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Pharrell Williams and producer Chad Hugo – who together formed the prolific songwriting duo The Neptunes – are now battling each other in a legal dispute over the group’s name, after Hugo accused Williams of “fraudulently” seeking sole control over the trademarks.
Before Williams was a solo star, The Neptunes produced a slew of radio hits in the early 2000s, including Nelly’s “Hot in Herre,” Snoop Dogg’s “Drop It Like It’s Hot,” Gwen Stefani’s “Hollaback Girl” and Justin Timberlake’s “Rock Your Body.” The legendary duo, who have been friends since childhood, were inducted into the Songwriters Hall of Fame in 2022.
But in a legal action filed last week at a federal tribunal, attorneys for Hugo accused Pharrell and his company of attempting to unilaterally register trademarks for the Neptunes name – a move they say violates their longstanding agreement that saw the pair split everything equally.
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“Throughout their over thirty year history, [Hugo] and Williams agreed to, and in fact, have divided all assets,” wrote Hugo’s attorney Kenneth D. Freundlich, a prominent music industry litigator. “By ignoring and excluding [Hugo] from the any and all applications filed by applicant for the mark ‘The Neptunes,’ applicant has committed fraud in securing the trademarks and acted in bad faith.”
In a statement to Billboard on Monday, a rep for Pharrell said there had been no ill-intent behind the disputed trademark filings: “Pharrell is surprised by this. We have reached out on multiple occasions to share in the ownership and administration of the trademark and will continue to make that offer. The goal here was to make sure a third party doesn’t get a hold of the trademark and to guarantee Chad and Pharrell share in ownership and administration.”
Hugo’s attorney did not immediately return a request for comment on Monday.
At issue in the dispute are three separate applications to register “The Neptunes” as a trademark – one covering the use of the name on streaming music, another for music videos and other content, and a third covering live performances. They were filed in 2022 by PW IP Holdings LLC, Pharrell’s company that also owns such registrations for his band N.E.R.D., his Miami-based Goodtime Hotel, and numerous other brand names connected to the superstar.
In his legal filings last week, Hugo’s attorneys argued that Pharrell had “knowingly and intentionally” filed those applications without required input from Hugo, even though he was “fully aware” that either Hugo or their partnership entity should have been listed as a co-owner: “Nothing, either written or oral, provided Williams or [PW IP Holdings] with the unilateral authority to register the trademarks.”
Hugo’s attorneys said they’ve “repeatedly” contacted Pharrell’s team about the problem, and that the star’s lawyers had “admitted that [Hugo] is equal co-owner of the trademarks” and promised to include him — a claim that lines up with Williams’ statement on Monday.
But the case claims that sharing never actually happened, partly because Pharrell’s company has insisted on “onerous business terms” that would deprive Hugo of proper control and compensation. The petition did not specify what exactly those “onerous” terms included.
Last week’s filings targeted only with the three recent trademark applications, but Hugo’s case could potentially expand beyond them. That’s because Pharrell’s company already successfully registered The Neptunes name as a trademark for musical sound recordings, and has another pending application to register the name for clothing and other merch.
In his filing last week, Hugo’s lawyers said that the trademark registrations covering sound recordings “and possibly others” would be subject to a future legal action aimed at having them voided.
When brothers Oscar and Jesús Flores launched the first-ever of Pa’l Norte in 2012 in Monterrey, Nuevo León — under Apodaca Group, their father Oscar Flores Elizondo‘s entertainment and promotion company — they figured it would be a one-time thing.
“We thought it would happen once, and then we’d just move on with our other projects,” Oscar says. He, along with Jesús and their sister Blanca, comprise the leadership of Apodaca alongside their dad, who founded the company in 1978 as Representaciones Artísticas Apodaca. At the time, the brothers were young executives and, as much as they liked their dad’s business, they wanted to put their own stamp on it. “My brother and I had never produced a festival when we decided to launch Pa’l Norte; fun fact, we had never even attended a festival in our lives,” Oscar says with a chuckle.
But even if it was a one-hit wonder, they wanted to give it a shot in hopes of diversifying the company’s roster of live music events. Apodaca was, and still is, a leader in the regional Mexican scene producing several shows and concerts for that genre in Monterrey, where the company is based. So, the brothers — taking the years of experience they already had working under their father — decided the company’s first festival would be a rock-only lineup. The first edition, Pa’l Norte Rock Festival, a one-day event, featured artists like Calle 13, Carla Morrison, Kinky and Zoé.
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Even with hiccups along the way, including being understaffed and a hailstorm the day before which they thought would cancel the event, they pulled through. And, unlike today, the event didn’t have a lot of support from sponsors, even with the Apodaca name attached to the festival. It was also at a time when the city, located in a state that borders Texas, was recovering from a brutal wave of murders linked to organized crime. Which is not to say Monterrey is a crime-less city today — but although organized crime is still a major concern in the city, it has not affected the festival in its 12 years. Its security plan includes city and state police officers (Fuerza Civil) inside and outside the festival, plus private security.
When Pa’l Norte first launched, Monterrey — an important commercial entry port between the Northeastern region of Mexico and the United States — was also on its way to becoming a modern economic region exploding with tech innovation. “It was like the perfect musical symphony,” says Francisco Orozco, professor at the school of business at the prestigious Tecnológico de Monterrey. “There was a political change in the city that opened doors for these types of events to happen and people gained the confidence and courage to leave their homes again. We proved we weren’t just bullets.”
Three years into the festival, Oscar and his brother dropped the rock-only label because “we wanted to grow and bring more commercial artists,” says Oscar (the festival also adopted the slogan “Siempre Poderoso y Ascendente,” or, “Always Powerful and Ascendant”). They also scored a partnership with concert promoter OCESA, which Live Nation acquired in 2021 for $416 million, doubling down on their efforts to expand their reach. “OCESA has been a great ally that has supported us a lot,” Oscar says. “We are partners in many festivals, but this partnership was key for Pa’l Norte because together with them, we were able to grow in many areas such as sponsorships, international artists.”
The now re-branded Tecate Pa’l Norte — after landing a major sponsorship deal with the beer giant — has gone through massive changes, which has led to its global appeal. “Apodaca has been very meticulous with their alliances, from the beer industry to teaming up with the ministry of tourism to have hotels and transportation available when the festival takes place, [and] also partnering with airline Viva Aerobus for sponsorship,” Orozco says. “It’s a business model that works. They know the importance of allies and that’s why the festival has grown the way it has.”
Today, it’s the “most important musical event in Northern Mexico,” according to Nuevo León’s Ministry of Tourism. “Every year we are talking about more than 75% hotel occupancy derived from Pa’l Norte, but this year will be much more special because it coincides with Easter,” the government agency told Billboard in a statement. “Throughout these 12 years, it has positioned itself not only to impact the creative industries in Nuevo León, but also as one of our most important economic and tourism engines. This year we estimate a revenue of close to 750 million pesos (approximately $46 million U.S.).”
Pa’l Norte’s three-day event now has nine stages that gathers 100,000 people per day at the emblematic Parque Fundidora (before, the capacity was 37,000 when it started at Parque Diego Rivera). Its lineup has evolved from genre-specific to super-eclectic with past headliners including Billie Eilish, Foo Fighters, Caifanes, Maná, Tame Impala, The Killers, Los Fabulosos Cadillacs and 50 Cent. This year’s edition was headlined by Peso Pluma, Blink-182, Imagine Dragons, Maná and Fuerza Regida.
“At the end of the day, promoters are looking to have the most popular acts on their lineup,” says Alan David Robles-Soto, director of the music production program at Tecnólogico de Monterrey. He’s also a guitarist who’s performed alongside Mexican bands like Jumbo and División Minúscula. “It’s the same case with Coachella: it used to be a rock festival and then it wasn’t. It’s in the promoter’s best interest, they want to push sales and the ones who are going to sell are bands like Blink-182.”
Pa’l Norte is perhaps Mexico’s biggest, and most diverse, music festival, though other major events like Vive Latino and EDC Mexico (both produced by OCESA in Mexico City) also move significant tickets: The former had a total of 160,000 attendees this year, while EDC Mexico had 200,000 people in attendance for its 2023 edition. Meanwhile, the Machaca festival, also in Monterrey, gathered 65,000 last year, according to local reports, and the Baja Beach Fest in Baja California (which went from six days to three) draws in a daily capacity of 35,000.
“The importance that Mexico has in Latin America in terms of income in the sub-sector of live music is noteworthy,” Orozco says. “Artists are not only performing in Mexico City or Monterrey but also in other states where we did not imagine artists would go. They understood that people are willing to spend a lot of money for these experiences. Geographically and logistically, the country, which borders the U.S., is in a very important spot for them as well.”
Producing more than 600 shows a year, including 15 festivals across the country, Apodaca now has several divisions under its umbrella, including booking, distribution and management. With Pa’l Norte, the goal is only to become more global and, in the future, Oscar hopes to add a streaming option to expand its reach and potentially turn it into a two-weekend event, à la Coachella. For now, he’s pleased with the festival’s growth over the past 12 years and the impact it’s had on the Mexican state.
“As citizens of Nuevo León, we are very proud that Pa’l Norte is a source of work for restaurants, hotels, taxi drivers during that week,” says Oscar. “At the festival, we have more than 10,500 people working per day; generating that number of jobs fills us with pride. We want to keep impacting. The slogan says it all [always powerful and ascending].”
Christine Lepera might be one of the country’s top music litigators, but decades ago, she wasn’t even sure she still wanted to be a lawyer at all.
In 1986, just a few years after she graduated law school, she was working at a New York firm where she was “dissatisfied” and, like many young attorneys, faced existential questions about her chosen career path.
“I never intended to be a music lawyer, and after four years at a corporate firm on Wall Street, I was basically ready to quit the law entirely,” she recalls with a laugh.
Today, that’s hard to imagine. Lepera — who is chair of the music litigation group at Mitchell Silberberg & Knupp (MSK) — for years has been one of the music industry’s go-to trial lawyers.
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She handles many different types of cases, from representing Daryl Hall in last year’s headline-grabbing battle with longtime partner John Oates that’s still pending to Dr. Luke in his just-settled defamation case against Kesha. But her primary specialty is defending superstar artists against allegations that they’ve stolen their songs from someone else.
Over the past year, Lepera has handled such copyright cases for Dua Lipa, Jay-Z, Post Malone and others; previously, she has done similar work for Katy Perry, Ye (formerly known as Kanye West), Drake, Ludacris and many more. For Lepera, who herself plays piano, working those lawsuits is not just about the people involved, but about their music — and their right to create without facing needless lawsuits.
“What I get the most enjoyment from is servicing the music,” Lepera says. “In many of these cases, what you’re dealing with is people who have not stolen anything and have just used basic musical building blocks. And the other side is literally trying to monopolize music that they shouldn’t.”
In recognition of her achievements, Lepera has been named Billboard’s 2024 Lawyer of the Year. Fellow partners Eric German, Bradley Mullins and David Steinberg join her on the Top Music Lawyers list.
Facing an impasse in her young career, Lepera turned to Martin Silfen — her former law professor at New York Law School and a music attorney who represented clients like Blondie, LL COOL J and Aerosmith — for advice. Silfen connected her with Leonard Marks, a legendary New York music attorney who counted Billy Joel, The Beatles and Elton John as clients over his long career.
The timing was just right. At that point, Marks was getting plenty of litigation business sent his way from John Eastman, another powerful industry attorney who is best known for representing Paul McCartney in his wranglings with the other members of The Beatles (prompted by their association with manager Allen Klein). The late Marks, whom Lepera fondly recalls as an eccentric attorney with you-can’t-believe-he’s-a-lawyer vibes, brought her into his small firm and gave her a shot.
“Len hired me, I started doing lots of entertainment cases and everything changed,” Lepera says.
From left: Attorneys Christopher Buccafusco, Christine Lepera and Carla Miller discussed how copyright law affects creators at a 2019 panel at Cardozo Law School in New York.
Rob Kim/Getty Images
One of the first major cases she handled was a copyright lawsuit filed in 1990 against Broadway composer Andrew Lloyd Webber that accused him of stealing the title song from his smash hit The Phantom of the Opera from a Baltimore liturgical composer. The case dragged on for years, featuring countersuits, multiple appeals and an attempted appeal to the U.S. Supreme Court before ending in the late 1990s with a victory for Lloyd Webber in a high-profile jury trial.
The long-running lawsuit provided plenty of material for the young music litigator to cut her teeth. “It was a 10-year extravaganza,” Lepera says, laughing. “And we won everything at the end of the day.”
In the years that followed, big music cases kept coming. In 2006, Lepera won a jury verdict clearing Ye and Ludacris of allegations that they had based their 2003 Billboard Hot 100 No. 1 hit, “Stand Up,” on an earlier song. In 2015, she helped defeat a lawsuit claiming that Jay-Z and Timbaland had stolen material from an Egyptian composer for their 2000 smash “Big Pimpin’.” In 2017, Lepera won a ruling that Drake had made fair use of a spoken-word jazz track when he sampled it on his 2013 song “Pound Cake.”
The attorney’s trajectory culminated in 2022, when she won a federal appeals court decision that Perry’s 2013 single “Dark Horse,” another Hot 100 No. 1, had not infringed the copyright of an earlier song. It was not only a big win for the singer, overturning millions in damages, but also set an important legal precedent that individual songwriters cannot lock up simple musical “building blocks.”
For years, such lawsuits have been a source of anxiety for creators and companies alike, particularly in the wake of the controversial 2015 verdict that Robin Thicke and Pharrell Williams’ “Blurred Lines” had infringed Marvin Gaye’s “Got To Give It Up.” In the years that followed, artists became more cautious about vetting their songs with musicologists, often preemptively offering writing credits to would-be accusers rather than risking a lawsuit.
But from Lepera’s perspective, song-theft lawsuits didn’t increase after the “Blurred Lines” verdict; rather, they’ve always just been an unfortunate byproduct of success. “You write a hit, you get a writ,” she jokes. In fact, she suggests the verdict had a positive impact: More artists are willing to fight back against questionable allegations and more courts are willing to scrutinize bad lawsuits.
“They’re going to fight and not give into this fear,” Lepera says of her clients and other modern artists. “Even though it’s a very draining, expensive, uncomfortable and uncertain process, I think we’re seeing very strong advocates turning around and deterring these kinds of cases.”
In the past year, Lepera fought battles inside and outside the copyright sector. She represented Lipa in two high-profile lawsuits that claimed the star had copied earlier songs when she wrote her megahit “Levitating.” In June, a federal judge dismissed one of them, agreeing with Lipa’s argument that she had never heard the song in question; the other case, where Lepera has made the same argument, is awaiting a decision. Lepera also won a ruling in September dismissing a lawsuit against Jay-Z, Timbaland and Ginuwine that claimed they had lifted material from an old soul tune for the songs “Paper Chase” and “Toe 2 Toe.”
Perhaps more notably, Lepera resolved the decadelong litigation by Dr. Luke against Kesha, in which her client claimed the pop star had defamed him when she accused him of rape in 2014. After years of litigation and appeals, a trial was set for July 2023; instead, a confidential settlement was reached in June. As part of the agreement, the two issued a joint statement in which Kesha said she “cannot recount everything that happened” while Dr. Luke maintained that he was “absolutely certain that nothing happened.”
The Dr. Luke v. Kesha case, which started years before the #MeToo movement and was heavily litigated throughout that period, sparked strong emotions on both sides and sometimes thrust Lepera herself into the spotlight. In deposition videos made public in 2019, Lady Gaga told her, “You should be ashamed of yourself.”
When facing such situations as an attorney, Lepera says she sticks to the “facts and the law” of a given legal argument and is not intimidated by the celebrities involved or the PR dimensions that can accompany it.
“I can’t advocate a position unless I believe in it,” she says. “I have to truly believe in whatever it is I’m arguing. I’m not really emotional. I don’t have that trepidation of ‘Oh, look who I’m representing.’ ”
Another major 2023 case for Lepera was the public breakup of beloved duo Hall & Oates, in which she served as Hall’s lead counsel. In the dispute, which attracted heavy media attention thanks to sealed filings later becoming public, Hall accused Oates of violating their partnership agreement by unilaterally attempting to sell part of their joint entity to Primary Wave, a prominent music company that has acquired many catalogs in recent years.
As the case unfolded, it became clear the matter was deeply personal for Hall, who in legal filings called the alleged sale by Oates the “ultimate partnership betrayal” and said it specifically had been designed to hurt him after years of worsening relations between the duo. Oates later responded by calling the accusations “inflammatory, outlandish and inaccurate” and saying that they had left him “deeply hurt.”
In late November, after a climactic court hearing in Nashville, a judge sided with Hall and Lepera, putting the Primary Wave deal on hold and allowing an arbitrator time to decide Hall’s arguments against it. The dispute remains pending.
Due to the massive media attention, Lepera says the case has been “very painful, obviously, for both of them.” Bands, she says, are “almost like family,” and when things “fall apart at the seams” after a long career, there are bound to be intense feelings for all involved. After decades of handling such cases, she says the job of a good litigator is to understand and absorb that human dynamic, but also to channel it into a winning legal argument.
“My challenge is to be there to absorb and listen to that,” Lepera says, “but also to just cut through and get to the result that’s needed.”
This story originally appeared in the March 30, 2024, issue of Billboard.
After nearly 1,000 votes cast over three rounds of voting, Billboard Pro members selected Dina LaPolt, founder and owner of LaPolt Law, for the 2024 Top Music Lawyers Power Players’ Choice Award, which honors the attorney they believe had the most impact across the industry in the past year. With multiple industry roles — on […]
HYBE shares jumped 17.5% to 230,000 won ($170.84) this week following news that the company struck a 10-year partnership with Universal Music Group (UMG) that calls for the label to distribute HYBE’s physical and digital music and put its artists on HYBE’s Weverse social media platform. HYBE America CEO Scooter Braun will oversee all promotional and marketing collaborations between the two companies. After dropping 9.1% over the previous four weeks, the announcement brought the South Korean company’s year-to-date deficit to just 1.5%.
Another K-pop company, SM Entertainment, was one of five music companies to post double-digit stock gains this week, with its shares rising 14% to 87,800 won ($65.22). On Wednesday (March 27), the company announced the appointment of Tak Young-jun to co-CEO alongside existing CEO Jang Cheol-hyuk. SM Entertainment also announced a 1,200-won ($0.89) per-share dividend totaling 28.1 billion won ($20.8 million), an amount equal to the prior year’s dividend.
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The 20-company Billboard Global Music Index rose 1.9% to a record 1,752.24 as 16 stocks posted gains, only three lost ground and one was unchanged. Even with an unusually high number of winners, the float-adjusted index, which gives greater weight to more valuable companies, fell this week because two of the three losers are among the most valuable music companies. Spotify, which has a market capitalization of roughly $50 billion, fell 0.4% to $263.90. Live Nation fell 0.2% to $105.77; its market capitalization is about $24 billion. Two more of the index’s largest companies had gains under 2%: UMG rose 1.6% to 27.88 euros ($30.11) and Warner Music Group (WMG) improved 1.4% to $33.02. Another valuable member of the index, Chinese music streamer Tencent Music Entertainment, rose 2.2% to $11.19.
Hipgnosis Songs Fund shares climbed 13.5% to 69 pence ($0.87) after the company’s board of directors released an internal report on Thursday (March 28) that showed the fund’s investment advisor, Hipgnosis Song Management, “materially” overstated annual revenue and misled investors about the amount of control exercised over the rights in its portfolio. The negative news was welcomed by investors who have taken issue with the company’s accounting practices and portfolio valuation. Hipgnosis shares traded as low as 52.9 pence ($0.67) on March 4 but have rebounded since the company overhauled its board and hired Shot Tower Capital to put together the due diligence report.
CTS Eventim, the German live events promoter and ticketing company, rose 11.1% to 82.45 euros ($89.05) after releasing earnings for the fourth quarter and full-year 2023 on Tuesday (March 26). The company expects “a moderate rise” in total revenue in 2024. Demand is “rising continuously,” CEO Klaus-Peter Schulenberg wrote in the annual report, and the company expects the recent decline in inflation to provide “new, consumption-driven impetus for growth in the future.”
Believe shares rose 7.2% this week to 16.92 euros ($18.27) following the company’s announcement that it will accept a formal offer from WMG by April 7. WMG revealed its interest in Belief on March 7 and said it would be willing to pay at least 17 euros ($18.36) per share. A consortium that includes Believe CEO Denis Ladegaillerie has lined up a large block of shares and is willing to offer 15 euros ($16.20) per share for the remainder. With Believe shares currently trading so close to WMG’s soft bid, investors apparently don’t think the consortium’s original offer is going to suffice.
Stocks were mixed as the trading week was shortened by some exchanges’ closure for Good Friday. In the United States, the Nasdaq composite fell 0.3% to 16,379.46 and the S&P 500 rose 0.4% to 5,254.35. In the United Kingdom, the FTSE 100 rose 0.3% to 7,952.62. South Korea’s KOSPI composite index fell 0.1% to 2,746.63. China’s Shanghai Composite Index dropped 0.2% to 3,041.17.
Let me start this column the way I ended the last one: Private equity isn’t destroying the music business. But it’s worth wondering: How will so much outside investment change the way the music industry works?
Obviously, we’re going to see more documentaries, Broadway shows and box sets, both to make money and to promote catalogs. But will this lead to significant changes to royalty distribution or the industry’s balance of power? And is there even a small chance of what might be called a subprime publishing meltdown?
As Cyndi Lauper sang, though, money changes everything — and that was before her recent rights sale. So I spoke with a half dozen serious players — music publishers and private-equity-backed catalog buyers of rights, plus lawyers and consultants who have been working on these deals since investment started flooding into the music business at the end of the 2010s, about how these new players are changing the business. Any new investment sector will have successes and failures — a new report from Shot Tower Capital says Hipgnosis Songs Fund overstated its revenue and overpaid for catalogs, although Hipgnosis has said it disputes this — but what does all of this mean for music in the long term?
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One of the few points of agreement is that this has been great for creators so far, especially songwriters. These deals involve creators who are already making money, but the ability to sell their catalogs lets them replace a steady stream of revenue with a one-time cash infusion — it’s “allowed artists the ability to have more liquidity opportunities,” according to one buyer. This is helpful if they need cash, want to diversify their assets, or have to think about estate planning. The emergence of outside buyers has also spurred traditional music companies to buy more publishing assets, especially in cases where they already own related rights, for reasons that can be either strategic (“we can bundle rights”) or defensive (“we can monetize this without interference”). That competition implies that prices will rise, which is good for creators.
It also means that potential investors will bid for a wider range of catalogs, including more recent songs in more genres — which is already happening. So what happens when some of the world’s biggest investment entities own so many catalogs? They will push — using the various tools at their disposal — to raise the value of their assets. They will not do this out of goodwill, of course; they will do it out of self-interest. But any move that raises the value of the song catalogs that they own will also raise the value of the song catalogs that they do not, and this could be very good for songwriters.
“Investors now stand in the shoes of the songwriter,” as one buyer of catalogs told me, “and will use their political clout to help make how a songwriter is paid fairer.” An executive who works for another company that buys catalogs is skeptical of some private-equity-backed ventures, because “their incentives are misaligned with those of creators.” But that doesn’t seem to be the case here. To the extent that some aspects of copyright regulation involve political power, the influence of private equity could counter that of the big technology companies that generally lobby to undermine copyright. Two executives even suggested that private equity could serve as an engine of reform to make collective management organizations more transparent. “We put up with all of this,” the argument goes, “but Wall Street won’t stand for it!”
Right now, some of the catalog acquisition business rests on the idea that new buyers can do more to promote songs than the current owners, especially with film or theater projects. Eventually, though, at least some of that advantage could disappear. Executives can see what works, and some of them will inevitably bring that knowledge to other companies. Plus, as we reach Peak Rock Doc, catalog owners — traditional publishers and private equity players alike — could start to see diminishing returns.
What about the downsides? The reason private equity has such a bad reputation is that it usually buys assets with considerable leverage and holds them for a limited amount of time, which can often result in layoffs at companies in which they invest. Although deal structures vary, a source familiar with many deals told me that buyers generally don’t borrow more than half the purchase price of copyright assets, which seems reasonable.
Eventually, of course, some buyers will become sellers, presumably because their funds have run their course, or perhaps because they do come under pressure. In some cases, operators will be able to attract other investment. In others, “secondary sales will just expand the field for what is in play,” a publishing executive pointed out. A market for publishing assets inevitably means that not everyone will succeed — but it should also provide other buyers. A certain amount of consolidation may be inevitable, but it might not be so bad. Some writers will worry about how the new owner of their songs will treat them, but realistically — and this might sound cold, but it’s also true — that’s something creators need to think about before they sell.
Is there any chance of a broader market failure — a subprime copyright crisis, of sorts? Music copyrights generate steady cash the way mortgages once did, but while individual investments can rise or fall, it’s harder to imagine that a financial squeeze would lead to a selling frenzy that would send prices downward across the board. This isn’t a massive liquid market the way housing is, plus there’s less leverage and far more due diligence about the assets being purchased. (One lawyer said that this market is encouraging creators and publishers to improve their contracts and document-retention practices.)
Although it might seem counter-intuitive, the market for music copyrights might actually be more solid than that for housing. So far, on-demand streaming has proved pandemic-proof, and it seems recession-proof, so the only danger would be a collapse of the copyright system — and it’s hard to imagine how that would happen, especially now that the music business survived illegal file-sharing. Outside investment in music rights will change, like everything else in the business, but it looks like we’re going to see steady, long-term change — most of which creators have good reason to be optimistic about.
Accounting scandals may not get the public’s attention like a raid by Homeland Security, but questions about the quality of a publicly traded company’s books is a serious matter. This week, an internal report made public by Hipgnosis Songs Fund, the London-listed company that played a major role in turning music rights into a stable, attractive asset class, confirmed what some analysts and shareholders had long suspected.
At best, the 26-page report by Shot Tower Capital, the firm hired by the company’s board of directors in the wake of a shareholder revolt in October, details how the investment advisor, the Merck Mercuriadis-led Hipgnosis Song Management (HSM), made numerous missteps in accounting and financial projections of its vast music rights portfolio that includes music by Red Hot Chili Peppers, Shakira and Journey. At worst, the report suggests the investment advisor chose accounting standards that overstated revenue, inflated the portfolio’s valuation and — as the board previously stated — resulted in larger fees paid for managing the portfolio. In any case, information released Thursday presents an unflattering portrait of HSM and its internal operations.
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For its part, HSM considers some “aspects of the report…to be factually inaccurate and misleading,” the company said in a statement on Thursday (Mar. 28). HSM said it received the report the evening before its release and will respond to the board “in due course.”
To be clear, Shot Tower did not explicitly comment on the investment advisor’s intent in using certain accounting practices. The data-heavy report offers analysis, not speculation. But the report, part of the board of directors’ effort to regain shareholders’ trust, made clear that annual revenue was “materially” overstated and laid out numerous examples where the fund’s numbers didn’t reflect the reality behind its assets.
Take, for example, something called right to income (RTI), which are royalties that are paid to the buyer at the close of an acquisition. (If the acquisition’s effective date is prior to the closing date, royalties received by the seller after the effective date are credited to the buyer.) Normally, the amount of the RTI is deducted from the purchase price and is not included in annual revenue figures. However, Shot Tower found that some RTI revenue from Hipgnosis acquisitions was counted as annual revenues rather than an adjustment in the purchase price. As the board’s Mar. 18 update noted, including RTI revenue with annual revenue amounts to “double counting.” Misclassifying RTI “significantly” increased the fund’s income in 2021 and 2022, according to the report. In fiscal 2019 and fiscal 2020, zero and 5.3% of deals had RTI periods that extended for more than one year. In fiscal 2021 and 2022, those numbers jumped to 43.9% and 60.0%.
RTI also came into play with the proposed sale of a portion of the portfolio to Hipgnosis Songs Capital, a joint venture of HSM and investment firm Blackstone. The catalog was presented to shareholders as having a net purchase price of $424.7 million (including RTI revenue of $15.3 million). With pro-forma annual revenue (PFAR) of $24.1 million, HSM assigned a 17.6x multiple to the proposed sale. But Shot Tower believes the catalog’s multiple should have been 14.9x based on higher annual revenue of $28 million and believed the net sale price should have been $416.7 million. Shareholders voted against the proposed sale in October.
In fiscal 2022, the investment advisor changed how it accounted for accrued revenues. The fund is required to make estimates on revenue earned in the period, rather than recognize revenue when the royalties are collected. A new approach, called “usage accruals,” calculated accruals “based on expected usage” rather than when revenues “are paid to, and processed by, collection societies, publishers and administrators.” Shot Tower noted the adoption of usage accruals occurred “at a time when RTI revenue was declining and the Fund could no longer raise capital for continued acquisitions.” In other words, a lack of fresh funding halted acquisitions and reduced the amount of RTI revenue added to annual revenue. Without the change, Shot Tower believes the fund “would have breached its lender covenants” and fiscal 2022 revenue would have been $36 million lower.
Accrued revenue also caused problems with PFAR, a non-IFRS metric meant to show investors organic growth excluding accruals and RTI. But Shot Tower found PFAR did indeed include accrual estimates of income expected to be included in the period, which “presents a picture of organic growth that is higher than growth suggested by the statement data,” according to the report. As such, Shot Tower warned investors not to rely on PFAR as a metric.
More issues arose in Shot Tower’s due diligence investigations into how individual catalogs were valued. The entire portfolio, which stood at $2.8 billion on Mar. 31, 2023, is instead worth $1.95 billion, according to the report — a difference of some $850 million. Given the transparency into the fund’s accounting practices, however, shareholders were unfazed by the demotion. On Thursday, Hipgnosis Song Fund’s share price jumped 8.3% to 69 pence, its highest closing price since Jan. 31 and 30.4% above its low point in 2024, 52.9 pence, set on Mar. 4. Whether the share price will improve further could depend on how shareholders view the board’s reaction to this report.
In the summer of 2022, Sabrina Carpenter released her Island Records debut album, emails I can’t send. Last March, she released its deluxe edition featuring four new tracks — including standout single “Feather,” which has since become the pop star’s biggest hit to date.
Following a controversial music video for “Feather” that arrived in October, for which Carpenter filmed the risqué clip inside a Brooklyn church (with approval, of course), the song has now reached No. 1 on Billboard’s Pop Airplay chart after a 24-week climb — and it’s showing no signs of slowing down.
This moment has not only been a long time coming for Carpenter, but also her manager, Janelle Lopez Genzink. The exec recalls how emails I can’t send came out just one year after the launch of her “female-focused” Volara Management firm (which operates under the Red Light umbrella), calling it “a very special season.”
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“During that year, I was laser-focused on building out Volara with a series of strategic hires that focused on digital strategies and overall artist brand building, while also maintaining a close watch on data and analytics, which transformed Sabrina’s career,” she says. And now, those years of hard work are paying off — and have helped Lopez Genzink earn the title of Billboard’s Executive of the Week.
Here, she talks about the success of “Feather,” Carpenter’s opening gig on Taylor Swift’s Eras Tour and more. “Coachella is next up,” she teases, “and the rest you’ll just have to wait and see.”
“Feather” has become the highest-charting song of Sabrina’s career, reaching No. 1 on Pop Airplay after a 24-week climb. What key decisions did you make to help make that happen?
The song was written and recorded right ahead of Sabrina embarking on the North American leg of her tour. When tour rehearsals began, her live performance of the song made it clear to all of us that it was a record that would quickly resonate with her fans as well as the larger pop music audience. But instead of going straight to radio, we took an approach that was way more reminiscent of a traditional pop single campaign. She went on tour and shot a meaningful video which ultimately gave the song the momentum and recognition to take to radio. These more traditional steps supported the song’s growth and helped us continue to tell the story of Sabrina as a holistic artist.
Its music video made headlines for being filmed in a church, which led to the removal of the monsignor who approved access. How did that conversation help drive interest in the song early on — and how have you helped sustain that interest?
Every pop music star has a controversial story in their back pocket. Although not intentional, the setting of the music video clearly drove additional exposure and a pop culture conversation that reminded us of those from some of our favorite pop divas. Sabrina’s witty and intelligent humor in interviews continued the conversation and drove the social story to continue and grow the audience. As we now all know, “Jesus was a carpenter.”
“Feather” was released on her album’s deluxe edition, emails I can’t send fwd:. How has the deluxe release helped sustain this momentum?
The deluxe version of the album allowed us to breathe additional life into the campaign. Alongside the release, we strategically lined up an extension of the tour in North America, while launching Europe and Asia dates to keep the album campaign feeling fresh. The thoughtful timing of the deluxe release, aligned with the active “Nonsense” single campaign, gave us a chance to speak to both current and new fans of Sabrina’s music.
“Nonsense” was a single from Sabrina’s 2022 album emails I can’t send, which was her first release on Island after years with Hollywood Records. How did you help guide that trajectory and transition?
We took a look at each piece of Sabrina’s business — e-commerce, touring, publishing, publicity. Each area needed growth and we worked hard to evaluate and put partners in place that could support an A-level career. For Sabrina, this meant aligning with UMPG for publishing, CAA and AEG for touring, Merch Traffic for touring merchandise and Bravado for e-commerce. With these changes, we saw significant growth in all areas, including a 500% increase in sales with specially-curated merch drops — spearheaded by Sabrina and her sister Sarah — around music releases, holidays and special fandom moments.
The Island team — led by Justin Eshak, Imran Majid and Mike Alexander — worked closely alongside us for the release of emails and the early success and significant streaming story of the album gave us insight to the level of growth that Sabrina was seeing. The October 2022 emails I can’t send tour marked the beginning of Sabrina’s custom city-specific outros for her song “Nonsense,” which racked up millions of views on TikTok, a music video and a top 10 U.S. pop radio single. This launched Sabrina into a sold-out worldwide tour in 2023 that included a festival slot at Hyde Park alongside Blackpink, Lollapalooza and ended the year supporting Taylor Swift on her Eras Tour in Latin America.
Even as “Feather” climbs, “Nonsense” continues to make headlines for those city-specific outros. Did the response from fans influence which song to push heading into this year?
I think “Nonsense” in so many different ways was a fully fan-chosen hit song. It’s track nine on her album and wasn’t highlighted as a single going into the campaign. The contrast of the lightheartedness of a song like “Nonsense” on an album with a title track that’s so deeply emotional and personal made it an obvious standout to fans. Once she started doing city-specific outros, the song really took off. And once we released the Christmas version with a video spearheaded and shot at home by Sabrina and her sister Sarah, we knew it was going to be huge. I think that’s the beauty of a lot of our story with Sabrina’s rise — how the fans have played such a massive role in choosing the songs we ultimately focus on. It feels collaborative in a lot of ways.
As you mentioned, Sabrina has also been supporting Taylor Swift on her Eras Tour. What kind of boost has she gained from that exposure?
Being a guest as an opening act on the Eras Tour has been such a gift in so many ways. Sabrina has been a true fan from such a young age and being able to see that dream realized was incredible as a manager. Being able to tour internationally at that level has allowed Sabrina to play her music to so many people in such a short window of time and we’re so grateful for all the ways that has impacted her music and career.
What’s the key to managing a pop star today?
Flexibility, care and strategy. It’s about understanding your artist and knowing when to say yes to the right things and when to say no, even when it’s tough.
Last fall, R&B singer October London performed “Back to Your Place” on Jimmy Kimmel Live! with a Snoop Dogg introduction and a seven-piece band including harp and violin players. In other words, the performance wasn’t cheap — and probably far more expensive than the few thousand dollars late-night talk-show guests typically receive under union rules.
According to London’s manager, Adrian L. Miller, the appearance, which has scored 281,000 YouTube views so far, was worth it. London’s more stripped-down GMA3 performance in February had even more concrete benefits, boosting ticket sales for the singer’s show at Brooklyn Steel later that night by 100. “It’s not nothing,” Miller says. “It’s good to have the logos and the exposure through TV.”
Still, Miller concedes that the promotional benefits of late-night TV performances aren’t as great as they were in the 2000s. Back then, Jay Leno and David Letterman frequently drew 4 million to 6 million nightly viewers, compared with the roughly 1.5 million to 3 million viewers top talk shows draw today. Plus, he says, “A lot of an artist’s audience is not on television. They’re not watching these shows.”
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For many acts, especially developing artists seeking viral moments, the return on investment for late-night and daytime talk-show performances has become too minuscule to be effective. “They have, like, 2 million viewers of these shows, and that’s what we get on daily posts on TikTok,” says Ethan Curtis, manager of singer-songwriter JVKE, who played The Tonight Show Starring Jimmy Fallon in 2022. “It’s an energy drain. We travel and train for the performance and do it in one take. It doesn’t feel worth it for every song.”
And while audiences are down, the cost of mounting a memorable televised performance is way up. Another of Miller’s clients, singer-rapper Anderson .Paak, spent “out of pocket, almost six figures,” he says, for a 2017 Ellen appearance. “Everybody wants a creative director now, and the stylist and the hair and the makeup,” a major-label source says. According to label and management sources, expenses for talk-show performances range from $150,000 to $225,000 — or as high as $700,000 for a potentially career-making Saturday Night Live opportunity.
Targeted talk-show performances sometimes redeem the expense. When JVKE played “Golden Hour” on Fallon in late 2022, his team wanted to “elevate him from a TikTok artist to a ‘real artist,’” Curtis says. “That’s when the late-night show served a purpose: ‘Let’s have an example of JVKE existing outside of TikTok.’ We chopped up the footage, reposted it on social media.” (JVKE’s Fallon performance is no longer available on his socials, but a Tonight Show YouTube video of him “playing my song for the Roots” beforehand has 358,000 views.)
“Most bands come in with the same amount of crew and backline as if they were putting on a show. They ask the record label to pay for it and [labels] don’t want to,” says Chris Gentry, who managed Phoenix in 2009 when the band’s SNL appearance helped turn its album Wolfgang Amadeus Phoenix into a smash.
In an analysis of 458 artist appearances on top talk shows such as Kimmel, Fallon, Ellen, SNL and The Late Late Show With James Corden, music data analyst Chartmetric found the artists’ monthly Spotify listeners averaged 1.78% more the week after the show. Some artists’ distinctive performances make a bigger impact: BTS on SNL in 2019 and Bartees Strange on Kimmel in 2022 both boosted their monthly Spotify listeners by nearly 85%.
Other talk-show performances barely register. Chartmetric reports that 192 artists experienced decreases in monthly Spotify listeners after their talk-show gigs; London’s Kimmel performance in October had minimal impact on his Spotify metrics. “We’ve had these conversations for a long time: Late night doesn’t move the needle,” says the major-label source, who nonetheless remains a proponent of such appearances because “Jimmy Fallon or NBC helps spread a piece of digital content in an era when we’re constantly trying to break through the noise.”
While Ken Weinstein, a veteran publicist whose company, Big Hassle, represents Phish, Jack White, the Pretenders and many others, acknowledges “labels are definitely more thoughtful about how they spend the money,” he adds that prominent talk-show performances can have promotional benefits far beyond the initial TV appearances. “Honestly, the appearance itself is as valuable as ever,” he says. “Only in a few instances really are there giant sales bumps from a particular TV appearance — but the conversation it begins is still very relevant, very powerful.”
Peter Katsis, who manages Bush, booked frontman Gavin Rossdale on Fallon in January; a Tonight Show Instagram clip of “Glycerine” scored 344,000 views, and numerous media outlets covered the performance. “It’s really not about what Fallon‘s numbers are anymore,” says Katsis. “It really starts with what you decide to do with the opportunity. All that stuff becomes way more valuable than just that initial appearance.”
“Everything’s more expensive, which is the reason to do it at the right time and have it be part of a larger plan,” says Diana Miller, supervising producer for The Talk, which recently booked Bush and Rachel Platten, adding that shows often negotiate with artists over paying a portion of their expenses, in addition to the low thousands of dollars in union rates they pay musicians to appear. “How much would four minutes be for advertising on this show? You can’t just promote to your own fanbase. You can’t assume Ariana Grande fans know she has new music out.”
Some artists have taken it upon themselves to economize. The Lemon Twigs, a band from Long Island, played Fallon in late January with a “very stripped-back backline” and “hardly any money at all,” according to Gentry, who manages the group. “We did it really for the cost of the flight for the drummer from L.A.,” he says. “What’s interesting right now with Fallon is how social media plays into it — 14 million on Instagram, 15 million on TikTok. It’s almost like you get more now.”
This story will appear in the March 30, 2024, issue of Billboard.
New funding is coming to the Canadian music industry.
Pascale St-Onge, the Minister of Canadian Heritage, announced at the Juno Awards on March 24 that the government will increase the Canada Music Fund by $32 million over the next two fiscal years.
The Canada Music Fund supports both FACTOR and Musicaction. Those granting bodies provide artists, labels and other organizations with funding for a wide range of activities, including recording, touring, marketing and music video production.
The announcement — though welcomed by Canadian music associations like the Canadian Independent Music Association (CIMA) and the Canadian Live Music Association (CLMA) — falls short of the $50 million that the Liberal government committed to in 2021, and the $60 million increase called for by the industry groups.
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FACTOR has historically received significant funds from Canada’s private radio broadcasters, but as those contributions decline, CIMA and CLMA have been sounding the alarm about the organization’s ability to meet the needs of Canadian artists. FACTOR’s funding challenges come at a time when many artists and organizations are struggling to stay afloat amidst a cost of living crisis.
“CIMA applauds the government’s increased investment in the Canada Music Fund,” said CIMA president Andrew Cash. “This is a recognition of music’s significant contribution to our cultural fabric and national economy.”
L’ADISQ, Quebec’s Association of the Record, Show and Video Industry, highlights that Musicaction — which primarily supports French-speaking projects — has already made cuts in recent months, and this increase will prevent a further reduction in capacity. The association calls the announcement a step in the right direction, but emphasizes the difficult economic context facing music organizations with fewer resources.
The Canadian Live Music Association echoes l’ADISQ’s sentiment, calling the increase “a good start,” and reiterating the tough circumstances industry members are facing. The Canada Music Fund increase was one of three recommendations CLMA put forward for the upcoming federal budget, which the organization hoped would take “urgent action” to protect the live music sector.
With the full budget still to come, more support measures could be in store for Canada’s music sector. -Rosie Long Decter
Canada Ranked 8th Largest Global Music Market In New IFPI Report
Canada’s recorded music revenues are strong, according to a new report from IFPI.
The IFPI’s 2024 State of the Industry report takes a deep dive into the state of recorded music around the world, and ranks Canada eighth in terms of global music markets in 2023, maintaining the country’s spot in the top ten. Canada’s music market grew by 12.19% last year, reaching US$659.6 million in revenues. That growth outpaced both the U.S. market, which grew by 7.2%, and global growth of 10.2% — the second highest recorded global growth rate, according to the report.
Some individual Canadian artists did well on a global scale, too: the report ranks Drake and The Weeknd at No. 4 and No. 5, respectively, in its Global Artist 2023 chart, which considers artist, track and album performance. Taylor Swift took the top spot there, followed by South Korean groups SEVENTEEN and Stray Kids.
A statement from IFPI, which represents the global recording industry, and Music Canada, an association representing major Canadian labels, attributes much of Canada’s revenue growth to streaming revenues, which jumped by 8.6% here, and subscription streaming in particular, which increased by 10.1%. The associations emphasize the challenges posed by streaming manipulation, highlighting IFPI’s recent legal complaint against nine Canadian-based sites that sold fraudulent streams. The sites are now offline.
Beyond Canadian borders, IFPI’s State of the Industry highlights how national markets are intertwined worldwide, using the growing popularity of Punjabi music in Canada and the launch of 91 North Records — a collaboration between Warner Music Canada and Warner Music India — as an example. “We set up 91 North Records,” Warner’s Simon Robson says, in “reaction to something that is happening organically and a proactive turbocharge to make sure it doesn’t just continue but flourishes and finds a wider audience.” Robson points out that several of the most popular Indian songs in 2022 came from artists based in Canada. – RLD
Karan Aujla Makes History at 2024 Junos
The 2024 Juno Awards looked to the future of Canadian music, while also honouring its history.
A quartet of acts who’ve had major breakthroughs this year won the major awards given out on the CBC-televised broadcast on Sunday night (March 24) live from Halifax, Nova Scotia.
Punjabi-Canadian global star Karan Aujla won the TikTok Fan Choice award, the only fan-chosen award of the ceremony. “Sometimes I can’t believe I’m that same kid who lost my parents when I was in India, made my way to Canada, and now I’m here!” said the B.C.-based artist, one of Billboard Canada’s inaugural cover stars. “If you are dreaming, make sure you dream big.”
Dressed in a spiffy white outfit with a four backup dancers in red, Aujla performed early on, playing pop hits “Admirin’ You” and “Softly.” Both came from his album Making Memories, which made history as the highest-charting Punjabi debut ever on the Canadian Albums chart. Ikky, who made the album with Aujla, acted as hype man on an elevated platform.
In the Billboard Punjabi Wave cover story, AP Dhillon talked about his performance at the 2023 Junos ceremony and how he lobbied to ensure majorly popular Punjabi music would have a prolonged platform at the awards. Evidently, they’ve kept their word.
This year’s Junos also had the most Indigenous nominees in award history. Anita Landback, Tanas Sylliboy and Sarah Prosper set the stage with a land acknowledgment that intersected with a performance by Juno winner Jeremy Dutcher in Wolastoqey, who then joined in a duet with Elisapie on an Inuktitut version of Blondie’s “Heart of Glass.” Along with Aujla and others, it meant performances featured at least six different languages, including English and French.
Several other breakout artists had big wins at this year’s awards. Tate McRae, The Beaches, Charlotte Cardin and TALK all had major years on the charts and were rewarded with awards. The Junos have struggled with star power in recent years — Drake has boycotted the last half decade, while chart-topper Tate McRae was not in attendance to accept her two awards this year — but they have made some strides when it comes to representation of what makes Canadian music unique. -Richard Trapunski
Last Week In Canada: Streaming Fraud Sites Shut Down