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A criminal case against YoungBoy Never Broke Again over federal gun charges must be put on hold until the U.S. Supreme Court decides a closely-watched Second Amendment battle this spring, a federal judge says — likely delaying a trial that had been scheduled to start in July.
In an order Wednesday (Mar. 13), U.S. District Judge Shelly Dick said she would wait to proceed until after the justices had issued their gun-control ruling since the Supreme Court’s looming decision will likely touch on the same Second Amendment questions at play in NBA YoungBoy’s case.
YoungBoy’s lawyers say the law he’s accused of breaking — a ban on convicted felons possessing firearms — is unconstitutional under the Second Amendment, which protects the right to “keep and bear arms.” The pending Supreme Court case, meanwhile, will decide the constitutionality of a similar federal ban on gun ownership for domestic abusers.
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After years of house arrest, YoungBoy (Kentrell DeSean Gaulden) had finally been set for a trial in July. Wednesday’s order will likely delay that trial since it could be June before the high court even rules on the pending case. But the delay might be worth it: If the Supreme Court rules against the gun restrictions in that case, it could greatly help YoungBoy beat his charges altogether.
The rapper’s attorney did not immediately return a request for comment.
YoungBoy was indicted by federal prosecutors in March 2021 after he was allegedly found with two guns during a September 2020 incident in Baton Rouge, La. He was charged with violating a long-standing federal law that bans convicted felons from ever again possessing guns — a rule that applied to him because he was convicted in 2017 of aggravated assault with a firearm.
In a motion filed last month, attorneys for the rapper argued that the charges against YoungBoy must be dismissed without trial because that federal ban violates the Second Amendment. They cited a landmark gun control ruling issued by the high court in 2022, which struck down a New York state law that had placed strict limits on carrying guns outside the home.
Echoing the language of that ruling, YoungBoy’s lawyers said the federal felon-in-possession statute was similarly unconstitutional because it was “inconsistent with our nation’s historical tradition of firearm regulation.”
“This prosecution seeks to restrict and deny Mr. Gaulden’s Second Amendment right to possess a firearm based solely on his status a felon and his alleged failure to comply with bureaucratic regulations,” the star’s attorneys told the judge.
In a response this month, federal prosecutors sharply disagreed, arguing that the gun ban for convicts had already been upheld in “hundreds of cases” since the Supreme Court’s 2022 ruling. They acknowledged that a few judges had ruled otherwise, but that the “overwhelming majority of courts” had continued to enforce the law.
In Wednesday’s order, Judge Dick said she could not decide those arguments until the Supreme Court rules on United States v. Rahimi, the pending case challenging a federal law that prohibits the possession of firearms by persons subject to domestic violence restraining orders. The case, argued last fall, is expected to be decided by June.
It’s difficult to predict how the Supreme Court might rule on a given case, but the tea leaves don’t look good for YoungBoy’s position. After arguments in the Rahimi case in November, Reuters reported that the court “appeared inclined to uphold the legality” of the domestic violence gun restrictions, with several justices suggesting the Second Amendment wouldn’t stop the government from banning “dangerous” people from owning guns.
Whenever the Supreme Court rules on the Rahimi case, YoungBoy and federal prosecutors will have 14 days to file briefs on how the case should proceed.
When the board of directors at Hipgnosis Songs Fund (HSF) cut the value of the company’s catalog by 26% last week, it admitted something investors had long believed. Although the London-listed royalty fund had amassed an enviable collection of songs since going public in 2018, changes in market conditions and the very nature of some of those rights may have merited a significantly lower fair value all along.
A new valuation by Shot Tower Capital put the portfolio of music rights — which includes Neil Young, Shakira and Red Hot Chili Peppers, among other A-list artists and songwriters — at $1.8 billion to $2.06 billion. As recently as Sept. 30, the catalog was given a fair value of $2.62 billion by HSF’s longtime valuation expert, Citrin Cooperman (previously Massarky Consulting). Six months earlier, it was said to be worth $2.8 billion.
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HSF’s new board of directors hired Shot Tower in the wake of investors’ Oct. 26 votes against continuation and a partial catalog sale — effectively a vote of no confidence in both the previous board and the investment advisor, Hipgnosis Song Management. Shot Tower will give HSF’s board its final due diligence by Mar. 25, and HSF will provide an update on those findings by Mar. 29.
Some longtime critics of HSF’s previous valuation found validation in Shot Tower’s lower number. Stifel analysts claimed the new number shows HSF “clearly overpaid for catalogs,” they wrote in a Mar. 4 investor note. To date, HSF has spent about $2.2 billion on acquisitions. It raised over 1.3 billion pounds ($1.67 billion) from an IPO and seven successive offerings and has drawn $604 million from a revolving credit facility.
Such a large decline in the valuation suggests the various experts had differing opinions on both the catalog’s revenues and the riskiness of those revenues. Shot Tower calculated HSF’s net revenue after third-party royalties and administration expenses at $121.7 million for the 12-month period ended June 30. The accounting firm BDO calculated a similar amount — $119.4 million for the 12-month period ended Sept. 30 — for a quality of earnings analysis.
The higher $2.62 billion valuation appears to be based on a higher annual net revenue. A July 2023 investor presentation put HSF’s annual revenue at $134 million (based on a $2.8 billion portfolio fair value and an implied historic net publishers share, or NPS, multiple of 20.89). That’s $12.3 million more than Shot Tower’s figure and $14 million more than BDO’s estimate. The difference in annual revenues, however, only explains part of the difference in valuations.
The discount rate appears to have also played a major role in HSF’s lower valuation. Shot Tower used a weighted average discount rate of 9.63% for the entire catalog, more than 1.1 percentage points higher than the discount rate used for previous valuations. Experts Billboard spoke with called the rate “on the high side” and “a particularly high number.” Some other recent valuations used a lower discount rate. Discount rates and valuations are inversely related: A higher discount rate will produce a lower present value of cash flows, and vice versa.
Until this week, HSF had been valued using an 8.5% discount rate since the Sept. 30, 2020, valuation conducted by Citrin Cooperman. FTI Consulting’s valuation of a Kobalt portfolio used in an asset-backed security (ABS) offering in February used an 8.5% discount rate for songs older than 18 months (and 11.75% for songs aged 3 to 18 months). FTI’s valuation of the portfolio behind Concord’s $1.65 billion ABS used an 8.25% discount rate for catalog songs (and 11.75% for recorded music frontline content and options for future releases).
The HSF discount rate has been a point of contention amongst analysts and investors in recent years. When HSF lowered its discount rate to 8.5% in 2020, analysts complained the valuation increased even though the investment manager had not yet added value and market assumptions hadn’t changed. When interest rates started rising in 2022, analysts wondered why HSF stuck with the 8.5% discount rate.
The discount rate depends on the riskiness of those future cash flows. Perfectly safe revenue is discounted using a risk-free rate of return such as a 10-year U.S. Treasury Rate. Because no business is without risk, a company’s revenues would merit a higher rate. If a company carries debt, its borrowing cost — also more than the risk-free rate — would also be baked into the discount rate.
Shot Tower’s discount rate took a variety of factors into account, according to the press release, which could explain how it got to 9.63%. For example, Shot Tower found that 65% of HSF’s revenue derived from passive rights where the company does not control publishing, administration or licensing. In many cases, HSF owns only a songwriter’s share rather than the publisher’s share, or the producer’s royalties from a sound recording. Investors might have assumed that HSF had more control over administration, distribution and licensing: In HSF’s annual report for the year ended March 31, 2022, it said it had 100% interest ownership in 96% of the songs in its catalog (138 of the 146 catalogs).
“That control has a lot of value,” explains an industry insider. Strategic buyers — usually music publishers and record labels — will pay a premium to control a song’s administration and licensing or a recording’s distribution. Passive rights typically trade at a discount because they carry more potential risks of counterparts (co-writers, for example) and potential collection risk (as is the case when royalties are re-directed from a label rather than received from a PRO). With a writer’s share, “you’re a lot more along for the ride,” this insider says. The producer royalties that HSF acquired — such as RedOne, Jimmy Iovine and Timbaland — are also passive.
For a company looking to bolster its credibility with investors, Shot Tower’s valuation was a double-edged sword. The lower number confirmed some investors’ long-held belief that the portfolio is worth less than HSF had claimed. But the decrease in valuation further hurt HSF’s share price. Shot Tower’s lower valuation prompted HSF’s board to commit to using its cash to pay down debt rather than resume the dividend it suspended in October. So, while the lower valuation better reflected HSF’s market capitalization, the continued loss of a dividend was the likely cause behind the stock dropping 11% the day of the announcement.
AEG Presents, the second biggest live events company in the world, and powerful Latin entertainment company Cárdenas Marketing Network (CMN), have partnered in a deal that will combine both companies under one roof. The partnership, in which AEG acquired an undisclosed stake in CMN and which AEG Presents chairman and CEO Jay Marciano describes as a “full partnership,” will explosively boost AEG’s Latin music business and is AEG’s first Latin partnership of this scope.
CMN ended 2023 at No. 4 on Billboard’s Top Promoter chart, and in 2022, it was No. 3, an enormous achievement for an independent company that CMN founder and CEO Henry Cárdenas self-describes as a “boutique concert promoter.” But it’s a very powerful boutique operation, with a slate that included Bad Bunny’s stadium tour in 2022 and currently Luis Miguel, Marc Anthony and Don Omar, among many other.
On its end, AEG is of course the powerhouse company behind Taylor Swift’s global tour and culturally-defining events like Coachella. Latin, however, was not its strong suit, although it promoted Karol G’s arena tour in in 2023. Now, AEG will have the Latin clout while CMN while have the global reach, and both companies will work together to create elevated and expanded experiences for artists and fans, with each benefitting from the complementary strategic alliance.
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“We are excited to partner with AEG Presents, one of the most powerful global forces in live entertainment. Together we look forward to making an even greater impact on the explosive growth in the Latin market,” said Cárdenas in a statement.
In an exclusive interview with Billboard, Cárdenas added: “We wanted to be bigger and more global. AEG is a giant company that also has venues and I’ve known Jay Marciano for 40 years, since he was president of Radio City Music Hall and Madison Square Garden. Jay knows who I am, and I know who he is.”
Marciano added: “Henry is a true entrepreneur and visionary, and what he and his team have built is simply awe-inspiring. We have been looking to expand our presence in Latin music and concerts for quite some time, and it was important that we took the time to find the right partner; we found it in Henry and CMN.”
The partnership between AEG and CMN has been actively in the works for approximately six months, but it was in both Cárdenas’ and Marcianos’ minds long before then.
“I feel like I’ve been chasing Henry for 40 years,” laughs Marciano. “It’s like the girl I’ve been chasing forever, and she finally said yes […] Henry was in Latin music way before any of us figured out it was an industry. Timing is everything. And I think the timing for us and for him finally, after all these years, aligned perfectly.”
Cárdenas has been in Latin music promotion for 44 years. In 2001, he sold CFA (Cardenas, Fernandez & Associates) — which at one point was the biggest Hispanic-owned event-promotion company in the U.S. — to Clear Channel Entertainment and Grupo Televisa. In 2004, he launched CMN on his own and quickly grew it all over again, eventually becoming the top Latin promoter in the country. In all his years of operation, he says, he has never lost money, save for during the pandemic.
“I’m a boutique concert promoter. I take care of my business. My tours have to be profitable, and we take care of each tour,” he says, emphasizing that his is not a cookie cutter approach to concert promotion.
However, Cárdenas also wanted to grow and become more global and in 2019, he acquired Arena Bogotá in Colombia. At this point, merging made sense, especially with a company like AEG, which has assets and artists that Cárdenas can work with in Latin America, and likewise, offers Cárdenas’ artists an entree into other markets.
The key, however, was the relationship with Marciano.
“It’s about people in this business,” says Marciano. “If you don’t have the right people, chances are you won’t be successful. With Henry we knew he had the foundation for decades and he could teach us a lot that we were missing.”
Cárdenas and Marciano had initial conversations several years back, at which time Marciano said: “Henry, I’m not going to hound you. But come the day you feel we’re better together than apart, give me a call.”
Last year he did, and conversations began in earnest.
“I think Henry believes Latin music is not just becoming big in North America but has the potential to become big in Europe and Asia and Australia and he can use our expertise and local offices,” said Marciano. “And we can also use his help because he understands the part of Latin music we’re just getting familiar with.”
Cárdenas will now take over AEG’s Latin activity and touring roster, which includes Carin León. In the spirit of AEG’s existing partnerships, such as the Messina Group or Golden Voice, Cárdenas will run the business, and make decisions on which artists and tours to bring to the business.
“I told Jay, ‘This needs to be fun. If it’s not going to be fun, it’s not interesting.’ I want to run CMN like I’ve always done,” says Cárdenas.
The AEG-CMN merger follows the 2021 acquisition of Mexican concert promoter OCESA Entertenimiento by Live Nation for $416 million for a 51% interest in the company.
No amount or stake percentage was disclosed for AEG’s purchase of CMN. But, says Marciano, “I think I have the Latin partner That I always wanted.”
03/13/2024
Billboard pays tribute to the executives, songwriters, managers, producers, promoters, radio hosts and more who passed on this year.
03/13/2024
The House on Wednesday passed a bill that would lead to a nationwide ban of the popular video app TikTok if its China-based owner doesn’t sell, as lawmakers acted on concerns that the company’s current ownership structure is a national security threat.
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The bill, passed by a vote of 352-65, now goes to the Senate, where its prospects are unclear.
TikTok, which has more than 150 million American users, is a wholly owned subsidiary of Chinese technology firm ByteDance Ltd.
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The lawmakers contend that ByteDance is beholden to the Chinese government, which could demand access to the data of TikTok’s consumers in the U.S. any time it wants. The worry stems from a set of Chinese national security laws that compel organizations to assist with intelligence gathering.
“We have given TikTok a clear choice,” said Rep. Cathy McMorris Rodgers, R-Wash. “Separate from your parent company ByteDance, which is beholden to the CCP (the Chinese Communist Party), and remain operational in the United States, or side with the CCP and face the consequences. The choice is TikTok’s.
House passage of the bill is only the first step. The Senate would also need to pass the measure for it to become law, and lawmakers in that chamber indicated it would undergo a thorough review. Senate Majority Leader Chuck Schumer, D-N.Y., said he’ll have to consult with relevant committee chairs to determine the bill’s path.
President Joe Biden has said if Congress passes the measure, he will sign it.
The House vote is poised to open a new front in the long-running feud between lawmakers and the tech industry. Members of Congress have long been critical of tech platforms and their expansive influence, often clashing with executives over industry practices. But by targeting TikTok, lawmakers are singling out a platform popular with millions of people, many of whom skew younger, just months before an election.
Opposition to the bill was also bipartisan. Some Republicans said the U.S. should warn consumers if there are data privacy and propaganda concerns, while some Democrats voiced concerns about the impact a ban would have on its millions of users in the U.S., many of which are entrepreneurs and business owners.
“The answer to authoritarianism is not more authoritarianism,” said Rep. Tom McClintock, R-Calif. “The answer to CCP-style propaganda is not CCP-style oppression. Let us slow down before we blunder down this very steep and slippery slope.”
Ahead of the House vote, a top national security official in the Biden administration held a closed-door briefing Tuesday with lawmakers to discuss TikTok and the national security implications. Lawmakers are balancing those security concerns against a desire not to limit free speech online.
“What we’ve tried to do here is be very thoughtful and deliberate about the need to force a divestiture of TikTok without granting any authority to the executive branch to regulate content or go after any American company,” said Rep. Mike Gallagher, the bill’s author, as he emerged from the briefing.
TikTok has long denied that it could be used as a tool of the Chinese government. The company has said it has never shared U.S. user data with Chinese authorities and won’t do so if it is asked. To date, the U.S. government also has not provided any evidence that shows TikTok shared such information with Chinese authorities. The platform has about 170 million users in the U.S.
The security briefing seemed to change few minds, instead solidifying the views of both sides.
“We have a national security obligation to prevent America’s most strategic adversary from being so involved in our lives,” said Rep. Nick LaLota, R-N.Y.
But Rep. Robert Garcia, D-Calif., said no information has been shared with him that convinces him TikTok is a national security threat. “My opinion, leaving that briefing, has not changed at all,” he said.
“This idea that we’re going to ban, essentially, entrepreneurs, small business owners, the main way how young people actually communicate with each other is to me insane,” Garcia said.
“Not a single thing that we heard in today’s classified briefing was unique to TikTok. It was things that happen on every single social media platform,” said Rep. Sara Jacobs, D-Calif.
Republican leaders have moved quickly to bring up the bill after its introduction last week. A House committee approved the legislation unanimously, on a 50-vote, even after their offices were inundated with calls from TikTok users demanding they drop the effort. Some offices even shut off their phones because of the onslaught.
Lawmakers in both parties are anxious to confront China on a range of issues. The House formed a special committee to focus on China-related issues. And Schumer directed committee chairs to begin working with Republicans on a bipartisan China competition bill.
Senators are expressing an openness to the bill but suggested they don’t want to rush ahead.
“It is not for me a redeeming quality that you’re moving very fast in technology because the history shows you make a lot of mistakes,” said Sen. Ron Wyden, D-Ore.
In pushing ahead with the legislation, House Republicans are also creating rare daylight between themselves and former President Donald Trump as he seeks another term in the White House.
Trump has voiced opposition to the effort. He said Monday that he still believes TikTok poses a national security risk but is opposed to banning the hugely popular app because doing so would help its rival, Facebook, which he continues to lambast over his 2020 election loss.
As president, Trump attempted to ban TikTok through an executive order that called “the spread in the United States of mobile applications developed and owned by companies in the People’s Republic of China (China)” a threat to “the national security, foreign policy and economy of the United States.” The courts, however, blocked the action after TikTok sued, arguing such actions would violate free speech and due process rights.
Mercury Records is expanding its executive team amid the broader restructure of Universal Music Group’s labels, the company announced today (March 13). The news comes as the label, which had been operating as an imprint of Republic Records since its relaunch in April 2022, has a hand in the top two albums on the Billboard 200 this week — Morgan Wallen’s One Thing At a Time (Big Loud/Mercury/Republic) and Noah Kahan’s Stick Season (Mercury/Republic).
Now, with the reorganization of UMG’s East Coast labels under Republic co-founder/CEO Monte Lipman, Mercury joins Def Jam, Island and Republic as part of the larger group, with a central organizational hub called Republic Corps. helping each label with marketing, promotions, publicity and legal support. And Mercury president Tyler Arnold and general manager Ben Adelson have made three appointments to their team in the new operation.
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Alex Coslov, a marketing veteran who had worked across both Mercury and Republic, will now be working full time at Mercury as its new executive vp, while Republic senior vp of media Marisa Bianco slides over to work on Mercury full time, while also reporting in to Republic Corps. head of media Joseph Carozza. Additionally, the label hired Mario Vazquez as vp of audience and streaming, who will work at Mercury while also reporting in to Republic Corps. executive vp of global commerce and digital strategy Kevin Lipson.
“Ben and I are thrilled to welcome Alex, Marisa and Mario to our team at Mercury Records,” Arnold said in a statement. “From day one, our goal has been to foster a creative, supportive and forward-thinking home for our artists to thrive. We are incredibly grateful to expand our team with this talented group of executives who will help further that mission as we usher in our next chapter.”
Arnold and Adelson are themselves Republic veterans, emerging from the A&R department at the label, and when the imprint relaunched in 2022 it came with several artists and partnerships that Arnold and Adelson had signed at Republic, including Post Malone, Kahan, James Bay, Lord Huron, Jeremy Zucker and others, as well as Republic’s relationship with Big Loud for Wallen, which Arnold had originally brokered. The label is also home to Stephen Sanchez, Zayn and AJR, among others.
Bravo Mondo, a growth equity firm founded by former Viacom and AOL executive Dermot McCormack, has partnered with Brandon Pankey‘s Artist Presented Experiences (APEX) to assist with strategic and capital needs for the emerging music, content and commerce platform. Pankey will also join Bravo Mundo as music partner as part of the agreement. Explore Explore […]
LONDON — Sweeping new laws regulating the use of artificial intelligence (AI) in Europe, including controls around the use of copyrighted music, have been approved by the European Parliament, following fierce lobbying from both the tech and music communities.
Members of the European Parliament (MEPs) voted in favor of the EU’s Artificial Intelligence Act by a clear majority of 523 votes for, 46 against and 49 abstentions. The “world first” legislation, which was first proposed in April 2021 and covers a wide range of AI applications including biometric surveillance and predictive policing, was provisionally approved in December, but Wednesday’s vote formally establishes its passage into law.
The act places a number of legal and transparency obligations on tech companies and AI developers operating in Europe, including those working in the creative sector and music business. Among them is the core requirement that companies using generative AI or foundation AI models like OpenAI’s ChatGPT or Anthropic’s Claude 2 provide detailed summaries of any copyrighted works, including music, that they have used to train their systems.
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Significantly, the law’s transparency provisions apply regardless of when or where in the world a tech company scraped its data from. For instance, even if an AI developer scraped copyrighted music and/or trained its systems in a non-EU country — or bought data sets from outside the 27-member state — as soon as they are used or made available in Europe the company is required to make publicly available a “sufficiently detailed summary” of all copyright protected music it has used to create AI works.
There is also a requirement that any training data sets used in generative AI music or audio-visual works are water marked, so there is a traceable path for rights holders to track and block the illegal use of their catalog.
In addition, content created by AI, as opposed to human works, must be clearly labeled as such, while tech companies have to ensure that their systems cannot be used to generate illegal and infringing content.
Large tech companies who break the rules – which govern all applications of AI inside the 27-member block of EU countries, including so-called “high risk” uses — will face fines of up to €35 million or 7% of global annual turnover. Start-up businesses or smaller tech operations will receive proportionate financial punishments.
Speaking ahead of Wednesday’s vote, which took place in Strasbourg, co-rapporteur Brando Benifei said the legislation means that “unacceptable AI practices will be banned in Europe and the rights of workers and citizens will be protected.”
Co-rapporteur Dragos Tudorache called the AI Act “a starting point for a new model of governance built around technology.”
European legislators first proposed introducing regulation of artificial intelligence in 2021, although it was the subsequent launch of ChatGPT — followed by the high-profile release of “Heart on My Sleeve,” a track that featured AI-powered imitations of vocals by Drake and The Weeknd, last April — that made many music executives sit up and pay closer attention to the technology’s potential impact on the record business.
In response, lobbyists stepped up their efforts to convince lawmakers to add transparency provisions around the use of music in AI – a move which was fiercely opposed by the technology industry, which argued that tougher regulations would put European AI developers at a competitive disadvantage.
Now that the AI Act has been approved by the European Parliament, the legislation will undergo a number of procedural rubber-stamping stages before it is published in the EU’s Official Journal — most likely in late April or early May — with its regulations coming into force 20 days after that.
There are, however, tiered exceptions for tech companies to comply with its terms and some of its provisions are not fully applicable for up to two-years after its enactment. (The rules governing existing generative AI models commence after 12 months, although any new generative AI companies or models entering the European market after the Act has come into force have to immediately comply with its regulations).
In response to Wednesday’s vote, a coalition of European creative and copyright organizations, including global recorded-music trade body IFPI and international music publishing trade group ICMP, issued a joint statement thanking regulators and MEPs for the “essential role they have played in supporting creators and rightsholders.”
“While these obligations provide a first step for rightsholders to enforce their rights, we call on the European Parliament to continue to support the development of responsible and sustainable AI by ensuring that these important rules are put into practice in a meaningful and effective way,” said the 18 signatories, which also included European independent labels trade association IMPALA, European Authors Society GESAC and CISAC, the international trade organization for copyright collecting societies.
At many of the more than 1,500 independent record stores in the United States, vinyl sales have been growing at a healthy clip for almost a decade — up 14.2% across all retailers in 2023 alone, according to Billboard’s data provider, Luminate. So why did Luminate track 47.3% fewer vinyl sales in January and February than it did for the same months in 2023?
On its face, such a precipitous drop might appear troubling — and puzzling — given the surge of vinyl sales since the pandemic. In actuality, the decline is mostly a result of Luminate changing the decades-old methodology it had used since Billboard adopted SoundScan’s measurement system in 1991 to count sales at indie retail outlets — a change that Luminate had warned last year would make 2024’s vinyl sales numbers appear significantly lower. But some of the drop reflects a protest by independent retailers against that adjustment, which one indie community executive worries “may put a damper on one of the industry’s high-profile, feel-good stories.”
Frustrated by the methodology change, some of these indie stores have stopped reporting sales to Luminate, and the Coalition of Independent Music Stores (CIMS), the Record Store Day board, the Music Business Association and other organizations have launched an alternative chart to measure physical and vinyl sales.
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“There are consequences to every decision,” Music Business Association president Portia Sabin said in a statement.
Until the end of last year, Luminate extrapolated indie retailers’ physical album sales using a methodology that weighted actual sales by a small sample of independent stores — approximately 70 accounts totaling 140 storefronts, Billboard estimates — that represented 1,500 to 2,000 retailers of their ilk that are operating in the United States, according to label and distribution sources.
Last year, physical purchases such as vinyl and CDs at these independent retailers — even with weighting — accounted for less than 3% of total music consumption units in the United States.
Indie retailers say they don’t oppose more accurate measurement of their sales. Rather, they are incensed that Luminate stopped weighting sales just months before it plans to begin the beta phase of its upgraded Connect measurement platform, which it had designed to only count actual indie physical sales. (The final version of the enhanced platform is expected to launch in 2025.) They had wanted Luminate to delay the methodology change until it onboarded hundreds more indie music retailers to report their sales.
Until the Connect beta is launched, Luminate is basing indie physical sales solely on the actual sales retailers report, which due to the protest has been cut in half to about 33 accounts with 70 storefronts, Billboard estimates.
Indie stores say they are protesting because of concerns that they — as well as the indie labels and artists who rely on them for marketing — will lose influence if their sales suddenly appear significantly lower across the board.
Indie-label executives and their distributors say they, too, are worried about the methodology change because it might affect the marketing of developing artists. “We are extremely disappointed that Luminate chose to stop weighting indie retail sales without launching a serious program to enlist store reporting and to count the physical market,” Matador Records president Patrick Amory wrote in an email. “Independent labels and independent artists over index in physical, and especially at indie retail, and we need a level playing field with the majors to measure success. Luminate is penalizing serious, career-building, album-oriented artists on the charts. Their sales are not being counted. Their market share is being allotted to the majors. That is a disaster for independent musicians, labels and retailers.”
An additional concern is that smaller sales numbers and less weight on the Billboard charts, which are based on Luminate data, will “diminish the importance of the physical market to the music business ecosystem,” as four independent record store coalitions and indie retailing giant Amoeba Music put it in a statement issued in October.
The worry is that less music will be released in physical formats, which would financially hurt indie retailers. But a record label executive says given the booming demand for vinyl — a high-margin product for labels — those fears are unwarranted. “Right now,” says one major-label executive, “with the high prices that the growing vinyl format commands, labels are printing dollars with healthy profit margin.”
Indie retailers, many of them iconic local businesses that have served their communities for decades, have panicked ahead of big changes in the past. When the major record companies decided to change the official day for new music releases from Tuesday in the U.S. to a worldwide Friday street date in 2014, “indie stores told labels, ‘You are killing us,’” recalls the major-label executive. “And yet no stores disappeared in the aftermath of that change.”
Some chart mavens say the boycott could be a risky move. By intentionally shrinking their influence on Billboard’s charts, indie stores could drive fans — who, thanks to social media, are much more attuned to the metrics that determine chart positions — to start shopping at sites or stores where they know their purchases will benefit their favorite artist.
Artists and record labels hoping to climb Billboard’s charts, meanwhile, might opt to stage meet-and-greets and other in-store promotions at businesses that report their data, though plenty of acts and record companies still host such events in stores that don’t report to Luminate.
In response to the protest, Luminate says it’s working to lure back stores that stopped reporting and onboard a critical mass of indie merchants that have not reported their data before. Stores that have stopped reporting are now permitted to bypass Luminate’s standard four-week onboarding process if they commit to reporting data for at least a year. For the latter, Luminate offers an instructional video and a written guide to the process, although indie merchants say they have pressed for personalized assistance and simplified reporting requirements.
Luminate also recently hired respected veteran music data executive Chris Muratore as its director for partnerships. Muratore worked for 18 years in various positions at Luminate’s previous iteration, Nielsen SoundScan, and more recently founded Border City Media, the startup behind music consumption data tool BuzzAngle Music (now Alpha Data, and, like Luminate, a subsidiary of Billboard’s parent company, Penske Media Corporation). He will focus on building and maintaining relationships with the independent music retail sector “to ensure physical music sale data collection is as accurate and representative as possible,” according to the release announcing his appointment.
When Billboard began tabulating charts using SoundScan data in May 1991, mass merchant sales, such as those by chain stores and, later, internet or other mail-order operations — were based on actual sales. But the data company used weighted samples of independent store sales because not all stores back then had the point-of-sale (POS) technology, nor the capability to transmit store reports. So, to compensate, stores were assigned weighting depending on how many other non-reporting stores were in their DMA, or designated market area. But over the years, that process became more difficult, and less scientific, as thousands of stores closed, sources say.
Using data from a confidential Luminate report shown to labels, Billboard estimates that last year, the data platform counted each album scanned by 140 indie retailers as 8.54 physical albums. Based on that extrapolation, Luminate reported that an average of close to 72,000 physical album copies — vinyl and CDs — sold each week, totaling 31.9 million copies sold in indie stores for the year.
Overall, in 2023, U.S. physical sales totaled nearly 87 million copies, of which 49.6 million was vinyl while 36.8 million was CDs. Of that total, indie stores, when they were still weighted, accounted for 36.7% of sales; non-traditional, which includes internet, mail order, Christian retailers and stores like Urban Outfitters, comprised 41.5% of physical sales; mass merchants like Target and Walmart, 16.5%; and chains like Barnes & Noble, 5%. As a result of the methodology change and boycott, Luminate reported a 40.2% drop in total physical sales (including vinyl and CDs at indie shops, chains and big-box stores) for the first eight weeks of 2024 compared with the same period in 2023 — from 13.6 million albums to 8.1 million. Within that, indie store sales fell 95.4%, from 5.71 million albums when weighted last year, to 262,000 copies.
Meanwhile, the aforementioned unweighted average weekly physical sales of nearly 72,000 averaged reported by indie retailers from January to November 2023 are now averaging 27,000 per week for the first eight weeks of 2024 because of the stores that have stopped reporting to Luminate.
As part of its plans to calculate actual sales instead of extrapolating them from a weighted sample, Luminate revealed in October that it had identified 570 indie accounts — with, industry sources say, the aid of labels, distributors and store coalitions — that it wanted to add as reporters. But as of Dec. 19, with the change in methodology looming, Luminate’s Music Connect website indicated that only six more indie sales reporters had been added, with the indie account total growing from 72 to 78. After the apparent boycott began, that fell to 36 reporters, and as of Feb. 22, to 33 indie store reporters.
Some of the retailers that have stopped reporting to Luminate are now sending their numbers to music data analysis platform StreetPulse, which is tabulating the Indie Retail Top 50 published by Hits Daily Double. Sources familiar with the chart say approximately 82 accounts operating about 185 indie stores are providing sales data, and another 50 stores are reporting online sales only.
Indie stores that have switched to StreetPulse claim it is more user-friendly because “Luminate expects the store reporters to do all the work to prepare the data for ingestion,” says one source familiar with the situation. “That takes time and [requires] a system able to make the reports. Luminate expects an indie store owner, who may be a one-man operation, to have the technical capabilities and manpower of a chain like Target.”
The source says the StreetPulse system “is cloud-based and has already integrated all the preeminent POS systems like Square for Retail Free, Shopify Clover and even some of the legacy systems like Lightspeed and Fieldstack, so it’s much easier to report.”
CIMS and ThinkIndie Distribution executive director Andrea Paschal says she supports the alternative chart because she felt her organization was “brushed aside” by Luminate.
As this conflict continues, it’s worth noting that vinyl sales keep growing. Even if indie store vinyl counts were eliminated for the first eight weeks of this year and last, Luminate’s Connect system indicates that year-to-date vinyl sales for the other nonweighted store sectors — chain, mass merchants, internet/mail order/venues and nontraditional retail — are still up nearly 7%. And the vinyl sales bonanza Record Store Day that was launched by independent record stores in 2007 is slated for April 20, less than six weeks away.
A version of this story originally appeared in the March 9, 2024, issue of Billboard.
HarbourView Equity Partners, the Newark, NJ-based investment firm that has acquired rights to music by Wiz Khalifa and Fleetwood Mac’s Christine McVie, among many others, raised approximately $500 million through an asset-backed securitization [ABS], the company announced Wednesday.
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The private ABS, backed by royalties generated by its music catalog, was led by global investment firm KKR. Investment accounts advised by Kuvare Asset Management also participated. Guggenheim Securities was the structuring advisor, and Guggenheim Securities and Barclays acted as co-placement agents.
“We are grateful to KKR for working with us to deliver a flexible and innovative financing structure that will support HarbourView in expanding its reach,” HarbourView founder and CEO Sherrese Clarke Soares said in a statement. “This capital will allow us to further our mission of investing in assets and companies driven by premier intellectual property while striving to ensure that creators are appropriately valued for their contributions to the world.”
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“This transaction is a testament to the scale and versatility of our High-Grade Asset-Based Finance [ABF] strategy, which is a fast-growing segment of our private credit business,” Avi Korn and Chris Mellia, co-heads of U.S. ABF at KKR, said in a statement. KKR’s ABF segment has amassed approximately $48 billion in assets under management since 2016. “Music IP is one of many areas where we see opportunity and we are pleased to finance a scaled and high-quality portfolio in this space.”
Founded in 2021, HarbourView launched with $1 billion of financial backing from investment giant Apollo Global Management. The company increased its buying power in December by increasing its credit facility by $100 million to $300 million. To date, it has acquired over 50 catalogs — including Brad Paisley, Jeremih, Nelly, Luis Fonsi and Eslabon Armado — and has $1.6 billion in regulatory managed assets.
The ABS will give HarbourView additional ammunition to pursue music rights. When a music company raises money through an ABS, it sells debt that will be repaid by royalties from its music catalog. A large music catalog filled with established songs provides to type of diversified, predictable income that’s attractive to investors. Music companies often prefer an ABS because it tends to have a higher loan-to-value ratio than traditional debt. That means the music company can raise more funding from a specific portfolio through an ABS than a bank would be willing to lend against the same assets.
A handful of companies have raised enormous sums of money through music royalties ABS deals in the past two years. In 2021, Lyric and Northleaf launched a $304 million ABS backed by 52,000 assets in Spirit Music Group’s portfolio. In 2022, Concord did a $1.8 billion ABS and Chord Music Partners, a venture of KKR and Dundee Music Partners, raised $733 million. Most recently, Kobalt raised $267 million in February through a security backed by publishing royalties from a 5,000-song catalog.
The growth of the music streaming market has helped create the current climate for music-backed ABS deals — and should result in more deals in the future. A large music catalog’s streaming royalties makes music assets “more suitable” for securitization, ratings agency S&P Global wrote in February. “The uptick in global music industry revenue over the last several years, and the desire of market players to diversify funding sources suggests that we may continue to see more of these types of transactions in the coming years.”