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What a difference a year makes. Last year’s Entertainment Law Initiative (ELI) Grammy Week Event was held during a recording business boom when AI was still an issue on the horizon and TikTok seemed like a surefire way to break new artists. This year’s event, held Friday (Feb. 2), took place amid a boom shadowed by clouds of uncertainty, including a difficult environment for new artists, a restructuring of Universal Music Group’s labels and what looks like the start of a battle with TikTok.
The winner of this year’s ELI writing contest, law school student Olivia Fortunato, wrote about the idea of a federal post-mortem right of publicity — a subject that was barely on the radar of most lawyers a year ago. The keynote speaker, Capitol Music Group chair/CEO Michelle Jubelirer, seemed to hint that her time running the label might be nearing an end. And the Entertainment Law Initiative Service Award Honoree, Atlantic executive vp of business & legal affairs/general counsel Michael Kushner, mentioned how much the industry has changed since the CD era in a way that could be taken as a sign of more changes to come.
Jubelirer’s speech got a good deal of attention, coming as it did a day after Universal Music Group (UMG) announced a restructuring of its labels that would put Republic chairman/CEO Monte Lipman in charge of the company’s East Coast labels and Interscope chairman/CEO John Janick in charge of its West Coast ones. That raises some questions about the future of Capitol Music Group that Jubelirer’s speech didn’t answer, but she dropped a hint. (A PR representative for Capitol declined to comment.)
Jubelirer said that her mantra was a question: “Am I changing the record company more than it’s changing me?” Standing at the event, “I am engaged in that very evaluation,” she said. “Asking myself that very question. And, for the first time in a very long time, I’m not so sure of the answer.”
Most of her speech was more upbeat: She spoke of growing up in Altoona, Penn., as a fan of Guns N ‘ Roses; how she went from a job in mergers and acquisitions law to Sony to the music law firm now known as King, Holmes, Paterno & Soriano; and her time at Capitol Music Group, where she worked with Katy Perry, Paul McCartney and, most recently, Ice Spice. She also praised several mentors and friends, including Universal Music Publishing Group CEO Jody Gerson, and took a moment to point out her mom, “the silver vixen over there.”
Atlantic Music Group chairperson/CEO Julie Greenwald presented the ELI Service Award to Kushner, who has worked closely with her and Atlantic chairman/CEO Craig Kallman. Kushner came to Atlantic after stints at Universal, Sony and PolyGram, where he started around the same time as Sony Music Entertainment executive vp of business affairs/general counsel Julie Swidler. After Greenwald spoke, Kushner received the customary video tribute, filled with praise both serious and silly.
Kushner then spoke about the importance of mentorship and the changes he has seen in the music business, where the only constant seems to be change itself.
Universal Music Group (UMG), the world’s largest music company, released an open letter to its artists and songwriters on Tuesday (Jan. 30) stating that the company’s music would soon leave TikTok due to disagreements over compensation, artificial intelligence, infringing works and harassment. TikTok replied a few hours later, calling UMG’s letter a “false narrative” and […]
Megan Thee Stallion has found a new home as she’s entered an “innovative agreement” with Warner Music Group while maintaining her independence.
Billboard reported in December that Megan would be working with WMG and utilizing the company “for distribution and services.” The distribution deal has since been signed and was announced officially on Friday afternoon (Feb. 2).
Within the structure of the unique partnership, the Houston Hottie will have access to WMG’s global services ranging from music promotion to distribution and worldwide marketing.
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On the music side, Megan will keep releasing tunes independently through her Hot Girl Productions label and work collaboratively with Warner Music Group. The deal allows Thee Stallion to keep ownership and control of her masters as well as her publishing.
“This is the beginning of an exciting new chapter of my life and career,” Megan said in a statement. “I’m really focused on building an empire and growing as an entrepreneur, so I’m proud to take this next step in my journey and work with Max Lousada and the entire Warner Music Group team in this new capacity. I know we’re going to create history together.”
Roc Nation will still be involved in managing the Grammy-winning rapper separate from the new Warner agreement.
Warner’s 300 Ent. previously distributed Megan’s music from 2018 through last November while the rapper was entrenched in a dispute with former label 1501 Certified Entertainment.
The tumultuous relationship was muddied with claims of 1501 keeping royalties from Megan and not allowing her to release music as she pleased.
The turbulent agreement between Meg and the Carl Crawford-led 1501 finally came to an end in October following a yearslong battle in court.
“Meg is not just a superstar,” WMG Recorded Music CEO Max Lousada added. “She’s an artistic force and a mogul in the making — authentic and unapologetic in defining her own unique place in the cultural landscape. So many relate to her remarkable story and have witnessed her come into her power on her own terms.
“At Warner, we’re creating an environment where original talents can explore both their creativity and entrepreneurialism, while building long-term careers. Following on her success with 300, we’re excited to continue our journey with Meg through this dynamic new partnership, with our global teams, infrastructure, and expertise supporting her every step of the way.”
Megan Thee Stallion has released a pair of singles independently, the second of which arrived last week with “HISS.” The fiery track saw her send indirect shots at Drake, Nicki Minaj, and more while blasting to top the U.S. Spotify and Apple Music Global charts.
The 28-year-old is on pace to earn her 32nd Billboard Hot 100 entry and a lofty debut on the elusive charts. Megan has two No. 1 hits on the Hot 100 and six Billboard 200 placements to her name. Her song catalog has earned 10.3 billion on-demand streams (including user-generated content, or UGC, which does not count toward Billboard’s charts), according to Luminate.
Find Megan’s post to Instagram celebrating the deal with WMG below.
Each year during Grammy week, members of the Association of Independent Music Publishers‘ (AIMP) gather at Lawry’s steakhouse in Beverly Hills to hear a speech from David Israelite, president and CEO of the National Music Publishers’ Association (NMPA). In it, Israelite discussed the successes of the Music Modernization Act, the new UMG TikTok licensing feud, the viability of artificial intelligence regulation, and the more.
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He started the presentation with slides showcasing the publishing revenue for 2022, divided by categories: performance (48.29% or $2.7 billion), mechanical (20.27% or $1.1 billion), synch (26.07% or $1.4 billion), and other (5.37% or $300 million). Synch, he says, is the fastest growing source of revenue.
Israelite focused much of his time on addressing the Music Modernization Act, which was passed about five years ago. “I don’t want you to forget is just how amazing the Music Modernization Act was and is for this industry,” he said. “I believe that it is the most important legislation in the history of the music business… You’re going to start to take for granted some of the things… but we had to fight and win to get this done.” He pointed to successes of the landmark law like the change in the rate standard to a willing seller, willing buyer model and its creation of the Mechanical Licensing Collective (The MLC).
Earlier this week, the MLC (and the digital licensee coordinator, DLC) began the process of its first-ever re-designation. This is a routine five-year reassessment of the organization and how well it is doing its job of administering the blanket mechanical license created by the MMA. As part of the re-designation process, songwriters, publishers and digital services are allowed to submit comments to the Copyright Office about the MLC’s performance. “Many of you will have a role in offering your opinions to the copyright office about that,” says Israelite. “The process needs to be respected and played out, but [The MLC] will be re-designated, and it is an absolute no brainer decision. There’s a lot about the MLC that I want to remind you about.”
Israelite then highlighted the organization’s “transparency,” the lack of administration fees for publishers and that the projection of 2023 revenue from streaming for recorded music ($6.3 billion) and publishing ($1.7 billion) “the split is the closest it has ever been,” attributing this, in part, to the MLC’s work.
He also addressed Grammy week’s biggest story: the UMG TikTok licensing standoff. “I’m only going to say two things about TikTok: the first is I think music is tremendously important to the business model of TikTok, and, secondly, I am just stating the fact that the NMPA model license, which many of you are using, with TikTok expires in April.” At that time, the NMPA can either re-up its model license with TikTok or walk away. If it were to pull a similar punch to what UMG has done, indie publishers could either negotiate with TikTok directly for their own license, or they could also walk away from the platform.
Later, in addressing artificial intelligence concerns, he pledged his support for the creation of a federal right of publicity, but he admitted “I want to be honest with you, it does not have a good chance.” Even though the music business is vying for its adoption, Israelite says that film and TV industry does not want it. “Within the copyright community we don’t agree… and guess who is bigger than music? Film and TV.”
Still, he believes there is merit in fighting for the proposed bill. “It might help with state legislative efforts and it raises the profile,” he said, but Israelite stated that his priority for AI regulation is to require transparency from AI companies and to keep records of how AI models are trained.
The greatest impact of Universal Music Group and TikTok’s licensing stalemate will likely not come from UMG’s superstar artists leaving the platform, it will come from the loss of its songwriters.
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Losing music from record label signees like Taylor Swift, Drake, Morgan Wallen, BTS, Olivia Rodrigo and more on TikTok is seismic on its own, but media coverage of the now-expired license that lapsed on Jan. 31 has largely ignored that the world’s largest music company’s songwriters are leaving, too. That means that any record that was touched by a Universal Music Publishing Group (UMPG) songwriter will also be subject to removal from the platform — even if it was released on a non-UMG label. Artist-songwriters like Harry Styles, Bad Bunny and SZA are three of many notable examples of UMPG writers that release music under non-UMG labels that will be affected. Artists who work with UMPG hitmakers like Metro Boomin, Jack Antonoff or Fred again.. could also face this.
In today’s pop and rap markets, writing rooms are considered to be bigger than ever, crediting anywhere from one to 30 contributors in extreme cases like cases like Travis Scott’s “Sicko Mode.” A typical pop song on the radio likely has at least three or four people receiving publishing. This, mixed with the fact that UMPG is one of the largest music publishers in the world with 4 million copyrights to its name, means that removing all songs with UMPG interests will impact just about every other record label and music publisher in some way.
In the third quarter of 2023, it was calculated that UMPG held a fifth of the market share on the Billboard’s Pop Airplay and Hot 100 charts. For Country Airplay, UMPG represented a tenth of the chart.
There’s also a chance of this standoff spreading to other publishers this spring. On Thursday (Feb. 1), at the Association of Independent Music Publishers event in Beverly Hills, National Music Publishers Association president and CEO David Israelite revealed during a speech that his organization’s TikTok model license is up for renewal in April. This license is negotiated by the trade association and adopted by a large number of the country’s independent publishers.
The NMPA has been known for its aggressive approach to licensing negotiations with other social media sites, games and apps in recent years, including a recent $250 million lawsuit against X (formerly Twitter) for alleged copyright infringement, and it would not be surprising if the trade organization considered following suit with UMG. If that happened, all indie publishers would be on their own to decide whether they wanted to negotiate with TikTok directly or leave the platform.
Already 21 of the 50 tracks on the TikTok Billboard Top 50 chart have been removed due to their UMG affiliation, but so far those take downs have focused on the company’s recordings, not publishing. Removing UMPG songs will be a far more arduous and complicated task than removing UMG records, given there are sometimes multiple recordings by multiple artists for the same underlying song. Publishing metadata — which keeps track of who wrote what song — is also notoriously incomplete or incorrect. In some cases, the metadata is often not even finalized and input until weeks or months after a song is released, making matters even more complicated.
It is widely believed that the process of taking down publishing interests will likely take a while and will be piecemeal and spotty, potentially forcing the UMPG team to police the platform and to issue takedown notices.
In the interim, UMG and TikTok are showing no signs of backing down. TikTok said the music company had “put their own greed above the interests of their artists and songwriters” after the letter was released. UMG fired back with another statement Thursday, calling TikTok’s view on compensating artists and songwriters “woefully outdated.” Amidst all the finger pointing, TikTok users are attempting to fill the gaps with non-UMG songs or covers of UMG records, while at least one UMPG writer, Metro Boomin, took to the internet to show his support: “It’s about damn time,” he posted to X.
A Los Angeles judge on Friday (Feb. 2) denied Lizzo’s motion to toss out a bombshell sexual harassment lawsuit filed by three of her former backup dancers, dismissing certain accusations but allowing the case as a whole to move forward toward a trial.
Facing allegations of harassment and discrimination, Lizzo argued last year that case should be dismissed under California’s anti-SLAPP statute — a special law that makes it easier to quickly end meritless lawsuits that threaten free speech (known as “strategic lawsuits against public participation”). Her lawyers argued that the accusers were using the lawsuit to “silence” her.
But in a detailed, 34-page decision, Judge Mark H. Epstein ruled that the anti-SLAPP statute didn’t quite fit all of the lawsuit’s allegations. He tossed out some claims – including a particularly loaded charge that Lizzo fat-shamed one of her dancers – but ruled that remainder of the case could go forward.
Figuring out the proper balance – between protected speech and illegal discrimination – was “no easy task,” Judge Epstein wrote, but he said he had “tried to thread this needle.”
“It is dangerous for the court to weigh in, ham-fisted, into constitutionally protected activity,” the judge wrote. “But it is equally dangerous to turn a blind eye to allegations of discrimination or other forms of misconduct merely because they take place in a speech-related environment.”
The case against Lizzo, filed in August by dancers Arianna Davis, Crystal Williams and Noelle Rodriguez, accuses the singer (real name Melissa Jefferson) and her Big Grrrl Big Touring Inc. of creating a hostile work environment through a wide range of legal wrongdoing, including not just sexual harassment but also religious and racial discrimination. The alleged weight-shaming, the lawsuit claims, amounted to a form of disability discrimination.
In one particularly vivid allegation, Lizzo’s accusers claimed she pushed them to attend a live sex show at a venue in Amsterdam’s famed Red Light District called Bananenbar, and then pressured them to engage with the performers, including “eating bananas protruding from the performers’ vaginas.” After Lizzo herself allegedly led a chant “goading” Davis to touch one performer’s breasts, the lawsuit says, Davis eventually did so.
Repped by Hollywood defense attorney Martin D. Singer, Lizzo fired back in October, arguing that Davis, Williams and Rodriguez had “an axe to grind” against the star because they had been reprimanded over “a pattern of gross misconduct and failure to perform their job up to par.”
“Plaintiffs embarked on a press tour, vilifying defendants and pushing their fabricated sob story in the courts and in the media. That ends today,” Singer wrote. “Instead of taking any accountability for their own actions, plaintiffs filed this lawsuit against defendants out of spite and in pursuit of media attention, public sympathy and a quick payday with minimal effort.”
The filing came with sworn statements from 18 members of Lizzo’s touring company who dispute many of the lawsuit’s specific factual accusations. That included several who challenged the headline-grabbing claim that Lizzo fat-shamed some of her dancers — a particularly loaded allegation against a singer who has made body positivity a key part of her brand.
Lizzo’s counter-attack came under the anti-SLAPP law. Anti-SLAPP motions are filed every day, but it was unusual to see one aimed at dismissing a harassment and discrimination lawsuit filed by former employees against their employer. They’re more common in precisely the opposite scenario: filed by an individual who claims that they’re being unfairly sued by a powerful person to silence accusations of abuse or other wrongdoing.
In their filings, Lizzo’s lawyers argued that the anti-SLAPP law could still apply to the current case because of the creative nature of the work in question. They called the lawsuit “a brazen attempt to silence defendants’ creative voices and weaponize their creative expression against them.”
But in his ruling on Friday, Judge Epstein largely rejected that argument. He said that conduct relating to speech is protected and that California law “law wisely disfavors chilling such conduct.” But he cautioned that free speech was not a magic wand against allegations of employer wrongdoing.
“The fact that the alleged incidents take place in the entertainment or speech world is no shield of invulnerability or license to ignore law enacted for the protection of California’s citizens,” the judge said.
The judge dismissed a sexual harassment allegation involving a nude photoshoot on the set of the reality competition series Lizzo’s Watch Out for the Big Grrrls; a disability discrimination accusation around one dancer’s allegation that she was fired from Lizzo’s tour after disclosing her mental health issues; and another allegation stating that Lizzo’s camp intentionally interfered with the dancers’ other job prospects after placing them on a “soft hold” and telling them they could not accept other work.
Lizzo and Shirlene Quigley, the captain of the singer’s dance team, will still have to face other allegations of sexual harassment, as well as accusations of racial and religious discrimination.
“We’re very pleased with the judge’s ruling, and we absolutely consider it a victory on balance,” said the dancers’ lawyer, Ron Zambrano, in a statement. “He did dismiss a few allegations, including the meeting where Arianna was fat shamed, the nude photo shoot, and dancers being forced to be on ‘hold’ while not on tour. However, all the other claims remain, including sexual, religious and racial discrimination, sexual harassment, the demeaning visits to the Bananenbar in Amsterdam and Crazy Horse in Paris, false imprisonment, and assault. The ruling also rightfully signals that Lizzo – or any celebrity – is not insulated from this sort of reprehensible conduct merely because she is famous. We now look forward to conducting discovery and preparing the case for trial.”
In his own statement, Lizzo’s lawyer, Stefan Friedman, said: “We are pleased that Judge Epstein wisely threw out all or part of four of the plaintiffs’ causes of action. Lizzo is grateful to the judge for seeing through much of the noise and recognizing who she is – a strong woman who exists to lift others up and spread positivity. We plan to appeal all elements that the judge chose to keep in the lawsuit and are confident we will prevail.”
Country star Lainey Wilson and Recording Academy president/CEO Harvey Mason voiced their support for federal regulation of AI technology at a hearing conducted by the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet in Los Angeles on Friday (Feb. 2).
“Our voices and likenesses are indelible parts of us that have enabled us to showcase our talents and grow our audiences, not mere digital kibble for a machine to duplicate without consent,” Wilson said during her comments.
“The artists and creators I talk to are concerned that there’s very little protection for artists who see their own name or likeness or voice used to create AI-generated materials,” Mason added. “This misuse hurts artists and their fans alike.”
“The problem of AI fakes is clear to everyone,” he continued later. “This is a problem that only Congress can address to protect all Americans. For this reason, the academy is grateful for the introduction of the No AI FRAUD Act,” a bill announced in January that aims to establish a federal framework for protecting voice and likeness.
The star of the hearing was not from the music industry, though. Jennifer Rothman, a professor of law at University of Pennsylvania Law School, offered an eloquent challenge to a key provision of the No AI FRAUD act, which would allow artists to transfer the rights to their voice and likeness to a third party.
It’s easy to imagine this provision is popular with labels, who historically built their large catalogs by taking control of artists’ recordings for perpetuity. However, Rothman argued that “any federal right to a person’s voice or likeness must not be transferable away from that person” and “there must be significant limits on licensing” as well.
“Allowing another person or entity to own a living human being’s likeness or voice in perpetuity violates our fundamental and constitutional right to liberty,” she said.
Rothman cleverly invoked the music industry’s long history of perpetuity deals — a history that has upset many artists, including stars like Taylor Swift, over the years — as part of the reason for her objection.
“Imagine a world in which Taylor Swift‘s first record label obtained rights in perpetuity to young Swift’s voice and likeness,” Rothman explained. “The label could then replicate Swift’s voice over and over in new songs that she never wrote and have AI renditions of her perform and endorse the songs and videos and even have holograms perform them on tour. In fact, under the proposed No AI Fraud Act, the label would be able to sue Swift herself for violating her own right of publicity if she used her voice and likeness to write and record new songs and publicly perform them. This is the topsy-turvy world that the draft bills would create.”
(Rothman’s reference to Swift was just one of several at the hearing. Rep. Kevin Kiley [R – CA] alluded to the debate over whether or not the singer would be able to make it to the Super Bowl from her performance in Tokyo, while Rep. Nathaniel Moran [R – TX] joked, “I have not mentioned Travis Kelce’s girlfriend once during this testimony.”)
Rothman pointed out that the ability to transfer voice or likeness rights in perpetuity potentially “threatens ordinary people” as well: They “may unwittingly sign over those rights as part of online Terms of Service” that exist on so many platforms and are barely ever read. In the music industry, there is a similar problem already causing problems for a number of young artists who sign up to distribute their music through an online service, agree to Terms of Service without reading them, and later discover that they have unknowingly locked their music into some sort of agreement. In an AI world, this problem could be magnified.
Rothman’s comments put her at odds with the Recording Academy. “In this particular bill, there are certain safeguards, there’s language that says there have to be attorneys present and involved,” Mason said during questioning. (Though many young artists can’t afford counsel or can’t find good counsel.) “But we also believe that families should have the freedom to enter into different business arrangements.”
Mason’s view was shared by Rep. Matt Gaetz (R – FL). “If tomorrow I wanted to sell my voice to a robot and let that robot say whatever in the world that it wanted to say, and I wanted to take the money from that sale and go buy a sailboat and never turn on the internet again, why should I not have the right to do that?” he asked.
In addition to Rothman, Mason and Wilson, there was one other witness at the hearing: Christopher Mohr, who serves as president of the Software & Information Industry Association. He spoke little and mostly reiterated that his members wanted the courts to answer key questions around AI. “It’s really important that these cases get thoroughly litigated,” Mohr said.
This answer did not satisfy Rep. Glenn Ivey (D – MD), a former litigator. “It could take years before all of that gets solved and you might have conflicting decisions from different courts in jury trials,” Ivey noted. “What should we be doing to try and fix it now?”
At the beginning of 2024, the always-changing music business is going through rapid transformation unlike anything in the last decade. How music companies organize themselves is changing. How royalties are calculated and paid is changing. How companies engage with fans is changing. And investors have different expectations of public companies — more focus on margins, less obsession with growth.
Music companies’ earnings results for the fourth quarter of 2023 will provide insights into how companies have performed and, more importantly, what they expect to do in the future. Only one company, SiriusXM, has announced to date. Next week’s earnings releases include Spotify (Tuesday, Feb. 6), Reservoir Media (Wednesday, Feb. 7) and Warner Music Group (Thursday, Feb. 8). Universal Music Group (UMG) announces earnings on Feb. 28. Here are some things to watch for in upcoming earnings calls.
The scope of layoffs
In October, UMG executives primed investors for cost-cutting measures that would improve margins and allow for investments in growth opportunities. The result would be hundreds of layoffs, according to a Jan. 12 Bloomberg report. On Thursday, UMG revealed some details of a bi-coastal label group restructuring. But what’s missing, so far, are details on the number of layoffs and the cost savings UMG expects to get from a restructuring. UMG’s fourth-quarter earnings release on Feb. 28 will be an opportunity for analysts to ask the company to give an update on its restructuring plans. As Billboard noted last week, the music industry is seeing widespread layoffs despite continued streaming growth. Warner Music Group (WMG), Downtown Music Holdings and BMG cut jobs in 2023. Digital music companies have shrunk their head counts, too: Spotify, Amazon Music, SoundCloud, Tidal and Bandcamp went through downsizings of various sizes.
More troubles in TikTok-land?
When UMG failed to renew its licensing contract with TikTok, it made licensing to the social video platform a major topic of conversation for upcoming earnings calls. Analysts and investors should want to know how a company’s negotiations with TikTok are proceeding and whether to expect an interruption if the two sides cannot reach an agreement. TikTok and WMG reached an agreement in July 2023, but investors may want progress reports from other public companies — Reservoir Media, Believe, Sony Music — about their licensing talks.
UMG’s decision is not without precedent: In 2008 and 2009, WMG pulled its catalog from YouTube for nine months while the two companies’ licensing negotiations were at an impasse. In 2011, Google launched an audio music streaming service, Music Beta by Google, without licenses from both Sony Music Entertainment (SME) and WMG. When Google added MP3s to its Google Music service later that year, the SME and WMG catalogs were initially absent.
The direct financial hit to UMG will be minimal since TikTok accounts for 1% of the company’s revenue, UMG stated in an open letter about the licensing talks. But because TikTok is an important promotional vehicle and a popular place to discover music, the indirect financial hit is more substantial. Investors always want to know about direct dollar impacts of a company’s moves, and they should want to understand the downsides of leaving a hit-making social platform.
How much have price increases mattered?
Music subscription prices didn’t budge for over a decade before succumbing to change in 2022 and 2023. The big fish was Spotify, which finally raised prices in the United States and other major markets in July. A higher price creates a multiplier effect on top of existing subscriber growth and will augment what would have otherwise been record quarterly revenues. The gains should come without an increase in churn: Spotify CFO Paul Vogel said during an Oct. 27 earnings call that Spotify didn’t lose any subscribers in the third quarter due to the price increase.
For record labels and publishers, a 10% price increase atop year-over-year subscriber growth stands to accelerate revenue growth. Guggenheim analysts said in a recent note to investors that they expect price increases at Spotify, YouTube and Deezer to raise UMG’s subscription revenue growth to 14.8% in the fourth quarter from 13.0% in the third quarter.
The state of the advertising business
While the subscription market has been strong, the ad-supported side of the business has struggled to keep chase. Through the first three quarters, Spotify’s ad-supported streaming revenue increased 14.9% year over year. That’s better than the 11.4% improvement in subscription revenue but well below the 22.2% and 62.1% gains in ad revenue in full-year 2022 and 2021, respectively.
Broadcast radio has fared even worse. Companies such as iHeartMedia, Cumulus Media and Audacy have blamed a slowdown in national broadcast advertising on some disappointing earnings in recent quarters.
SiriusXM provided the latest clue about broadcast advertising. “SiriusXM’s advertising revenue remains challenged,” CFO Tom Barry said during Thursday’s earnings call, “which we believe is a product of a tough broadcast advertising market.” Elsewhere, however, SiriusXM’s digital advertising improved versus 2022: Pandora had “strong growth” in its podcasting and programmatic advertising businesses, added Barry.
Some positive news in recent days shows advertising — perhaps not for broadcast businesses — is rebounding. U.S. ad spending in November was up 25% year over year, according to MediaRadar, an advertising intelligence company. The number of advertisers declined 8%, however, suggesting existing advertisers were ramping up spending.
More good news came from major ad-driven tech companies. Google’s advertising revenue in the fourth quarter increased 11% from the prior-year period, the company announced Wednesday, up from year-over-year improvements of 3.3% and 9.5% in the second and third quarters, respectively. Meta’s revenue grew 25% and its ad impressions rose 28% in the fourth quarter, the company announced Thursday.
The mission to reach superfans
Major music companies are suddenly taking a greater interest in serving superfans, those heavy-spending consumers that drive the concert and merchandise businesses but have less effect in a world of flat-rate, all-you-can-eat music subscription services. The 80-20 rule says 80% of a company’s business comes from 20% of its consumers. With music streaming, however, a $10.99-per-month service doesn’t capture a superfan’s willingness to pay more for additional value. Spotify hinted that “superfan clubs” were in the works in an announcement about the Digital Markets Act in the European Union. UMG CEO Lucian Grainge’s letter to staff in January said the company will focus on “strengthening the artist-fan relationship through superfan experiences and products.”
The problem isn’t that consumers won’t pay more money to engage with their favorite artists. The problem is no platforms have found a winning formula. Numerous previous attempts to court superfans fizzled. Drip, a platform that allowed artists to provide fans with music and other items for a recurring monthly fee, lasted from 2011 to 2016 (it relaunched a Kickstarter in 2017 but shut down in 2018). PledgeMusic shut down in 2019 amidst financial problems and allegations of improprieties. Most recently, startups’ attempts to use Web3 technologies to build superfan communities ran headfirst into the public’s sudden distrust of cryptocurrency and disinterest in NFTs. Given Spotify’s market size and resources, though, the company could make a real impact.
Benson Boone has had a few appearances on the Hot 100, scraping No. 100 with “Ghost Town” in November 2021 and reaching No. 82 with “In the Stars” in May 2022. But nothing has compared with his latest song, “Beautiful Things,” which rocketed onto the chart at No. 15 in its first week. The track garnered 15.7 million on-demand U.S. streams in the week ending Jan. 25, according to Luminate, and debuted at No. 5 on the Streaming Songs chart.
That instant success for the song has been a long time coming. Boone signed to Warner Records alongside Dan Reynolds’ Night Street Records in October 2021 and has emerged more than two years later as a heavy hitter, having spent that time in writing rooms honing his craft and developing as an artist. That’s the exact type of story that many have said is in the past in the current record business.
Now, he’s become just the latest in Warner’s recent run of success stories, which are coalescing in the first part of this year as Zach Bryan, Teddy Swims, Kenya Grace and Boone all occupy spots in the top half of the Hot 100. Meanwhile, another Warner artist, Brandy Clark, is one of the top-nominated acts at this weekend’s Grammy Awards with six nominations. This success with Boone, Clark and other artists such as Billy Strings (three Grammy noms), Rufus du Sol, Nessa Barrett and others earns Warner Records executive vp of A&R Jeff Sosnow the title of Billboard’s Executive of the Week.
Here, Sosnow talks about the rapid rise of Boone’s latest hit, the songwriting and artist success story Clark is enjoying and the evolution of artist development in the modern record business at a time when many deride the major labels as chasing after virality and one-off unicorn hits. “In this moment,” Sosnow says, “the artist development piece at Warner Records is no bulls—.”
This week, Benson Boone’s “Beautiful Things” debuted at No. 5 on the Streaming Songs chart and No. 15 on the Hot 100. What key decision(s) did you make to help make that happen?
It starts with the music. I had worked with producer Evan Blair over the last few years with another one of my artists, Nessa Barrett. I had a hunch Evan and Benson would hit it off and work well together. “Beautiful Things” was the first song that came together. After that, it really became a collaborative effort between our viral and marketing teams supporting Benson and his manager Jeff Burns’ incredible social campaign and teasing cadence. But certainly, it comes back to the music resonating in such a way with potent visuals that make for a magical moment.
Boone signed to Warner alongside Dan Reynolds’ Night Street Records in October 2021. What work have you done to help develop him as an artist over the past few years?
Dan and his brother, Mac, had signed Benson, and Jon Chen at Warner Chappell turned me on to Benson who at the time had one song, “Ghost Town.” Together with co-publisher Coulter Reynolds we have put Benson with a group of core writers and producers after some trial and error. He found his footing and confidence as a writer and artist. The level of consistency in his writing is reflected over the arc of two years of consistent streaming. And it’s not just one or two big songs. But then you throw in the fact that Benson is a world-class performer and you watch thousands of kids sing every word to every song — not just the bigger ones — and you know the hard work and patience has paid off. Some used to call this artist development.
This is his third Hot 100 entry, but first in the top half of the chart. What is it about this song that has made it resonate so much — and so quickly?
A great vocal can never be underestimated. I think Benson’s passion cuts through. There’s an urgency and a universal lyric. But again, his clever visuals on the social platforms and effective music video helped punctuate the visceral feel the song has.
Brandy Clark is nominated for six Grammys this year, part of a dozen nominations that artists you’ve signed have earned. What made her year so special, and how has she developed and grown as a songwriter and artist?
Brandy is the most prolific songwriter I’ve ever worked with. It’s been an honor to work with Lenny Waronker on Brandy’s last few records. She always amazes us because we literally go through upwards of 100 to 150 demos to get to what comprises the album. Brandy’s openness to collaboration is a key ingredient to her success. It was an amazing moment when I was able to get Michael Pollack in with Brandy for just one day. They came out with “Dear Insecurity,” which is simply one of the most powerful songs of this or any year. Enter Brandi Carlile to produce and feature on the song, and you walk out with a timeless record. As great as the album itself is, “Dear Insecurity” was always the centerpiece for me.
How has the rise of different technologies and social apps changed how the role of A&R functions?
Many A&R people rely heavily on data, and it is such an incredible tool to have. We have always had various iterations of data — watching market-by-market ticket sales, radio spins, etc. But other constants that seem to prevail in the A&R process are a great song and a great voice. So technology hasn’t really affected one’s gut instinct and intellectual ability to speak to artists and producers and make decisions about pulling the trigger on a signing, or whether a song is working or not.
A lot of people bemoan the state of artist development these days, but many of the artists you’ve signed have grown and developed extended careers. What would you say about the perception that labels don’t invest in artist development like they used to?
I don’t think labels as a whole have really, truly been beacons of artist development the last five years. I can say that what Aaron [Bay-Schuck] and Tom [Corson] have done in their time at Warner Records is to trust me with acts like Billy Strings, Rufus Du Sol, Benson, Nessa and Michael Marcagi. Each has a different arc and story, but the common thread is patience and belief in the artists and the A&R person’s ability to have real, honest conversations that will push them while also protecting and supporting them for the long haul. And in this moment, the artist development piece at Warner Records is no bulls—.
Global superstar Drake is making moves to expand his influence. His OVO Sound label has announced a new partnership with the Santa Anna Label Group, an artist and label services company launched by Sony Music last year.
Through the partnership, OVO will remain a distinct label with its own roster, but will benefit from distribution, marketing and promotion, A&R services, finance and accounting, and more from the American company.
Santa Anna is a new venture, launched in January 2023 by Sony Music and Alamo Records CEO Todd Moscowitz, with the goal of helping artists and entrepreneurs to develop their businesses within the industry. This isn’t Moscowitz’s first encounter with the Toronto label: the industry executive was CEO of Warner Records in 2012, when OVO was originally founded under the Warner banner.
“After 10 years, it’s exciting to reunite with the OVO Sound team to collaborate on new ways to support their impressive roster of artists,” Moscowitz said of the new partnership. “Together, I look forward to working with a best-in-class management team to develop opportunities to help scale their business and take their artistry to new heights.”
OVO was founded by Drake, producer Noah “40” Shebib and manager Oliver El-Khatib. The roster includes popular Toronto talent like Majid Jordan, DVSN and PARTYNEXDOOR, and is headed by former Warner A&R executive Mr. Morgan. This new announcement comes after Majid Jordan’s fall 2023 release of the duo’s latest LP, Good People, and ahead of PARTYNEXTDOOR’s P4, expected soon.
The OVO brand — October’s Very Own, named after Drake’s birth month — includes live music at OVO Fest and a brick-and-mortar clothing store in Toronto, as well as the label. In the decade-plus since OVO’s launch, the label has largely focused on Canadian acts, though they also represent Dutch artist (and their first female signee) Naomi Sharon.
The partnership indicates that Drake’s business ambitions are only growing. Will OVO expand its focus beyond Canada? Or will the new investment be directed towards discovering new artists like they did recently with 6ixBuzz collaborator Smiley? –Rosie Long Decter
Vancouver-Based Beatdapp Partners with Universal Music Group to Detect Fraud
Vancouver-based Beatdapp has become the leading streaming fraud detection company in the music industry today after successfully raising C22M in growth financing and newly announced partnerships with SoundExchange, Napster and a “strategic collaboration” with Universal Music Group.
Last year, the company analyzed more than two trillion streams and 20 trillion data points for its five core categories of customers: DSPs, music labels, collection societies, creator tool services and music distributors.
Beatdapp asserts that as much as 10% of global streams are fraudulent, with the result that as much as US$1B in royalties end up in fraudsters’ pockets. Latest statistics suggest more than 100,000 tracks are uploaded every day. These are on top of the 100M tracks Spotify hosted in 2023, with over 30M added annually at the current rate of uploading.
The company claims to detect fraud with more than 99% accuracy. That’s become especially pertinent as Spotify has eliminated royalties for songs with less than 1,000 songs, in a claimed effort to crack down on fraud. Fraud is also a major topic of conversation when it comes to artificial intelligence, a point of existential angst for many in the music industry.
Recently, Universal Music Group has also been up front when it comes to fair distribution of royalties, pulling its entire song catalogue from TikTok at the end of January. In a widely distributed open letter, the major record company accused the platform of “trying to build a music-based business, without paying fair value for the music,” according to a new open letter.
In the meantime, companies offering fraud detection or protection could have major value within the music industry. –David Farrell & Richard Trapunski
Tokyo Police Club Says Goodbye
Tokyo Police Club, one of the most successful Canadian indie rock bands of the last two decades, is calling it quits — but not before four more hometown goodbye shows in Toronto from Nov. 27-29 at History.
Though they began in Ontario, a press release announcing the band’s breakup says the members of the band are now spread out from Los Angeles to Toronto to Prince Edward Island.
In a joint statement signed by “Dave, Graham, Josh and Greg,” the group explains that, “It’s time for us to say goodbye! This band has meant so much to us for so many years, but all magical things must come to an end. Tokyo Police Club will always stand for the connection we have shared ever since we were teenagers, and it’s brought so many amazing people and moments into our lives.”
Tokyo Police Club was formed by four high school friends in Newmarket, Ontario, and comprises vocalist and bassist Dave Monks, keyboardist Graham Wright, guitarist Josh Hook, and drummer Greg Alsop. The group made a splash with an acclaimed debut EP, A Lesson In Crime, in 2006, going on to release two more EPs and five full-length albums and tour internationally, from Coachella to The Late Show with David Letterman.
Among other nominations, the band was twice up for the Juno Award for Alternative Album of the Year, in 2011 for Champ and in 2019 for TPC, its final full-length release.
After the band’s first goodbye show was announced, there’s been overwhelming demand for more. Now, it’s a four-night stand in Toronto. Additional live dates could also be in the works, they hint. –Kerry Doole
Last Week in Canada: Chilly Response to Pitchfork Changes