Business
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To many people, Joe Keery is the actor known for playing Steve Harrington on the beloved Netflix show Stranger Things, or Gator Tillman on the most recent season of FX’s Fargo. What those people may not know is that he’s also the creative behind the music releases under the moniker Djo and has been releasing music for the past five years under that name through Sony-owned AWAL. He started by licensing his music through the company’s distribution service and, over the years, rose through its tiered offerings to release two projects via its AWAL Recordings label.
The most recent of those projects was Decide, Djo’s 2022 album that broke through and was well received by critics, garnering him his biggest looks from the music press to date. Now, two years later, the Decide track “End of Beginning” has become a massive hit on TikTok. The song has flown to the top of the TikTok 50 chart and landed “End of Beginning” not just a spot in the top 25 of the Hot 100 (it currently sits at a new peak of No. 23) but into the top 10 of both the Global 200 (at No. 6) and the Global Ex-U.S. charts (No. 7) as the song explodes not just Stateside but around the world.
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That marks a huge success for Djo and serves as an example of how AWAL’s tiered offerings can help an artist go from hobbyist side project to worldwide success; it also helps earn AWAL CEO Lonny Olinick the title of Billboard’s Executive of the Week. Here, Olinick talks about the success of “End of Beginning,” Djo’s rise through the AWAL ranks and how the company helped support the song’s growth as it began to take off on social media. “We are seeing many people who are discovering ‘End of Beginning’ and loving the song, and are digging deeper,” Olinick says. “And when they do, discovering that the person behind it is so talented in many different ways is just adding to their connection to the project.”
This week, Djo’s “End of Beginning” jumps into the top 10 of Billboard’s Global 200 (No. 6) and Global Ex-U.S. charts (No. 7), his first global chart entry and first top 10. What key decision did you make to help make that happen?
Projects that create meaningful impact always begin with the right A&R decision. You never lose when you partner with artists who have a real creative vision, the drive to be successful and great music to go along with it. That has been the case with Joe and this project since day one.
When it comes to the success of this record, the way we have structured AWAL really allows us to mobilize on a global basis immediately. As we started to see “End of Beginning” react, we were able to spread the story in every country, tied in with the specific way it was reacting. That meant everything from press to content creation to DSP partnerships to radio, depending on the market. Joe even went to the U.K. to present at the Brits and visit key partners, with only a few days’ notice.
Djo first started out distributing his music through AWAL, then rose up through the company’s offering tiers to now doing full recordings deals with AWAL. How did you help guide that trajectory?
We are really lucky that we work in a system that allows us to find the best way to work with music we are passionate about. Ultimately, the projects help guide this process themselves. It becomes pretty clear when an artist is raising their hand and is in the right place to be supported further. I think the traditional way of looking at it — that an artist goes from doing everything on their own to counting on someone else to do everything — isn’t relevant in today’s world. The ramp should be guided by the connection an artist has made with an audience and the potential to grow beyond that base.
In Joe’s case, that is exactly what happened. When we first started working with him, he needed distribution and marketing/content advice. If we had pushed to do more too fast, we might have suffocated the creative process and organic growth he was experiencing as an artist. By the second project, there was a more defined fan base and he was ready for our team to handle marketing and push the story globally. And then we have a moment with “End of Beginning” where we are pushing every lever available to a record label on a global basis. And most importantly with that, pushing them in a way that is focused on creating fans of Djo, not just fans of “End of Beginning.”
“End of Beginning” was originally released two years ago, then caught a new wave on TikTok earlier this year. How were you able to capitalize on that to continue to boost the song’s success?
It is critically important that we let the artist and the art dictate what is possible. In this case, we started to see such great engagement around this song and amazing content being created. Joe was excited to continue the dialogue with the audience and so our job was to spread this in a way that respected the song and artist. From there, we dig into the who, what and where of the moment. From creating new content to support the song, to pitching DSPs, radio and press, and facilitating in-person moments, our team created and executed this strategy on a global basis. And importantly, it changes in real time as the moment evolves.
But most importantly, this has to be led and driven by the artist and that is what happened with Joe. And Joe is supported by an amazing manager in Nick Stern, who has always known when to lean into moments and when to let the fans do what they do on their own.
The song’s appearance in the top 10 on the global charts speaks to the enormous success it’s having not just in the U.S., but also around the world. How have you worked to help the song grow internationally?
To start with, we don’t care where an artist is signed or even where they are based. We let the fans tell us where there is an opportunity to engage further. Since this is ingrained in our DNA, we look at every artist with a global perspective. That has meant that our team has spent as much time focusing on what we can do in Latin America and Asia as we have on what can be done in the U.S., U.K. and Europe. As it turns out, the audience for this song is everywhere and so our team has been everywhere. But it’s easy to say we want to be global. What’s hard is to create and execute a unique plan for each and every market, and that is exactly what our team has done.
Djo — Joe Keery — is also an actor that many people know from Stranger Things and Fargo. How has his success in other mediums also helped you guys with his music career?
To be honest, this is one of the things that makes this project most meaningful and that starts with Joe. Even when I was introduced to the project five years ago, I had no idea it was Joe. I listened to the music and loved it and only found out after the fact. And that has been the way Joe has wanted it to be. He puts the music first and doesn’t want people to listen to it or discover it because he is an actor. And because of that, he has built up a hugely engaged music audience first, many of whom don’t know that he is behind Djo.
It has been interesting to watch this moment evolve. We are seeing many people who are discovering “End of Beginning” and loving the song and are digging deeper. And when they do, discovering that the person behind it is so talented in many different ways is just adding to their connection to the project.
What else are you looking to do to continue to push the song, and Djo’s career overall, moving forward?
Career is the most important part of that question. We are relentlessly focused on using this moment to create new fans for Djo, vs. just fans of “End of Beginning.” We are seeing great engagement with his whole catalogue and there are so many great songs he has put out that are getting new exposure. We believe there is a lot of life left in this song, but at the end of the day, we are spending a lot of time planning out the next two years and continuing to build a story that has already been five years in the making. So many artists have moments that they aren’t ready for and you see that, quickly, it can only be about the song. In this case, we have an artist and their team who has done the work in so many different ways and is fully ready.
How has AWAL shifted along with the music business in the last few years?
We have been fortunate to be ahead of where the industry is going for a while now. We always had fair deals and a model that allowed us to partner with artists in different ways. And most importantly, we always were a music company that prioritized being in business with artists that we love and knowing how to truly develop those artists. Our track record of developing meaningful artists really is different from any other non-traditional company.
But that doesn’t mean we are in any way complacent. I find that our team is hungrier than we have ever been. And being a part of Sony has been an incredible accelerant to everything we planned to do. We have doubled down on the creative side of our business both in helping on the music side and the content side. The creative part of our jobs is what we ultimately all are here for. We have also built out the global side of our business even further. We have new teams in India, Spain, Brazil, Mexico and Nigeria with more offices opening up in the coming months. I look at the last eight years as the hard preparation work for where the market was going. It is fun to see now how uniquely positioned we are even as so many others are trying to adapt to this new music world.
Billboard Power Players is expanding to Canada for the first time in 2024, nominations have now officially opened via this nomination form.
For its relative size, the country has produced some huge international success stories over the last decade, with artists like Drake, The Weeknd, Shawn Mendes, Justin Bieber and Tate McRae making big waves on the world stage.
That’s the case behind the scenes, too, including previous Power List honourees like Kristen Burke, the president of Warner Music Canada and the only female head of a major label in Canada; Wassim “Sal” Slaiby of The Weeknd’s XO Records and the founder of Universal Arabic Music; and Michael Rapino, the Canadian-born president and CEO of Live Nation who finished fourth on the recently revealed 2024 Power 100 list, behind only Taylor Swift and the global CEOs of two major labels.
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Billboard Canada Power Players, however, will be the first time the award will be exclusive to Canadians or those who’ve made an impact in Canada’s music industry. – Richard Trapunski
New U.S. Visa Fees Could Prove Costly for Canadian Musicians
The U.S. Citizenship and Immigration Services (USCIS) has published its final rule updating visa fees in several categories, along with a Frequently Asked Questions page summary.
Overall, creative arts petitioners will be hit with higher costs, increased petition prep requirements, and lengthier times for premium processing. This will affect Canadian and other musicians, as well as art workers, travelling across the border to play in the U.S.
After consultation with stakeholders including the American Federation of Musicians, final fees have been reduced from the initial amounts proposed by the Department of Homeland Security for nonprofits and certain small businesses with 25 or fewer employees.
The new fees, though, could prove costly for Canadian musicians, for whom crossing the border is a necessary part of a music career.
The fee increases were originally for early 2023, but will now take effect on April 1, 2024. – David Farrell
Music Declares Emergency Will Host a Climate Summit in Halifax Ahead of the Juno Awards
Music Declares Emergency (MDE) Canada is looking to spark conversation about the climate crisis at this year’s Juno Awards. Ahead of the ceremony on March 24, the advocacy organization will host a Mini Music Climate Summit at the Halifax Central Library, on March 22, to promote the need for climate action in the music industry.
The free, one-day event will consider topics such as sustainable transportation, carbon calculation, merch and food, and much more, providing an opportunity for industry members to share best practices and develop strategies around curbing emissions in the industry. MDE Canada previously held Canada’s first Music Climate Summit in Toronto in 2022.
The climate summit accompanies MDE Canada’s Climate Emergency Concert on March 17 in Halifax, where artists like Talia Schlanger and Jenn Grant will pay tribute to Neil Young and Joni Mitchell, two Canadian musicians who have used their platforms to promote environmental awareness. – Rosie Long Decter
Last Week ‘In Canada’: No to ‘Laughs,’ But Yes to Women in Music
LONDON — Strong growth in streaming, vinyl and even CD sales saw music spending in the United Kingdom increase for a ninth consecutive year in 2023, according to annual figures from labels trade body BPI published Thursday (March 14).
Total U.K. recorded music sales — comprising digital and physical revenues, public performance rights and sync — climbed 8.1% to 1.43 billion pounds ($1.8 billion) last year.
That’s the highest nominal amount ever achieved in the U.K in one year, although when the figures are adjusted for inflation, last year’s record revenues are actually 478 million pounds ($610 million) below the 1.9 billion pounds ($2.4 billion) where the music industry should have been in real terms since 2006, the first year when public performance and sync were included in the annual total, reports BPI.
Driving the growth was an 8.4% year-on-year rise in streaming revenues, which increased to 962 million pounds ($1.2 billion) and accounted for just over 67% of annual trade revenues in 2023 — broadly flat with its share of the U.K. market in the previous 12-month period. Ten years prior, streaming represented just 8.6% of British labels’ income.
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Breaking down streaming revenue, paid subscriptions to services like Spotify and Apple Music generated 827 million pounds ($1 billion), up 8.1% on 2022, while ad-funded revenue grew by over 12% to 71 million pounds ($90 million) and video streaming trade income rose 6.9% to 64 million pounds ($82 million).
Download sales fell 5.8% to 26 million pounds ($33 million), while total digital revenue was 989 million pounds ($1.2 billion), up 7.9% on the previous year.
BPI reports that nearly 2,250 artists registered more than 10 million audio streams in the U.K. last year — a rise of 17% over the past two years — with Miley Cyrus’ “Flowers” the most-streamed track, racking up almost 200 million audio and video streams. Behind Cyrus was Dave and Central Cee’s “Sprinter” (160 million streams) and “Escapism” by Raye featuring 070 Shake (142 million streams).
In terms of physical format sales, labels and artists received 243 million pounds ($310 million) in 2023, up almost 13% on 2022, when physical trade revenues dropped by a tenth.
Fueling physical’s recovery was a double-digit (18.6%) rise in vinyl album revenues, which totaled £142 million ($181 million) on the back of popular new releases by Taylor Swift, The Rolling Stones and Lana Del Rey, who had the top three best-selling vinyl titles in the U.K. last year with 1989 (Taylor’s Version), Hackney Diamonds and Did You Know There’s A Tunnel Under Ocean Blvd, respectively.
More surprisingly, CD revenues also grew in 2023, up 5.4% year-on-year to just under £100 million ($127 million) with Take That’s This Life the year’s biggest-selling CD release.
Despite the compact disc’s resurgence, which BPI partly attributed to high-profile annual marketing events such as Record Store Day and National Album Day, vinyl moved further ahead as the country’s leading physical format in terms of label income, making up just over 58% of all physical music trade revenue, compared to 55% the previous year.
Public performance revenue climbed 7% year-on-year to 155 million pounds ($198 million), while sync sales dropped 7.6% to just under 40 million pounds ($51 million).
BPI’s year-end figures differ from those released by the Digital Entertainment and Retail Association (ERA) in January as the two organizations have different counting methods.
BPI’s financial figures are based on Official Charts Company (OCC) data and a survey of its record label members, which include the U.K. arms of Universal Music Group, Sony Music Entertainment and Warner Music Group, as well as over 500 independent labels. ERA’s year-end results, which also use OCC data, also include retail value, hence the higher numbers.
The U.K. is the world’s third biggest recorded music market behind the U.S. and Japan with sales of just under $1.7 billion in trade value, according to IFPI’s 2023 Global Music Report.
“Led by streaming, this ninth consecutive annual rise in recorded music revenues highlights how a balanced and prosperous market enabled by significant label investment can help even more artists to succeed,” said BPI CEO Jo Twist in a statement.
The Black Eyed Peas and Daddy Yankee are facing a lawsuit over allegations that they illegally sampled from classic 90s song “Scatman (Ski-Ba-Bop-Ba-Dop-Bop)” — a case that claims the artists “simply lied” in order to “avoid paying a larger licensing fee.”
In a lawsuit filed March 8, the company that owns the rights to “Scatman” accuse will.i.am (William Adams), Daddy Yankee (Luis Ayala Rodríguez) and others of “clear-cut copyright infringement” over their use of Scatman John’s ear-catching 1995 track in their own 2022 song “Bailar Contigo.”
The current owners of “Scatman” (Iceberg Records AS) claim that they granted a “limited license” allowing the superstars to use the underlying written music, but explicitly warned that a license to actually sample from the sound recording would cost more. The case claims the artists agreed to those terms, but that their “assurances turned out to be pretense.”
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“After comparing the tracks, it is apparent that the derivative work and the song are so strikingly similar that defendants have used the sound recording of the song, rather than just the composition, as agreed,” attorneys for Iceberg write in their lawsuit. “Defendants simply lied to plaintiff about not using the sound recording in order to avoid paying a larger licensing fee.”
The new case highlights the distinction between sampling (the use of an actual recording of an artist’s performance) and interpolation (the use of the same music but re-performed by the new artists). Sampling licenses require paying the owners of both the master and publishing copyrights to a given song, and thus typically cost more than interpolation licenses.
In the case of “Scatman” and “Bailar Contigo,” Iceberg claims it inked an interpolation deal with the Black Eyed Peas and Daddy Yankee in October 2022 in return for 75 percent stake in the publishing rights to the new song and a 5 percent income stream from the new recording. But Iceberg, which also owns the master to the song, says the contract “made clear” that the agreement was not a sampling deal.
“Rights to the recording of the original work (so called master rights) are not subject of this approval and require separate licensing,” the 2022 agreement purportedly read.
But when the song was released in November 2022, Iceberg’s lawyers say it obviously included a sample, not just an interpolation: “Although it appears that defendants attempted to manipulate the sound recording slightly to hide their infringement, the work remains so strikingly similar to the song that it could not have been created without using the song’s sound recording.”
Reps for both the Black Eyed Peas and Daddy Yankee did not immediately return requests for comment on the allegations. In addition to naming will.i.am as a defendant, the lawsuit also named Black Eyed Peas members apl.de.ap (Allen Pineda Lindo) and Taboo (Jaime Luis Gomez); it did not name not Fergie, who left the group in 2018.
Faced with only being able to secure an interpolation deal and not an outright sample clearance, artists will sometimes re-record a song in ways that sound very similar to the original recording. But that practice can ruffle feathers with the owners of masters, and has led to disputes in the past.
Last year, Rick Astley filed a high-profilelawsuit against Yung Gravy over the rapper’s breakout 2022 hit that heavily borrowed from the singer’s iconic “Never Gonna Give You Up,” alleging that the new track — an interpolation that sounded a whole lot like an outright sample — broke the law by impersonating Astley’s voice. In that case, Gravy cleared the underlying music (which Astley does not own) but failed to secure a license to sample the master.
The lawsuit, premised on Astley’s likeness rights, raised big questions about sound-alike songs and sampling, but the dispute was settled on confidential terms in September.
It’s time for another spindle around the Executive Turntable, Billboard’s comprehensive(ish) compendium of promotions, hirings, exits and firings — and all things in between — across music. For a summary of all the goings-on at UMG, scroll to the bottom. For everything else, read on!
Deezer‘s search for a permanent replacement for the departing Jeronimo Folgueira is underway, but in the meantime the Paris-based streaming service has hired a ringer of sorts to keep the CEO seat warm. Stu Bergen, a 14-year veteran of Warner Music and longtime CEO of the label group’s international and global services division, has stepped in to serve as interim CEO until a new chief is found. Bergen, who left WMG in early 2021, has been a member of Deezer’s board of directors for more than a year and will remain there after the executive search is complete. “Stu’s in-depth knowledge of the music and digital industries, coupled with his tenure as a director on Deezer’s board, positions him perfectly to boost the company’s strategic direction and facilitate a seamless transition,” the company said this week, adding it believes Bergen is perfectly suited to guide them in its international expansion and boosting subscribers in key markets. The company recently posted positive financial results for 2023, with revenue up 7.4% to $524 million and an 11.5% increase in subscribers (thanks to business-to-business partnerships).
”I am honored to accept the interim CEO role at Deezer at this pivotal time,” Bergen said. “I am committed to strengthening the company’s values and driving its growth trajectory forward. With the dedicated team and clear objectives already in place, I am eager to lead us through this period of transition, ensuring the company is prepared for its ambitious future.”
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Merlin, the digital music licensing go-to for indies everywhere, announced an expansive run of promotions and role tweaks at the company. Over on the member and partner success teams, Emma Robinson ascends to senior director of member operations after six years of service; Daniele Yandel was promoted to senior manager of member operations after four years; four-year veteran Jo Danher is now senior manager of member relations; and Poppy Waring (seven years) and Shannon Bradley (three) both step up to senior manager of commercial partnerships. As for the finance fam, Vincent Moyo is promoted to director of commercial finance, four years in; Grace Styles approaches her three-year mark with a promotion to management accountant; Savannah Puleston bumps up to operations and events coordinator, nearly two years after joining Merlin. Did someone say data? Mili Payne (two years) is elevated to senior royalty coordinator and Tom White has been named senior coordinator of business analytics in Merlin’s reporting and insights team. Finally, Tolis Koutronas was elevated to senior developer of technology and business solutions, rewarding four years of enhancing Merlin’s infrastructure, while four-year staffer Katie Eckett is now senior manager of business and legal affairs.
NAMM, aka the National Association of Music Merchants, appointed AJ Zane as the trade org’s new director of technology. Zane’s many duties include running point on NAMM’s product and platform technology, cybersecurity, cloud engineering, infrastructure, corporate IT and a host of other responsibilities only a “career technologist” (NAMM president/CEO John Mlynczak’s words) could muster. “He brings a diverse background and experience that align with our commitment to stay at the forefront of technology and harness its power to propel our organization into the future,” Mlynczak said. Prior to NAMM, Zane was an engineering manager at real estate data management tool Measurable and before that was a technical principal at Veyo.
Haley Evans was elevated to the role of president at Mega House Music, a songwriter-producer management company and music publisher. She has worked her way up at Mega House over the last four years, guiding the careers of writing talents like Casey Smith (“Moral of the Story” by Ashe, “Cool” by Jonas Brothers), Gian Stone (“Stuck With You” by Justin Bieber and Ariana Grande), Caroline Pennell (“Past Life” by Trevor Daniel and Selena Gomez, “Everytime I Cry” by Ava Max), and Peter Fenn (“Nathan (still breathing)” by Fred Again.., “Slow Down” by Laufey). Evans also works across the Mega House’s full roster, helping with Monsters & Strangerz, Joe London, Sol Was and others. She manages rising folk artist Mon Rovia as well and has played a meaningful role in the company’s expansion into Nashville and Miami. In her new role, she will continue to report to co-CEOs David Silberstein and Jeremy Levin. –Kristin Robinson
Academy Music Group (AMG) appointed Liam Boylan as chief executive officer of the UK venue owner and operator. AMG’s roster of medium-sized venues across the country include O2 Victoria Warehouse in Manchester, O2 Academy Birmingham and the soon-to-reopen O2 Academy Brixton. Boylan was previously stadium director at the legendary Wembley Stadium, and prior to that worked for years at SJM Concerts and Manchester Arena. “We’re delighted to welcome Liam to the AMG team and look forward to working with him,” said Denis Desmond, chairman of AMG. “He has a wealth of knowledge and experience in the live industry and running major events. He will be a great asset.”
Concord Music Publishing hired Lüder Castringius for the newly created position of senior vp of legal and business affairs across Germany, Switzerland and Austria (GSA). In his new role, Castringius will play a “central role” in bolstering Concord’s interests in the sprawling region, remarked Duff Berschback, evp of legal and business affairs, who added: “The decision to create this position demonstrates our commitment to top-tier legal counsel and underscores our efforts to meet the rapidly evolving demands of the music market.” The Berlin-based exec arrives from BMG, where he rose to senior vp of business and legal affairs EU during a 15-year run at the company. Castringius reports directly to Berschback, who is based in Nashville, but will also work closely with Tina Funk, managing director of Concord Music Publishing, GSA. “We appreciate his sensitivity, his fighting spirit, and his commitment to shaping the character and roster of the publishing house… and ensuring the protection of our creators’ rights,” Funk said.
RADIO, RADIO: Audacy announced that svp of digital audio content Tim Clarke will depart at the end of the month, with his role — leading consumer-facing properties such as Audacy.com and the company’s radio app — being phased out and duties folded into other teams. Clarke joined Audacy in March 2021 as svp of market manager before quickly ascending to his current position. Prior to Audacy, he spent 12 years at Cox Media, rising to vp of audience and content for his last three. In a staff memo obtained by Radio Insight, chief digital officer J.D. Crowley called Clarke a “wonderful creative executive, a great friend and colleague to so many of us.”
Big Loud Rock, which specializes in big loud rock records, upped its visual marketing game with the appointment of Paul Wright as vp of creative strategy. Based in Los Angeles, he reports up to Lloyd Norman, svp of BLR, which is the alt-rock imprint of Big Loud Records. Wright joins from Red Bull Records, where as director of creative marketing he worked with Blxst, Albert Hammond Jr, AWOLNATION and others on tailored content. Prior to RBR, Wright racked up time at Nettwerk Music Group and Hopeless Records. Elsewhere at BLR, recent new hires and promotions include Dave Barbis as svp of promotion, Nicole Rich as director of promotion & publicity, Delaine Halpin as project marketing manager, Colleen Kennedy as operations manager and Bella DiDomenico as executive assistant to BLR president Greg Thompson. “We are thrilled to have an executive like Paul join the Big Loud Rock team and also to recognize the growth of our staff and the overall team building Big Loud Rock,” Thompson said.
Absolute Label Services added three new members to its London-based team. Joining as senior label manager is Dominic Squire, most recently senior international marketing manager at BMG. The independent services company also welcomed Jimmy Smith, formerly of Platoon, as a campaign coordinator. Finally, Finn Peat is now part of ALS’ digital right team in his first music industry gig.
Outback Presents promoted Fallon Nell to vp of booking, overseeing all Outback artist bookings for country, comedy and music events. Nell launched her career at Outback as the company’s first intern, before joining as a promoter representative in the company’s comedy department. She later transitioned to artist management at Alliance Artists (now Red Light Management Atlanta) before launching Brothers Management. Nell returned to Outback Presents in 2023, serving as senior booking manager. –Jessica Nicholson
NASHVILLE NOTES: Music City-based executive Kelly Bolton joined Warner Records as vp of A&R, focusing on country but reporting to Warner Records’ LA-based CEO Aaron Bay-Schuck. She arrives after more than five years at Tape Room Music, where she served as svp of A&R … Black River Records elevated Bill Mackay to vp of national promotion. Mackay joined the label in 2012 after more than 30 years in the industry, including stops at MCA, Sony and Stroudavarious Records, plus 16 years as a country radio programmer in markets including Pittsburgh, San Jose and San Diego. Congratulate Mackay at bmacky@blackriverent.com.
Creative Artists Agency (CAA) welcomed Julian Teixeira to the family as an agent in the music touring department. He arrives from The Bullitt Agency and brings a client roster that includes Dubfire, Chris Stussy, Dennis Cruz and Kölsch, among other. The George Washington University grad is based in CAA’s. New York offices.
ICYMI:
Following the curtain-raising of the Interscope Capitol Labels Group, chairman/CEO John Janick (pictured) announced more additions to his C-suite team (namely Gary Kelly and Jason Kawejsza), and a few days later fleshed out the structure of the new company … then UMG’s more East Coast-y labels reorganized under the new Republic Corps banner under Monte Lipman … and finally a member of the Corps, Mercury, announced several promotions and hires.
Last Week’s Turntable: Warner Chappell’s China Role
These days the music industry sometimes seems like a media business version of “Trading Places” in which every label wants to be a distributor and every distributor wants to become a label.
On March 7, Warner Music Group disclosed its interest in buying the French digital music distributor Believe, but all the label groups are focusing more on the distribution game – think Sony Music’s 2021 acquisition of AWAL and Universal Music Group’s October consolidation of Virgin Music and Ingrooves. At the same time, distributors are offering more of the services that only labels used to provide, including radio promotion and different kinds of marketing.
From the perspective of an independent creator, these two once-separate sectors have moved close enough that they’re competing – the majors are offering more flexible contracts that allow artists to keep their copyrights, while distributors are providing advances and an array of services to successful acts. For anyone who was in the industry before streaming became the standard, this seems like the music business’ Reese’s moment: You got your distribution in my label! You got your label in my distribution! To outsiders and young creators though, the distinction might not even make that much sense in the first place. Behind all the complicated corporate org charts, isn’t Sony just investing in, marketing and distributing Bad Bunny’s music (through The Orchard), just as it invests in, markets and distributes Beyoncé’s (on Columbia)?
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Sort of. Companies spend less, and make less, on the music they distribute, while acts signed to labels represent bigger bets both in terms of investment and potential upside. Distribution is steadier, while the label business involves more risk and some very profitable successes that more than make up for them. That’s not new. What is new, though, is how what was once a binary choice has become more of a question of finding the right point on a spectrum of risk and reward that has a traditional label deal at one end, distribution on the other and plenty of options in between.
It’s easy to understand why distributors are offering services that were once solely the domain of labels – pure online distribution has always been a low-cost commodity business, and label services offers are one way to get better margins. But what about the opposite? Why are labels getting into a lower-profit business that essentially endangers the best part of their existing business? Especially as label deals get less standard, companies make higher margins on acts that are early in their careers, before they score the success that gets them the leverage to negotiate a better deal.
Understanding why the major label groups are investing so much in a less profitable sector than the one they’re in requires seeing the issue like a media executive in the Internet Age, which is to say through the lens of disruption. This is the idea that companies which pioneer a good-enough product or service at a much lower cost will eventually challenge the market leaders – think of Netflix and cable television, for example. Although the theory isn’t as simple or as applicable as technology executives say it may well apply here: The market share of recorded music from traditional labels is slowly but steadily shrinking, in favor of distributors. The good news for the major labels is that much of that shift involves distributors they own, including The Orchard, owned by Sony, which raised its U.S. market share from 1.5% in 2021, to 7.1% in 2022, to 8.7% in 2023, according to Luminate. Much of that business comes from Bad Bunny, of course, but the company already has another bona fide Latin music superstar in Peso Pluma.
The labels basically just want to disrupt their own businesses before other companies can. If you think this kind of change is inevitable, it’s worth running toward it. (The music business has a reputation for being fearful of technology because it took so long to embrace the internet, but the business school idea of disruption doesn’t apply to pirated music; Napster wasn’t offering another product – it was offering the same product illegally.)
The second reason companies are buying distributors is, as MUSIC founder and CEO Matt Pincus recently told Billboard, “it solves a real stack problem for them.” Pincus was talking specifically about Warner, which like all label groups focuses on trying to break and market stars. A “stack” – programmer-speak for underlying technology – would let the company serve beginning creators and more emerging ones, as well as stars and a few artists that it wants to develop into stars. Warner already does this with ADA, which distributes independent labels, but ADA has tended to focus on a moderate number of mid-size indies, rather than a larger number of smaller ones.
But the most important reason labels are investing more on distribution could be the sector’s potential to serve as a kind of talent farm system. In the movies, label executives discover artists in bars or office auditions, but that hasn’t been the dominant way of doing business for a generation. These days, even beginning creators are distributing their music online, starting their careers on their own rather than trying to be discovered. Which means that by the time a major label gets interested in them, they may already have a deal. Since it’s easier to sign an artist who’s already involved with another division of the company, it makes sense to cast the biggest net possible. This is a defensive move, too: Now that Sony and Universal have big distribution businesses that can potentially serve as talent pipelines, Warner arguably needs one, too.
For that matter, the same applies to Believe. Most indie creators want to start their careers with basic distribution deals – but few of them want to stop there. Believe could be much more attractive to creators if it could offer them a place to grow to as well as services to grow into.
Former Treasury Secretary Steven Mnuchin said Thursday that he will put together an investor group to buy TikTok after the House passed a bill that would ban the popular video app in the U.S. if its China-based owner does not sell its stake.
During an interview on CNBC’s “Squawk Box,” Mnuchin, who served under President Donald Trump, said he had spoken “to a bunch of people” about creating an investor group that would purchase the popular social media company. He offered no details about who may be in the group or about TikTok’s possible valuation.
“This should be owned by U.S. businesses,” Mnuchin said. “There’s no way that the Chinese would ever let a U.S. company own something like this in China.”
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TikTok did not immediately respond to a request for comment.
The House bill, passed by a vote of 352-65, now goes to the Senate, where its prospects are unclear. Lawmakers in the Senate have indicated that the measure will undergo a thorough review. If it passes in the Senate, President Joe Biden has said he will sign it.
House lawmakers acted on concerns that TikTok’s current ownership structure is a national security threat. Lawmakers from both parties and administration officials have voiced concerns that TikTok’s parent company, ByteDance, could be compelled by Chinese authorities to hand over data on American users, spread pro-Beijing propaganda or suppress topics unfavorable to the Chinese government.
TikTok, for its part, has long denied that it could be used as a tool of Chinese authorities. The company insists it has never shared U.S. user data with the Chinese government and will not do so if asked. To date, the U.S. government also has not provided evidence that shows TikTok shared such information with authorities in China.
The White House had no immediate reaction Thursday to Mnuchin’s potential bid for TikTok.
“We’re still focused on continuing to work, providing some technical support and assistance to Congress, as this bill, which just passed the House, moves on to the Senate,” White House national security spokesman John Kirby said when asked about whether the Mnuchin consortium could assuage the administration’s national security concerns about TikTok.
“There is an ongoing legislative process for that. We obviously want to see the Senate take it up swiftly and we’re focused on making sure we’re providing them the context and information we believe is important so that this bill can actually do and address the national security concerns that we have with respect to TikTok.”
The fight over the platform takes place as U.S.-China relations have shifted into strategic rivalry, especially in areas such as advanced technology and data security, seen as essential to each country’s economic prowess and national security.
If passed and signed into law, the House bill would give ByteDance 180 days to sell the platform to a buyer that satisfies the U.S. government. It would also require the company to give up control of the TikTok algorithm that feeds users videos based off their preferences.
In addition to Mnuchin, some other investors, including “Shark Tank” star Kevin O’Leary, have voiced interest in buying TikTok’s U.S. business. But experts have said it could be challenging for ByteDance to sell the platform to a buyer who could afford it in a few months.
Big tech companies are best positioned to make such a purchase, but they would likely face intense scrutiny from antitrust regulators, which Mnuchin emphasized.
“I don’t think this should be controlled by any of the big U.S. tech companies. I think there could be antitrust issues on that,” he said during the interview. “This should be something that’s independent so we have a real competitor. And users love it, so it shouldn’t be shut down.”
He also said the app would need to be rebuilt in the U.S. with new technology.
In many ways, social media companies have become battlegrounds for partisan disagreements about how to control disinformation while protecting free speech. Mnuchin’s effort to buy TikTok comes as Trump and his allies have long complained about what they see as social media muzzling conservative voices.
Trump himself has voiced opposition to the House bill, saying that a ban on TikTok would help its rival, Facebook, which he continues to lambast over his 2020 election loss. Some other Republicans who oppose the bill say the U.S. should simply tell Americans about the security concerns with TikTok, but let them decide if they want to use the platform.
Meanwhile, some Democrats have expressed concern about singling out one company when other social media platforms also collect vast amounts of data on users. Opponents of the bill also say it would disrupt the lives of content creators who rely on the platform for income and run afoul of the First Amendment, which protects free speech.
This isn’t the first time a TikTok sale has been in play.
When Mnuchin was Treasury secretary, the Trump administration brokered a deal in 2020 that would have had U.S. corporations Oracle and Walmart take a large stake in TikTok on national security grounds.
The deal would have also made Oracle responsible for hosting all TikTok’s U.S. user data and securing computer systems to ensure national security requirements are satisfied. Microsoft also made a failed bid for TikTok that its CEO, Satya Nadella, later described as the “strangest thing” he had ever worked on.
Instead of congressional action, the 2020 arrangement was in response to a series of executive actions by Trump targeting TikTok.
But the sale never went through for a number of reasons. Trump’s executive orders got held up in court as the 2020 presidential election loomed. China also imposed stricter export controls on its technology providers.
A London appeals court on Thursday (Mar. 14) overturned the murder conviction of Jamaican dancehall star Vybz Kartel, ruling that the 2014 guilty verdict was tainted by allegations that one juror attempted to bribe others.
The ruling came more than a decade after Kartel — a popular Jamaican artist who has worked with Rihanna, Jay-Z and others — and three others were convicted in Kingston, Jamaica of the 2011 killing of an associate named Clive “Lizard” Williams, whose body was never found.
In the decision, the appeals court ruled that the judge overseeing the 2014 trial had made a “fatal” error: allowing the jury to proceed to a verdict despite news that one of the jurors had attempted to bribe others. That juror was not removed, and soon after the jury returned a guilty verdict.
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“There should have been no question of allowing Juror X to continue to serve on the jury,” the appeals court wrote Thursday. “Allowing Juror X to continue to serve on the jury is fatal to the safety of the convictions which followed. This was an infringement of the defendants’ fundamental right to a fair hearing by an independent and impartial court.”
The decision came from the Judicial Committee of the Privy Council, a London court that decides last-resort appeals from certain countries belonging to the Commonwealth of Nations, including Jamaica.
The ruling overturned Kartel’s conviction and his 32-year prison sentence, but he could still face a retrial on the same accusations. The appeals court said that Jamaican courts would decide whether such a trial will take place.
Kartel — along with co-defendants Shawn Campbell, Kahira Jones and Andre St John — faced a 64-day jury trial in early 2014 over accusations that they had killed Williams after he failed to return two unlicensed firearms they had lent him.
But on the final day of the trial, the judge was told that Juror X had attempted to “persuade another member of the jury” to acquit the defendants by offering bribes of 500,000 Jamaican dollars (roughly $3,200 US).
After receiving that information, the judge was faced with an unusually difficult choice. Because another juror had already been discharged over a separate issue, the only choice was to end the trial entirely after weeks of testimony or allow the case to continue to a verdict.
“It might have been possible simply to discharge a miscreant juror and to allow the remaining members of the jury to return verdicts [but] that was not possible here,” the appeals court wrote Thursday.
Though the appeals court said it had “considerable sympathy with the judge’s dilemma,” it said the decision to proceed with the problematic juror had been a “serious irregularity” that would result in a “miscarriage of justice” if allowed to stand.
“In coming to this conclusion, the Board is mindful of the very serious consequences which may flow from having to discharge a jury shortly before the end of a long and complex criminal trial,” the appeals court wrote, noting that England has statutes aimed at dealing with such situations.
“However, in the absence of such a provision — and there is no such provision in Jamaica — there will be occasions on which, as in the present case, a court will have no alternative but to discharge a jury and end the trial in order to protect the integrity of the system of trial by jury,” the court wrote.
While the Mechanical Licensing Collective’s announcement last month about the “final final” Phonorecords III Copyright Royalty Board rate determination adjustment seemed to imply songwriters and publishers were due another roughly $400 million to, sources say the number likely overstates the coming financial windfall.
After a more than two year wait that included an appeal process, a remand, a new partial rate trial, and then the time to recalculate and resubmit adjusted play reports, sources say that number may correctly assess how much more money was earned and reported due to the CRB determination covering 2018 through 2022 — but it also likely includes payments that have already been made.
Within the total adjustment, about $250 million in net extra mechanical royalties will be paid out thanks to the adjustment, with practically all of that coming from the 2021-2022 period. Those royalties will be paid out beginning in May by the Mechanical Licensing Collective, the agency created by the Music Modernization Act to collect and disburse mechanical royalties from on-demand digital streaming services. This means adjusted monies paid out by the MLC will probably begin reaching songwriters from their publishers in the following quarter.
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The rest of the roughly $400 million adjustment comes from performance royalties. But sources at the U.S. performance rights organizations say they are surprised by the MLC’s claim that another $138 million has been discovered in the resubmitted play reports required by the final rate determination.
The MLC may be the best positioned to understand this, though. Because the mechanical rate formula calls for the digital service providers to report how much they paid in performance royalties each month — or estimate how much they will pay — the MLC has insight into how much was reported collectively for mechanical and performance royalties for the period of 2018-2022 before the rate determination was finalized. It also has insight into how much performance royalties totaled after the play reports were resubmitted with the adjustments due to that final determination. The final determination happened in August 2023, eight months after the 2018-2022 term ended, with the resubmitted reports due Feb. 9, 2024.
In contrast, the PROs themselves only know what they each individually have been paid, and each digital service only knows what they individually have paid out to each PRO. Neither of those sides can see the whole performance revenue pool like the MLC can, unless they share information with competitors, which is unlikely but possible. Consequently, sources at PROs and digital services say they are surprised and puzzled by the MLC’s announcement that more performance royalties were found due to the adjusted reports. Others say the MLC’s announcement has caused consternation between songwriters and PROs. One source at a PRO suggests that the MLC including performance royalties in its report was a “marketing mishap.”
PRO sources insist that whatever performance royalties came in have largely already been paid out, and they don’t expect any new windfalls. And sources at the digital services say that, from what they can tell, the streamers have already paid out all the performance royalties that were due and they don’t expect to be making further payments.
Meanwhile, sources at PROs say the MLC’s announcement has caused significant confusion, leading songwriters to inquire about when they will get additional payouts for performance and why they were not made aware of this sooner.
Even if the performance royalties have already been paid, many executives in the music industry are speculating about what caused such a significant increase. The all-in mechanical formula that was determined by the CRB in Phonorecords III, by itself, doesn’t do anything to change performance royalties, which are typically decided by private negotiations between PROs and streaming services.
It’s possible digital services made mistakes when they reported the monthly performance royalties the first time around. The MLC could also have made a mistake either when it added up all the interim royalties paid while parties were awaiting a final determination or when it subsequently adjusted performance royalties for the period.
Alternatively, some of the PROs could have negotiated deals that tie their performance rates to the statutory mechanical rate. That would mean when digital services reverted to paying a lower mechanical rate while the 2018-2022 rate was still being determined, they wound up paying lower performance royalty rates, too — which later increased after the final CRB rate determination. But while some PRO sources concede that they try to negotiate for at least 50% of the statutory rate as a floor, they also say they don’t have any deal triggers specifically tied to the mechanicalrate.
Another theory is that one or two of the PROs might have been operating under an interim royalty rate with one or more streaming services while working through negotiations, which hypothetically weren’t finalized until recently. If those performance royalty rates have now been decided, the adjustments could be reflected in this total reported number. But several sources say they aren’t aware of any instances where this has happened.
It isn’t unusual for there to be streaming royalty adjustments after the fact, even without a new subsequent “final final” rate determination, sources point out. As it is, streaming services will sometimes need to make estimates on reporting monthly performance and mechanical royalty payments and then later adjust if necessary once the period has closed. At that time, the new payment would be made and the expense adjustment would be reported to the MLC — not two years later, sources say.
Performance and mechanical royalties have a see-saw effect where an increase in one will result in a decrease in the other. That’s because the formula for calculating the mechanical rate includes a first step in the formula that initially acts as a cap for an all-in publishing royalty pool that combines the two. This has publishers worried. If the services have already fulfilled all of their performance payments and the PROs have paid out all the received performance royalties, then how can the services now claim that $138 million as an additional deduction in the resubmitted reports? By claiming additional performance payouts, that would likely reduce the potential mechanical royalty payouts on the resubmitted report.
Aside from whether more money is coming, how these publishing royalties are paid — as performance or mechanicals — matters to publishers and songwriters.
For example, if that newfound $138 million in performance royalties needed to be paid out, it would likely mean that only about $120 million to $125 million of it would flow to songwriters and publishers because of the PROs’ overhead expenses.
If, instead, that $138 million was mechanical royalties, the songwriters and publishers would get all of that because the MLC has no overhead expense deduction since digital services finance the operation. But, instead of it getting paid out separately and directly split between publishers and songwriters, these royalties are paid to publishers, who then distribute royalties to their writers, but usually after recouping. So, the difference in where the payment comes through matters significantly to songwriters and publishers.
Overall, this adjustment seems to weigh more favorably for the mechanical royalty pool. Previously, during the interim period, the $2.77 billion in total publishing royalty payouts from digital services were weighted 50.93% to mechanical and 49.07% to performance. But after adjustments, including subtracting a slight overpayment in mechanicals for the years of 2018-2019, the $3.16 billion in total publishing royalties paid out by digital services to the PROs and the MLC works out to 52.63% paid in mechanical and 47.37% to performance, or nearly a two-percentage point increase for the former.
Eventually, when the MLC digs into the resubmissions and compares them to the earlier monthly play reports, it will likely be able to discern if the additional $138 million is coming across the board from all services or if a specific service or two accumulated the bulk of the new reported performance royalties. But if that doesn’t solve the mystery, another process is beginning that could bring in an answer. Last month, the MLC served notice on some 50 digital services that it is performing audits on them. If all else fails, that should bring some clarity to the mystery.
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