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More than one third of the songs — at least 17 tracks — on Billboard’s TikTok Top 50 chart are no longer available for use on the app after Universal Music Group‘s negotiations with the platform fell apart last week. UMG said the Bytedance-owned company refuses to pay “fair value for the music.”
The missing tracks include several of the most popular songs on TikTok: Muni Long’s “Made for Me” (No. 2 on the TikTok Top 50), Xavi’s “La Diabla” (No. 7), Drake’s “Rich Baby Daddy” (No. 9), and Lana Del Rey’s “Let the Light In” (No. 11).
The absence impacts both recent releases — Ariana Grande’s “Yes, And?” along with a pair of songs from Nicki Minaj’s December album — and catalog: Lesley Gore’s “Misty,” originally released way back in 1963, and Sophie Ellis-Bextor’s “Murder on the Dancefloor,” which came out in 2002 but charted on the Hot 100 for the first time recently due to a synch in the film Saltburn.
Users still appear to be able to still make videos with an official “orchestral version” of “Murder on the Dancefloor” — likely because it’s licensed to a different label. And even though UMG and TikTok’s licensing agreement expired, 10k.Caash’s “Aloha,” which was released by the UMG label Def Jam in 2019, is available to soundtrack TikTok videos as of Thursday morning.
In addition, TikTok has long had a vibrant bootleg scene, which means that in some cases, users have uploaded their own versions of UMG songs or made remixes in place of the official sounds. Those bootlegs were also a source of frustration for the record company, which said last week that “TikTok makes little effort to deal with the vast amounts of content on its platform that infringe our artists’ music.” It’s worth noting, however, that labels often encourage remixers to rework their artists’ songs without the proper clearances in the hopes that it starts a viral trend.
TikTok has been a dominant force in the music industry since 2019, transforming both marketing and signing strategy. “We fully immerse ourselves in the diverse subcultures of TikTok,” said Alec Henderson, vp of digital at the independent label APG, in December. “We have weekly meetings dedicated to sharing things that we’re seeing there. We view the TikTok viral chart with a competitive mindset. And we put a high emphasis on working with artists that are native to the platform.”
As the industry became increasingly focused on TikTok, it also became increasingly uneasy about the platform’s power. The app became increasingly saturated — brands, movies, videogames, cats, ASMR, you name it — which made marketing music both more expensive and less effective. Labels are used to having some level of influence over promotional levers; TikTok proved frustratingly hard to leverage.
Tension over the platform’s low payouts started to grow as well. TikTok’s parent company, ByteDance, “doesn’t view music as a value add,” one senior executive told Billboard in the fall of 2022. “They just view music as a cost center they have to limit as much as possible.”
“The [payout] numbers are horrifying,” said a manager at the time. A marketer who oversaw the campaign for a single that was used in roughly half a million TikTok videos, earning billions of views, found that his artist took home less than $5,000 from the platform. It was no surprise when UMG CEO Lucian Grainge fired a warning shot late in 2022, noting pointedly at an industry conference that a value gap was “forming fast in the new iterations of short-form video.”
Last week, Universal Music Group said that its license agreement with TikTok was set to expire on Jan. 31. “TikTok proposed paying our artists and songwriters at a rate that is a fraction of the rate that similarly situated major social platforms pay,” UMG said in an open letter. The record company accused TikTok of trying to “intimidate us into conceding to a bad deal that undervalues music and shortchanges artists and songwriters as well as their fans.”
After UMG issued its statement, TikTok hit back, accusing the record company of promoting a “false narrative.” It’s “sad and disappointing,” TikTok added, “that [UMG] has put their own greed above the interests of their artists and songwriters.” These comments elicited yet another response from UMG.
If the standoff between the two companies continues, it will start to affect even more music: At the end of the month, TikTok will have to take down any song that Universal Music Publishing Group (UMPG) has a stake in. Many UMPG songwriters collaborate with artists signed to other labels (or are signed as artists on other labels). This means that the number of songs that become unusable on TikTok could balloon.
Artists can market their music elsewhere, of course — TikTok has competitors in both YouTube Shorts and Instagram Reels. However, neither of those apps have demonstrated the ability to break a song with the speed and intensity of TikTok.
Spotify’s revenues for 2023 grew 16% year over year, reaching 3.67 billion euros ($4.05 billion), as a surge in both monthly active users (up 23% to 602 million) and premium subscribers (up 15% to 236 million) beat expectations. After a third quarter in which the streaming company turned a profit for the first time in […]
Corporate finance veteran Michael Grau joins Madison Square Garden Entertainment Corp in a dual-capacity, with duties for overseeing the live entertainment specialist’s financial matters.
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Effective from Feb. 12, Grau joins the business as executive VP, finance, then, following a transition period, adds responsibilities of CFO from April 1.
In this role, Grau will work closely with MSG Entertainment’s executive management team to support the long-term direction of the company, reporting to MSG Entertainment’s executive chairman and CEO James L. Dolan.
Also, he will provide strategic financial insight on all facets of the business, and deal with financial planning and analysis, controllership, treasury, investor relations, tax, and procurement functions.
Grau joins MSG Entertainment from Altice USA, the publicly-traded cable communications company, where he served as CFO. He took that role in 2019 following a nearly 20-year career at Cablevision Systems Corporation, which was acquired by Altice in 2016.
“We are pleased to welcome Michael to MSG Entertainment in this important role,” comments Dolan. “Michael was previously a key member of our finance team at Cablevision, and he brings significant financial and operating experience to this role, which will prove valuable as we continue to advance the company’s key initiatives.”
“MSG Entertainment is a leader in live entertainment, and I am honored by the opportunity to leverage my experience in this role,” adds Grau. “I look forward to working with the company’s management team, and the entire finance department, to help ensure we continue to deliver excellence across our financial operations and drive business priorities.”
MSG Entertainment’s portfolio includes New York’s Madison Square Garden, The Theater at Madison Square Garden, Radio City Music Hall, Beacon Theatre, and The Chicago Theatre, and the original production, the Christmas Spectacular Starring the Radio City Rockettes.
The group last year finalized a spin-off that separated the pure-play live music business from MSG Entertainment’s state-of-the-art venue in Las Vegas, sports television network and hospitality businesses.
After negotiating a new contract with film and TV producers for the last 10 days, the American Federation of Musicians (AFM), the 70,000-member union that represents musicians in orchestras and on-air performances, has “not resolved our core issues” and will continue negotiations later this month, according to a statement put out Monday (Feb. 5) by Tino Gagliardi, the union’s international president and chief negotiator.
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“The time is now,” Gagliardi tells Billboard over Zoom. “The business model has changed, and the way we are compensated needs to reflect that.”
Echoing the Hollywood writers and actors unions, which went on strike for months in 2023 before resolving their contracts with the Alliance of Motion Pictures and Television Producers (AMPTP), the AFM identified its top issues as higher compensation, improved streaming residual payments, better healthcare and protections against artificial intelligence (AI). To the latter issue, Gagliardi said in Monday’s statement that AI protections are necessary “so our sound and/or image cannot be captured or used without consent, credit, and compensation.”
Gagliardi adds to Billboard: “I’m going to continue to fight and we’re going to continue our argument for fair treatment for musicians until we actually come to a deal. Am I confident we’re going to get one? I’m never confident. It’s up to them to show me that they’re willing to make a deal.”
AMPTP reps did not respond to requests for comment.
Members of the Writers Guild of America, SAG-AFTRA, IATSE and other Hollywood unions have been supporting the AFM since contract negotiations began with a Jan. 22 rally at the offices of the AMPTP in Sherman Oaks, Calif.
The writers and actors unions’ 2023 agreements with the AMPTP make Gagliardi hopeful for a timely AFM deal. “The solidarity in the entertainment guilds is very solid this time around,” he says, “unlike some of the issues we’ve had in the past.”
At the January rally, Teamsters Local 399 secretary-treasurer Lindsay Dougherty told a crowd of union supporters: “We learned a hard, long lesson last year that we had to be together since day one. That’s going to be the difference going into this fight for the musicians, is that we’re all together in this industry.”
Negotiations will resume Feb. 21 and Feb. 22, according to Gagliardi.
“Rap beef is so washed and tired. Exhausting. Embarrassing. Just f—ing over all corny as f—.”
The rapper Coi Leray made this pronouncement in a since-deleted tweet on Jan. 26. She was responding to an Eminem verse in a new Lyrical Lemonade song titled “Doomsday Pt. 2,” but the spat — and Leray’s suggestion that beef was a waste of energy — was quickly forgotten.
That’s because, that same day, Megan Thee Stallion released “Hiss,” a withering track that hurls vitriol at blogs, exes, shit-talkers, copycats, “Z-list hoes,” and more. Nicki Minaj is not named in the song, but she took offense to a line, and has spent her subsequent days letting the world know in interviews and on social media. She also attacked Megan Thee Stallion in a venomous new song called “Big Foot.”
All of this has been great for the commercial reception of “Hiss,” which launched at No. 1 on the Hot 100, far higher than Megan Thee Stallion’s last single, “Cobra” (No. 32). On-demand audio streams of “Cobra” started at around 1.7 million the day of release and then slid to a plateau around 1.1 to 1.2 million, according to Luminate. “Hiss” started out higher — earning 3.2 million on-demand audio streams opening day — and then began to make a similar slide, falling to 2.3 million plays by Sunday, a drop of around 27%. However, when Minaj released “Big Foot” Sunday at midnight, streams of “Hiss” shot back up — hitting 3.8 million on Monday, a jump of more than 60% — and they stayed strong for the rest of the week.
That’s all worth real money. Billboard estimates that “Hiss” earned around $121,000 in royalties from those on-demand audio streams — about $33,000 of which came from that “Big Foot” bump. (Megan Thee Stallion recently signed a distribution deal with Warner Music Group.) “Big Foot,” meanwhile, has earned more than $44,000 in recorded music royalties from its audio streams, Billboard estimates. (These figures don’t take into account other sources of streams or sales, which were especially significant for Megan Thee Stallion.)
In an industry where the competition for attention is fiercer than ever, the combination of controversy and celebrity remains the closest thing to a surefire winner. “When you’re in a very crowded marketplace with however many songs coming out on streaming services every day, you have to figure out an angle to cut through the noise,” says Eddie Blackmon, a longtime A&R. “Obviously this is cutting through the noise.”
“Beef always helps music, because it just brings attention,” adds another rap executive who requested anonymity to speak candidly. “In the clickbait world that we’re in, that gets the headlines, that’s what people talk about, that gets the barbershops going. People react to negativity more than they do positivity.”
Megan Thee Stallion has already proved adept at using celebrity and controversy to galvanize headlines and streaming, of course. When she released “WAP” with Cardi B in 2020, conservatives objected to the sexually explicit lyrics, turning the single into a culture-war-flashpoint — and a No. 1 hit. (When the two rappers released “Bongos” in 2023, it failed to incense right-wing commentators, debuted at No. 14, and quickly faded from view.) Lil Nas X achieved a similar feat with “Montero (Call Me By Your Name),” transforming conservative outrage over the track’s video into a tail-wind that propelled him to No. 1.
These days, culture war controversy may be the most effective rocket fuel for hits. For two other examples that helped mint No. 1’s in 2023, see Oliver Anthony Music’s “Rich Men North of Richmond” and Jason Aldean’s “Try That in a Small Town.”
Hip-hop feuds are another strain of controversy with their own long history, fodder for many an internet list: MC Shan vs. KRS-One; Lil’ Kim vs. Foxy Brown; Jay-Z vs. Nas; 50 Cent vs. Ja Rule; Meek Mill vs. Drake; Minaj vs. Remy Ma, and many, many, many more.
Sha Money XL produced 50 Cent’s “Wanksta,” a hooky Ja Rule diss that came out in 2002. “That was 50’s first break-through record,” Sha Money XL says. “DJs went crazy with it.”
A dispute between artists “is definitely going to raise your attention,” the producer and longtime record executive adds. “The bad thing is there can be fights, shoot-outs, that come with it.”
Listeners love to take sides in abstract debates — which rapper is more talented, or more of a sellout — especially in an era where zealous fan armies vie for primacy online, but there can be dangerous real-world consequences. “With beefs there can be a bravado there; guys want to hurt each other or defend their ego,” says Ray Daniels, a veteran hip-hop executive and host of The GAUDS Show.
In the case of Megan Thee Stallion and Nicki Minaj, Daniels continues, “no one is saying, ‘tool up and get security up.’ So to me, it’s a great thing that they’re using their platforms to shine lights on each other, whether that’s good light or bad light. Both songs are streaming; it’s obviously working.” (Though while streams of “Hiss” rebounded and stayed high, “Big Foot” enjoyed a big debut — 4.1 million on-demand audio streams — then fell off quickly, logging 1.1 million plays in the last day of the track week, according to Luminate.)
If sales can be a side effect of some spats, they can also be the main event, the whole purpose of the fracas. 50 Cent and Kanye West battled over who would sell more units in 2007, as did Minaj and Travis Scott in 2018. (At the time, Minaj memorably ridiculed Scott as “this Auto-Tune man coming up here selling f—ing sweaters.”)
Squabbles over sales also help drive sales, of course — it’s not a coincidence that West’s Graduation earned the biggest opening week of his career at that point. “Some skeptical hip-hop fans believe that most of these feuds are merely cheap marketing stunts meant to help sell records,” The New York Times noted at the time. “This feud was unabashedly a marketing stunt, with record sales not the hidden agenda but the main point.”
“We know there are real beefs and then there are manufactured beefs,” acknowledges Blackmon, who started his career working at West’s G.O.O.D. Music label. “But they all help build awareness of the songs that are being released. It’s all marketing at the end of the day. If it takes on a life of its own, the companies and teams around it figure out how to fan the flame.”
That fanning process can happen more quickly in the social media era. “Social media makes little things bigger, magnifies the tension and the opinions,” Sha Money XL notes.
Many of the prominent music- and culture-focused accounts on X, Instagram, and TikTok are entrepreneurial, meaning they accept money for posts. “People spend tens of thousands of dollars across Instagram, blogs, and X culture accounts,” says one digital marketer who is not working with either Megan Thee Stallion or Minaj. “Narrative-based campaigns are everything. You’re getting the internet to see the parts of the story you want them to see; if you wanted to hurt somebody, for example, you seed out their low first-week numbers [when they release an album], knowing that everybody’s just gonna roast them.”
“Black Twitter has had a field day right now with this whole feud” between Minaj and Megan Thee Stallion, the digital marketer adds. His advice: “Keep fueling it.”
“You want to continue the conversation,” a second digital marketer uninvolved with either rapper agrees. If a rivalry is developing, he continues, artist’s teams can go to culture-focused accounts and pay $50 or $100 for posts asking something as simple as, “who’s harder?” “It’s much easier to push a narrative on X, especially if you’re a large artist,” the digital marketer says. “You’re going to get impressions just by using the name.”
Both Megan Thee Stallion and Minaj seem keenly aware that their clash has the potential to drive clicks. Even as Minaj insults Megan Thee Stallion in “Big Foot,” she claims that she’s doing her rival a favor: “It’s the most attention you’ve ever gotten.” Meanwhile, “Hiss” targets anyone “usin’ my name for likes.” “All this free promo,” Megan raps. “I’m turnin’ a profit.”
In its first full quarter of operation, Sphere, the next-generation music venue in Las Vegas, lost $193.9 million on revenue of $167.8 million, its owner, Sphere Entertainment Co., announced Monday (Feb. 5). The company posted an adjusted operating gain of $14.1 million if “certain corporate overhead expenses” were excluded.
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In the quarter ended Dec. 31, nearly half of Sphere’s revenue — $92.9 million — came from The Sphere Experience’s 191 performances. (The Sphere Experience includes a tour of the venue and a viewing of the film Postcard From Earth.) Concerts accounted for nearly all of the $55.2 million of event-related revenues. Advertising on the outside of the venue and suite license fees totaled $17.5 million.
After U2’s residency ends on Mar. 2, the venue will host runs by Phish and Dead & Company. Executive chairman/CEO Jim Dolan didn’t announce any new residencies but said during Monday’s earnings call that “pretty much our calendar is full for this calendar year.” Demand from artists continues to grow, Dolan added, and the company expects 2025 to be “another full year.”
Including MSG Networks, Sphere Entertainment had $314.2 million of revenue and an operating loss of $159.7 million. MSG Networks had revenue of $146.4 million, a 12.5% decline from the prior-year period.
Sphere opened on Sept. 29 and posted $4.1 million from two U2 concerts, and $7.8 million in total revenue, in the previous quarter. The venue has received rave reviews and worldwide attention for its captivating audio-visual experience and presence on the Las Vegas skyline. It featured prominently in Las Vegas’s Formula 1 race in November and will grab more attention this weekend as Las Vegas hosts Super Bowl LVIII on Sunday (Feb 11).
Although Sphere ended its bid to expand into London, the company is having “substantive discussions about expanding to international markets,” said Dolan. The plan is to have a franchise model for additional venues that will generate revenues immediately through construction and development, Dolan added.
Shares of Sphere Entertainment rose as much as 10.4% to $39.11 on Monday and closed at $38.97, up 10.1%.
For the second straight year, and third in the last four, the top honors in the Big Four Grammy categories were all split among different record labels, as Republic Records (Taylor Swift, album of the year for Midnights), Columbia Records (Miley Cyrus, record of the year for “Flowers”), Interscope Geffen A&M/Atlantic Records (Billie Eilish, song of the year for “What Was I Made For?”) and RCA Records (Victoria Monét, best new artist) all divvied up the major prizes.
This year, that breaks down into a split among the three major label groups, as both Universal Music Group (UMG) and Sony Music Entertainment (SME) accounted for two each, while Warner Music Group (WMG) earned one. (The discrepancy between the four categories and five label wins is because Eilish’s win for song of the year is technically split; she is a Darkroom/Interscope recording artist for UMG, but the song appeared on the Barbie soundtrack, which was released by WMG’s Atlantic Records.) In 2023, the top four was split evenly across the three majors and an independent, with Columbia (Harry Styles, album of the year for Harry’s House), Atlantic (Lizzo, record of the year for “About Damn Time”), Verve (Samara Joy, best new artist) and indie label Redwing (Bonnie Raitt, song of the year for “Just Like That”) scoring wins.
Among the Big Four and the top seven genres by U.S. market share — pop, rock, R&B, hip-hop, Latin, country and dance — RCA and Atlantic picked up the most wins, tying for five apiece, as Monét (best new artist, best R&B album) and SZA (best pop duo/group performance, best R&B song, best progressive R&B album) led the way for RCA while Eilish (song of the year for her track on the Barbie album), Fred Again… (best dance/electronic recording with Skrillex and Flowdan, best dance/electronic music album) and Paramore (best rock album, best alternative music performance) paced Atlantic. Interscope, through Eilish and a trio of awards for acclaimed group boygenius (best rock song, best rock performance and best alternative music album) landed four, while Loma Vista/Concord, off a big night for Killer Mike (best rap album, best rap song, best rap performance), racked up three.
Aside from that, honors were largely evenly divided, with no other label picking up more than two awards. Swift led Republic’s pair of wins (she also won best pop vocal album), while Cyrus led Columbia’s two (she also earned best pop solo performance); a pair of victories for Chris Stapleton (best country song and best country solo performance) landed two wins for UMG Nashville; BMG got two for best pop dance recording for Kylie Minogue’s “Padam Padam” and best country album for Lainey Wilson’s Bell Bottom Country; and UMG Latin earned best musica urbano album for Karol G’s Mañana Será Bonita and Juanes’ Vida Cotidiana, which came in a tie with Natalia Lafourcade’s De Todas Las Flores (Sony Latin) for best Latin rock or alternative album.
The rest were spread across a number of labels, including Def Jam (Coco Jones, best R&B performance), Warner Records (Zach Bryan, best country duo/group performance with Kacey Musgraves), Alamo (Lil Durk, best melodic rap performance with J. Cole), EMPIRE (PJ Morton, best traditional R&B performance with Susan Carol), Blackened (Metallica, best metal performance) Prajin/The Orchard (Peso Pluma, best Música Mexicana album), Cosmica (Gaby Moreno, best Latin pop album) and Ruben Blades Music (Ruben Blades, best tropical Latin album).
Overall, that gave Universal Music Group 11 of those victories, with indies racking up 10, Sony nine and Warner Music Group six.
The music industry’s Cold War with TikTok just turned very hot — and extremely complicated. By the end of the month, Universal Music Group (UMG) will require the platform to take down music it controls even a small part of, by using what some music executives call “the nuclear option.” This will prevent some other rights holders from making money on TikTok — but at least some of them are cheering it on.
On Jan. 30, the day before UMG’s latest deal with TikTok lapsed, the company announced in an open letter that “we must call time out on TikTok” and began removing its recorded music from the platform. After a 30-day grace period, UMG says it will also require TikTok to take down any song in which Universal Music Publishing Group (UMPG) controls any rights. That means songs by Harry Styles, SZA and Bad Bunny; those with writing credit from creators like Metro Boomin and Jack Antonoff; and even those that sample compositions by UMPG songwriters. In some markets, that might account for more than half of the music used on the platform.
The question is what this means for the rest of the business. Styles, SZA and Bad Bunny are three of the biggest acts signed to or distributed by Sony Music Entertainment, so this would affect that label, as well as Warner Music Group, BMG and scores of independents. From the end of February until UMG and TikTok reach a new licensing deal, they will not earn any money on music to which UMG has any rights — a relatively minor income stream at this point — while losing out on an important source of promotion. In the long term, of course, a win for UMG that pushes TikTok to pay more for the rights to music could also help the entire industry.
This Cold War turned hot pretty suddenly. For years, rights holders have embraced TikTok as a promotional vehicle while griping about the short-form video platform’s low payouts in what seemed like a repeat of the music industry’s contentious relationship with YouTube. Both can pay less than other platforms because in many cases they can essentially operate under the Digital Millennium Copyright Act, which allows them to make available content uploaded by users until rights holders ask for a takedown. In language that sounds like it could have come from YouTube a decade ago — or from a file-sharing service a decade before that, for that matter — in a statement released on social media, TikTok said that UMG had abandoned a popular platform “that serves as a free promotional and discovery vehicle for their talent.” Basically, they offer exposure. But as creators and rights holders might say — and here you have to imagine a Borscht Belt delivery — you could DIE of exposure!
UMG’s move came at the worst possible time for TikTok: the day before a Senate committee hearing on child safety and social media, during an escalating Middle East conflict that has focused negative attention on TikTok’s Chinese ownership, and during a week when much of the music business was in Los Angeles for the Grammys. This isn’t entirely a coincidence: UMG’s long-term deal actually expired at the end of 2023, and Jan. 31 was just the end of a one-month extension. (A source close to TikTok said that the two sides were close to a deal at the end of December, while a source close to UMG said that was not the case.) Fair or not, the pressure in Washington could be substantial. (I have serious concerns about a Chinese-owned app becoming an important source of news on Taiwan, but I’m not sure that has much to do with music licensing.)
So far, there has been some support for UMG from other companies in the music business. Neither of the other two major labels would comment — Sony declined and a spokesperson for Warner did not return messages — and it’s unlikely that they will, for antitrust reasons. Primary Wave, Downtown and Hipgnosis have expressed support for Universal, though. And at a Grammy Week music publishers event, National Music Publishers’ Association (NMPA) president/CEO David Israelite pointed out that the model contract with TikTok that’s used by many NMPA members expires in April.
Tik-tok, indeed.
The dynamic here is complicated but potentially revolutionary. For the last two decades, most of the negotiations between media and technology companies have involved a few rights holders that each control significant amounts of content and a platform that has a larger share in its market than they do — think labels and streaming services or book publishers and Amazon. Since antitrust law almost always prevents big companies from negotiating together — a lesson Apple and some book publishers learned the hard way — the platforms have an advantage. In this case, UMG managed to get more leverage by using publishing rights that by their nature will affect impact a lot of compositions, creating a situation where some small companies can cheer it on.
The question is what happens after February. Rights holders can live without the money they make on TikTok, but what about the platform’s promotional value for breaking artists? For now, presumably, artists on other labels who don’t work with UMPG songwriters will gain an advantage. If this dispute lasts a few months, that might give smaller labels enough of an advantage to matter. If it lasts longer than that, though, TikTok could face more competition, too. The company has suggested that music accounts for a modest amount of the platform’s value, but that would be tested if TikTok has to compete against other short-form video platforms that have rights to use music that it doesn’t.
The more likely scenario is that UMGand TikTok will reach an agreement — perhaps one that both will grumble about but accept — and then over time find ways to work together that benefit both sides, plus creators of all kinds. Short-form video could eventually grow into a truly important revenue stream. By that time, of course, a new platform will probably come along to challenge that, too.
A year into SoundCloud’s fan-powered royalties, a departure from the traditional “pro rata” method of calculating streaming royalties, artists have a better understanding of their fan bases and a better chance to monetize their listeners, according to a new report by author, podcaster and economics professor Will Page.
Fan-powered royalties — known more broadly as user-centric royalties — is a method for calculating streaming payouts to independent artists based on individual fans’ listening on SoundCloud. The traditional, pro-rata model divvies up a large revenue pool based on a track’s total number of plays. In that scenario, an up-and-coming artist shares the same royalty pool as the biggest superstar.
User-centric royalties turn a big pool into smaller silos by splitting a listener’s subscription or advertising revenue based on only the tracks they streamed. If a listener streams only independent artists, most or all of the user’s subscription or advertising revenue will go to those artists. Since SoundCloud first announced fan-powered royalties in 2021, Warner Music Group and Merlin have agreed to use the calculation approach for their artists.
SoundCloud singles out an artist’s biggest fans and gives artists the tools to engage with those supporters through person-to-person messaging. With the help of tools that help artists engage directly with their fans on the SoundCloud platform, a small number of what SoundCloud calls “true fans” will provide an “outsize” share of an artist’s royalties. (Page did not define “true fan” or explain the threshold that separates them from less passionate ones.) The combination of the engagement tools and the fan-powered royalties “make this true fan game the most desirable to play,” wrote Page.
The promise of fan-powered royalties is a more sustainable business model for up-and-coming and working-class musicians. For SoundCloud, a well-known springboard for young musicians’ entry into the big leagues, a model that benefits independent artists over major-label superstars would help cement that platform’s credentials in the creator community.
So, Page offered three case studies that examined artists in different stages of their careers. In 2022, Rapper Lil Uzi Vert opted into fan-powered royalties and gave SoundCloud an exclusive on the track “Space Cadet” from his Red & White EP. As a result, according to Page, “more of Uzi’s listeners became true fans, and those true fans made up an even greater proportion of the overall revenue.” With fan-powered royalties and insights from the platform, true fans accounted for 6.5% of the rapper’s audience in July 2022, up from 5.2% in the previous month, as well as 71.8% of his revenue, up from 54.6%. The audience he gained was engaged: 6% of them were true fans, 69% were classified as engaged and only 9% were passive listeners.
To show that fan-powered royalties can help a mid-tier, independent artist, Page offers the example of Kelow LaTesha, a rapper with about 14,000 SoundCloud followers. LaTesha used fan-powered royalties to reach more listeners. True fans’ share of her revenue jumped to 45.7% in July 2022 from 32.2% in June 2022. The number of true fans increased, but because she gained a greater share of passive listeners, LaTesha’s true fans accounted for 1.4% of her listeners, down from 1.7%.
The do-it-yourself case study, focusing on EDM producer/DJ ShortRound, improved both his true fans and his revenue from those fans. From June to July 2022, true fans’ share of DJ ShortRound’s SoundCloud audience climbed from 3% to 4.4% and their share of his revenue jumped from 77.7% to 82%.
SoundCloud’s adoption of fan-powered royalties pre-dated a larger effort to make streaming more financially viable for labels and artists. Universal Music Group partnered with streaming service Deezer in 2023 to improve payouts to professional musicians while reducing payouts to background noise and other types of audio content that arguably provide less value to listeners. In Europe, politicians are calling for “fairer models of streaming revenue allocation” for artists.
SoundCloud’s approach might not be the best approach for all streaming platforms, but the handful of case studies is evidence that the approach works for SoundCloud. The combination of fan-powered royalties and creator tools “opens a new path to prosperity that the entire music industry should understand,” wrote Page.
K-pop is having amazing charts and sales success and selling out large venues around the world, but the South Korean companies behind those artists are off to a terrible start in 2024.
Through Friday (Feb. 2), four K-pop stocks — HYBE, SM Entertainment, JYP Entertainment and YG Entertainment — have fallen an average of 17% year to date. HYBE, home to BTS and its members’ various solo projects, has had the best performance with a 12% decline, while JYP Entertainment is the worst of the group with a 24.1% loss. Elsewhere, YG Entertainment has lost 14.7% and SM Entertainment is down 17.4%. Korean stocks in general have gotten off to a much better start: Through Feb. 2, the KOSPI composite index of Korean companies increased 5.5%.
Investors may feel K-pop’s finances are less than reliable after news broke this week that Kakao Corp. is auditing SM Entertainment’s financial practices following its acquisition of a 40% equity stake in 2023, according to reports out of South Korea. Kakao’s audio committee is investigating “the appropriateness of investment decisions made by SM management without holding prior consultations with Kakao,” a Kakao official told The Korea Times. For the time being, Kakao is only auditing SM Entertainment’s books, not overhauling its management or considering selling its shares. Amidst heavy media coverage in Korea, Kakao went as far as to issue a statement on Monday (Jan. 29) to dispel rumors it will sell its stake in SM.
Spotify, on the other hand, is soaring ahead of its fourth-quarter earnings report on Tuesday (Feb. 6). The music streaming giant gained 3.8% to $222.31 this week, bringing its year-to-date gain to 18.4%. Spotify shares rose 1.6% on Friday after news broke the company had signed a new distribution deal with popular podcaster Joe Rogan. Spotify will sell ads for and distribute The Joe Rogan Experience on several multiple podcast platforms, according to the Wall Street Journal. So, unlike the previous deal, Rogan’s show will not be exclusive to Spotify and will be available on YouTube and elsewhere.
Although Rogan is no longer exclusive to Spotify, the deal could be extremely lucrative. An upfront minimum guarantee and ad revenue share could be worth up to $250 million, according to the report. While Rogan has proved to be enduringly popular, Spotify kept its relationship with the comedian while maintaining distance from its previous strategy of high-priced, exclusive content deals. Call Her Daddy is no longer exclusive to Spotify, Barack and Michelle Obama departed for Amazon’s Audible, and the former royals, Prince Harry and Meghan Markle, were not renewed.
Investors’ enthusiasm for Spotify hasn’t spilled over to other music streaming companies, however. Abu Dhabi-based music streamer Anghami fell 10.1% to $0.98 this week, bringing its year-to-date decline to 5.8%. Three other music streaming companies also posted losses: France’s Deezer fell 2.3%, U.S.-based LiveOne sank 5.3% and China’s Cloud Music dropped 6.2%. Tencent Music Entertainment, China’s largest music streaming company, rose 0.4%.
The Billboard Global Music Index fell 0.4% to 1,588.68 this week as 13 of the 20 stocks posted losses and only seven stocks finished the week in positive territory. Stocks were broadly up in the United States: the Nasdaq composite gained 1.1% to 15,628.95 and the S&P 500 improved 1.4% to 4,958.61. In the United Kingdom, the FTSE 100 dropped 0.3%. South Korea’s KOSPI composite index gained 5.5%. China’s Shanghai Composite Index sank 6.1% to 2,730.15.
German concert promoter CTS Eventim was the greatest gainer this week with a 4.1% gain. Two other live entertainment companies, Sphere Entertainment Co. and MSG Entertainment, ended the week up 2.8% and 0.7%, respectively.
Among the week’s biggest losers was Hipgnosis Songs Fund, which fell 7.5% to 0.653 pounds per share. Hipgnosis fell 2.5% on Friday after news broke that Merck Mercuriadis is stepping down as CEO of the fund’s investment advisor, Hipgnosis Song Management, and will become chairman. President/COO Ben Katovsky will take over the CEO role.