streaming business to be more than just a marketing funnel for paid subscription and still be a tremendous value for users. We have a shared interest in better monetization of free tiers. At Sony Music, we think everyone is willing to pay something for access to virtually the entire universe of music.”
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Free streaming provides an opportunity to attract paying subscribers but returns far less per listener than subscriptions. Even though Spotify has 62% more free listeners than subscribers, advertising accounted for just 10.7% of first-quarter revenue compared to 89.3% from subscriptions. Another round of price increases by Spotify this month in the U.K. and Australia portend additional price increases in the U.S. and other major markets. Further subscription price increases will widen the gap between premium and free streaming, and “even if advertising will become a better part of the story, it’s still a relatively small part of our overall revenue mix,” Spotify CEO Daniel Ek said during the April 23 earnings call.
Charging for ad-supported music would break from a long tradition of providing listeners with a free, on-demand streaming option. YouTube and Spotify are the two largest on-demand, ad-supported platforms that stream music. Amazon Music has a free tier with limited functionality. In the U.S., Pandora has about 39 million monthly active users for its ad-supported internet radio service that has less interactive capabilities than YouTube or Spotify. But paid, ad-supported streaming is common in the video world. Video on-demand services such as Hulu and Netflix offer low-price tiers with advertisements and charge higher prices to eliminate advertising altogether.
Sony Music also wants to extract more revenue from short-form video platforms such as TikTok that command huge audiences but provide relatively few royalties. “Premium-quality artistry drives the appeal of these services, with music being central to approximately 70% of videos created on them,” said Stringer. “These companies play a larger and larger role in music discovery and engagement amongst young listeners. More and more, these are primary consumption sources, and they need to be valued accordingly.”
Stringer, who does not comment during the parent company’s quarterly earnings calls, spoke and answered questions for 40 minutes about Sony Music artists, chart successes, growth opportunities and efforts in emerging markets. After highlighting Sony Music’s efforts in Latin America, India and China, he focused on the newest — and most vexing — technology on the music industry’s horizon. Artificial intelligence, he said, “represents a generational inflection point for music” and Sony Music will take “an active role” in creating a “sustainable business model” that respects the company’s rights.
But Stringer was clear that Sony Music is taking a hard line in the battle to shape AI in music. “We won’t tolerate the illicit training of AI models by reckless and unlicensed misuse of this art,” he warned. “We believe strongly that permission is the only way AI models can be trained with our content, and followed protocols of the EU AI act by sending over 700 letters to AI developers to opt our copyrights out of training.” Sony Music has also issued “over 20,000 takedowns of AI generated soundalikes over the past year,” he added, while working with legislators around the world “to shape policy and rights” on AI issues.
“With the right frameworks in place, innovation will thrive, technology, music will benefit and consumers will enjoy your experiences,” Stringer said. “We have prospered from disruptive market changes before so we are confident we can navigate this chapter successfully.”