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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.
Domelipa is ready to launch her music career under her new signing with Westwood Entertainment, Billboard can exclusively announce today (March 14). She will be managed by Jorge Juárez, who currently also manages Carin León. Explore See latest videos, charts and news See latest videos, charts and news The Mexican influencer — who boasts more […]
Kelly Clarkson’s ongoing legal battle with ex-husband Brandon Blackstock is expanding with a new lawsuit aimed at potentially going much further than the $2.6 million ruling she won against him last fall.
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With Blackstock currently appealing that November decision, Clarkson filed a new case Monday in Los Angeles court, seeking a ruling that he and his father’s management firm had been violating state labor rules all the way back to back to the very start of their relationship.
Clarkson’s new lawsuit is seeking an order that would require the return of “any and all commissions, fees, profits, advances, producing fees or other monies” she paid to Blackstock’s father’s company, Starstruck Entertainment, dating back to 2007 – much further back than the earlier judgment, which only reached back to 2017.
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The new case is the latest development in a sprawling legal battle between the two ex-spouses, who split in 2020 after seven years of marriage. The divorce itself was finalized in 2022, but that personal settlement didn’t resolve tricky business entanglements with Blackstock’s father’s firm, which managed her for years.
Shortly after Clarkson filed for divorce, Starstruck sued her for millions in allegedly unpaid fees, claiming it had “invested a great deal of time, money, energy, and dedication” into her and had “developed Clarkson into a mega superstar.”
Clarkson responded by filing a complaint with California’s Labor Commissioner, arguing that Blackstock and Starstruck had violated California’s Talent Agencies Act (TAA) by serving not just as her personal managers, but as unlicensed talent agents who booked business deals.
In November, Commissioner Lilia Garcia-Brower ruled that Blackstock had indeed procured a number of deals for Clarkson, including her lucrative role as a judge on The Voice, that should have been handled by her talent agents at Creative Artists Agency (CAA). The decision ordered Blackstock to repay Clarkson more than $2.6 million in commissions she paid to him for handling those deals.
In December, Blackstock and Starstruck challenged that ruling in court, demanding that same questions be re-decided by a Los Angeles judge rather than by the Labor Commissioner. That case remains pending and is set for a hearing in August.
With her new lawsuit, Clarkson could win a ruling that would effectively confirm the findings of the Labor Commissioner. But the case could also give her a vehicle to expand the Commissioner’s decision – a ruling that went her way, but also rejected some of her core claims against Blackstock and Starstruck.
For instance, the commissioner rejected Clarkson’s claim that Blackstock was also required to pay back commissions he earned from helping to secure The Kelly Clarkson Show — which could have seen him owe much more. His involvement in that deal, including “strategizing” with her agents, was clearly “at the request of CAA” and thus not a violation of the law, the commissioner ruled.
An attorney for Blackstock did not immediately return a request for comment.
After a marriage of seven years, Clarkson filed for divorce from Blackstock in June 2020. The case was finalized two years later, with the singer agreeing to pay her ex-husband monthly child support of $45,601 for their two children, plus a one-time payment of just over $1.3 million.
A year ago, Matt Najdowski, like many business managers for top artists, was routinely going over royalty statements when he discovered an unusual plunge in revenue.
For years, Pandora, the internet-radio streaming service, had paid 50% of song royalties to the artists through a collection agency called SoundExchange. But suddenly, artists signed to Universal Music Group were receiving a much lower percentage, similar to what they received from on-demand streaming services like Spotify or YouTube. And the payments were now arriving directly from UMG instead.
Najdowski researched further and learned UMG was able to change the way it reported Pandora revenue because Pandora itself had changed. In 2016, the streaming service began evolving from webcasting to a Spotify-style “search and play what you want” model. Because Pandora now offers an interactive service, rather than a non-interactive webcaster, it needed to make new deals with labels rather than relying on a government-mandated compulsory license at a standardized rate.
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As such, UMG and other labels were able to change the flow of royalties so they collected and paid them directly — rather than SoundExchange distributing to artists, as law mandates under these compulsory licenses. With UMG’s change in policy last year it became the first and only label so far, according to sources, to take advantage of this change. With that, the royalty splits for artists changed, too, from a 50% split through SoundExchange to whatever, often smaller, percentage their record deals dictated for on-demand streaming revenues. That’s significant as the world’s biggest record label contributed $135 million to SoundExchange as part of its Pandora share for artists, according to Billboard estimates based on financial reports and other public information.
“That specific royalty stream can range from a couple hundred dollars per month to a couple thousand. It can be a significant amount of money,” says Najdowski, royalty manager for Farris, Self & Moore. This change in accounting, he adds, “is more or less taking money out of [artist’s] pockets.”
Perhaps most notably, Najdowski discovered that the many UMG artists who are unrecouped – meaning they have yet to earn back the money the label spent on recording, marketing and other costs – were receiving a worrisome amount: zero. These acts were previously being paid directly by SoundExchange, so their unrecouped status with UMG was not an issue for these royalties. “A lot is being withheld, and it feels like a grab for money from the labels,” says Heather Gruber, royalty manager for Fineman West, a business-management firm that represents artists.
Although Pandora has struggled in recent years – monthly users have dropped from 81.5 million in 2014 to 46 million in 2023 – it remains a potent outlet for hitmakers such as SZA, Megan Thee Stallion and Lil Durk, as well as bubbling-under singles like contemporary-Christian singer-songwriter Lauren Daigle’s “These Are the Days.” Newer artists rely on the exposure, too, and Pandora royalties have provided crucial revenue while they absorb touring and merch expenses. “If you’re making millions of dollars, this isn’t going to have a big impact on you,” says Harold Papineau, associate lawyer for King, Holmes, Paterno and Soriano, which represents Metallica and others. “But if you’re living paycheck to paycheck, then this is a significant problem. Now you’ve lost money that you may have relied on to pay your bills.”
In a statement, a UMG representative responded by explaining the difference between interactive (like Spotify, YouTube and Apple Music) and non-interactive streaming services (like internet radio). For the former, recording royalties are “subject to direct negotiation between an individual rights owner and the service,” the rep said, adding that Pandora “has substantially changed its functionality such that it has evolved into an interactive service, where users can select tracks on demand.” In other words: The label has every right to make this change.
Still, UMG didn’t fully change the way it reported the royalties to artists until 2022, and it caught many business managers and music attorneys by surprise. “It kind of happened in the dead of night,” says Mike Merriman, a business manager for the firm PARR3 who represents DJ Alison Wonderland, singer 6lack and producer Louis Bell, among others. “It does create some ambiguity and lack of transparency.”
When the Pandora change first kicked in, business managers were confused about the streaming service’s identity. “We’re still running analysis on it,” says Erica Rosa, owner/vp of royalties and contract compliance at FBMM, a business management firm that represents top artists. “I’ve asked a lot of questions to attorneys and various industry figures: ‘How would you define Pandora? Would you consider it to be an interactive or non-interactive stream? I don’t know that anyone has given a clear definitive answer yet.”
Additional reporting by Glenn Peoples.
D.C. Stadium LLC and Grand Rising Curations today announced a multi-year partnership that will expand Audi Field into a Sports & Entertainment complex primed to host concerts and festivals in the Nation’s Capital. Explore Explore See latest videos, charts and news See latest videos, charts and news The deal between D.C. Stadium LLC and Grand […]
Position Music has acquired the catalog of French producer, artist and DJ Gesaffelstein. As part of the deal, Position will own and administer the publishing rights to the catalog prior to his 2016 Sony Music Publishing deal. In addition, the company has also acquired the writer, artist and producer royalties for Gesaffelstein’s entire catalog, including “Lost in the Fire” ft. The Weeknd, “I Was Never There” and “Hurt You” by The Weeknd, “Black Skinhead” by Kanye West, and more.
UMPG has signed Yusuf/Cat Stevens to an exclusive global publishing administration agreement. Known for hits like “Father and Son,” “Wild World,” “The Wind” and “Morning Has Broken,” the singer-songwriter recorded music and publishing catalogs are now united under one roof for the first time at UMG.
Reservoir Media has signed Kings of Leon to a go-forward publishing agreement, including the group’s upcoming project Can We Please Have Fun. The deal arrives just after Kings of Leon announced their 2023 world tour, including 26 cities across the U.S. and Canada.
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Warner Chappell Music has signed Yellowstone actor and artist Luke Grimes to a global publishing deal, in collaboration with Range Media Partners. His debut song “No Horse To Ride” was featured in the mid-season series finale last year, driving Grimes up the Billboard Country charts. His debut album will be released on March 8 under UMG Nashville’s Capitol Records.
The 100 Percenters has linked with Spotify to offer ten $2,500 career stimulus grants for songwriters and producers. The grants are supported by Spotify’s Creator Equity Fund. Applications will open Friday, March 15, and will close Monday, April 15. Applicants must be members of the 100 Percenters community and must have at least two years of professional experience, have three or more commercial songwriting or producer credits, be a U.S. citizen, earn an annual income of less than $100,000 and submit verifiable proof of income.
SMACKsongs has signed an exclusive publishing deal with Sarah Buxton, the Nashville-based hitmaker behind songs like “Stupid Boy” and “Put You In A Song” recorded by Keith Urban, “Sundaze” by Florida Georgia Line, “Don’t Let Me Be Lonely” by The Band Perry, and “Fix” by Chris Lane.
BMG has extended its publishing agreement with Grammy-nominated DJ and producer Robin Schulz, which began in 2016. As part of the extension, BMG has also acquired the co-publishing rights to Robin Schulz’s entire song catalog, including “Waves,” “Prayer,” “Sugar,” “Alane,” “All We Got,” and “Young Right Now.”
The Other Songs Live, a songwriter night featuring performances by some of music’s top hitmakers, will be returning to the London Palladium on Monday, May 20. Presented by indie music company The Other Songs in partnership with The Ivors Academy, the event will raise money for three music-related charities, including The BRIT School, The Ivors Academy Trust and Nordoff and Robbins. In the past, the show has featured artists, including Raye, Andrew Lloyd Webber, Nile Rodgers, Dave Stewart and Katie Melua.
peermusic UK has signed Nothing But Thieves to a global publishing deal. The deal includes the band’s fifth studio album, which will be released later this year. Their prior catalog remains with Sony Music Publishing.
Warner Chappell Music and Katy Perry‘s Unsub Publishing have signed rising singer, songwriter and producer Debbii Dawson to a global co-publishing deal. Perry says of Dawson, “She’s a rare find and someone I believe has the brightest of futures ahead of her as an artist, songwriter, and creative force.”
The Nashville-based Edgehill Music Publishing has signed songwriter Carys Selvey to a global publishing deal. Founded by Josh and Tara Joseph, Edgehill adds the London-based Selvey to a growing roster that also includes Dave Villa, Rob Williford, LOCASH and more.
Spirit Music Group has signed worldwide publishing administration deals with Chris Robinson and Rich Robinson of rock band The Black Crowes. The deal includes the band’s albums Warpaint and Before The Frost…Until the Freeze as well as their latest album Happiness Bastards, out March 15.
Warner Chappell Music has signed a global publishing deal with AntsLive, the viral London rapper behind the popular song “Number One Candidate.” Nominated for two MOBO Awards in 2024, including Best Newcomer and Best Video, the musician says he decided to join the WCM roster after attending the company’s songwriting camp in Las Vegas.
BMG has acquired 100% of the catalog of Cologne-based record label Coconut Music, including the recorded rights to tracks by Haddaway, Bad Boys Blue, London Beat, and Wolfgang Petry. The deal builds on BMG’s 2022 acquisition of Haddaway’s recorded music royalties. Under the new agreement, BMG now controls 100% of Haddaway’s biggest track “What Is Love.”
Major Bob Music has re-upped its publishing agreement with writer/producer Colin Healy. Before signing a publishing deal, Healy got his start as bassist and music director for Dustin Lynch, a gig he held for thirteen years. Then, in 2019, he signed to Major Bob Music to further his career as a writer. Since then, Healy has landed cuts with Megan Moroney, Avery Anna, Tayler Holder and more.
Warner Chappell Music has signed Nashville-based talent Josh Montgomery to a global publishing deal. Known for his ability to work across genres, Montgomery has already earned cuts with Ashley Kutcher, Jessie Murph, Tyler Halverson, Graham Barham, Jax, and Dasha.
Wise Music Group‘s Chester Music has signed a new publishing agreement with performer, composer and Olivier Award-winning choreographer Dickson Mbi. Born in Cameroon and raised in East London, the multi-talented Mbi has worked with artists like Russell Maliphant, Boy Blue Entertainment, Robbie Williams, Corrine Bailey-Rae, Black Eyed Peas and choreographed the “Leave A Trace” music video for CHVRCHES.
Wise Music Group has signed Icelandic composer Högni Egilsson has signed a worldwide publishing agreement with the newly opened office, Wise Music Iceland, marking the first signing of the Iceland office, since it launched in November 2022. A leading voice in Iceland’s music scene, Egilsson will be administered by Wise for all future works.
Nashville’s Big Loud Records has inked a multi-year distribution deal with Mercury/Republic for all releases, effective immediately.
Previously, only releases from Morgan Wallen, Lily Rose and Dylan Gossett had gone through the partnership, while the rest of the Big Loud roster was distributed through Stem and Amped.
In a memo to the staff obtained by Billboard, Big Loud founders/partners Seth England, Craig Wiseman and Joey Moi stressed that the move is not an acquisition and that the full staff will remain intact: “This partnership allows for Big Loud Records to remain fiercely independent while leveraging their global distribution and resources, as needed, to best serve our world-class roster. Artists and our staff will see increased creative opportunities, robust international support, new multimedia partnerships, additional multi-format promotion muscle and merchandising resources, among many other benefits. And to clarify: Big Loud Records has not been acquired in any way. Our full staff will remain intact and will continue to lead with the artists we represent.”
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The move comes as Mercury/Republic parent Universal Music Group is undergoing a massive restructuring, with the East Coast labels realigning under a new structure called Republic Corps under chairman/CEO Monte Lipman. Mercury will continue to be led by president Tyler Arnold and general manager Ben Adelson.
The announcement arrives as Wallen’s One Day at a Time spends its 19th non-consecutive week at No. 1 on the Billboard 200, breaking the previous record of 18 weeks held by Garth Brooks more than 30 years ago.
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The memo is in its entirety below.
Good afternoon everyone,
We’re writing to share an important update regarding our distribution for Big Loud Records and our affiliate labels.
After many incredible years with Stem and Amped we have decided to enter into a new multi-year distribution deal with Mercury Records/Republic, amplifying our existing partnership with Monte & Avery Lipman as well as Tyler Arnold and the greater Mercury Records/Republic team.
We are immensely grateful for the tireless efforts of Milana, Kristin, Bobby, Alison, and the entire team at both Stem and Amped who have supported our releases for the better half of a decade. Both teams have been an integral part of our growth story and remain a highly recommended distribution and artist resources solution for self-determined artists and companies. We remain proud investors of Stem to this day.
The Big Loud partners and executive leadership team are immeasurably proud of what this roster and staff have accomplished over the past eight years. Our songs, albums, artists, and company have seen the top slots of nearly every chart in our format. Best of all, we’ve earned those accolades with integrity. We’re reaching new heights with broadened creative ventures and international outposts leading our growth into new genres and markets. With this next chapter, we are thrilled to elevate with a like-minded, best-in-class team that’s effectively been the #1 all-genre record label in the business for the last decade. Rest assured, Mercury Records/Republic both mirrors and supports our renegade spirit.
This partnership allows for Big Loud Records to remain fiercely independent while leveraging their global distribution and resources, as needed, to best serve our world-class roster. Artists and our staff will see increased creative opportunities, robust international support, new multimedia partnerships, additional multi-format promotion muscle and merchandising resources, among many other benefits. And to clarify: Big Loud Records has not been acquired in any way. Our full staff will remain intact and will continue to lead with the artists we represent.
Our hope is that this announcement makes you as excited as the partners and the executive leadership team feel because we achieved this together. From the smallest artists to the biggest, it takes the entire village – we are confident Big Loud will be a force to be reckoned with for years to come.
Please feel free to reach out to your department head, Patch, Austen, or Seth if you have any questions.
Sincerely,
Seth, Craig, and Joey
LONDON (AP) — Adidas said Wednesday that it’s donated or is planning to give away more than $150 million to groups fighting antisemitism and other forms of hate from the sales of Yeezy shoes last year after it severed ties with Ye, the rapper formerly known as Kanye West.
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The German sportswear brand had 1.2 billion euros ($1.3 billion) worth of popular Yeezy sneakers piled up in warehouses after it broke off its partnership with Ye in October 2022 over his antisemitic and other offensive comments on social media and in interviews.
Adidas decided to sell some of the remaining shoes in batches, with two releases last year and another that launched late last month, and donate a portion of the proceeds to anti-hate groups.
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The company has made donations to the Anti-Defamation League and the Philonise & Keeta Floyd Institute for Social Change, run by social justice advocate Philonise Floyd, the brother of George Floyd.
Net sales of what’s left of Adidas’ former banner line of sneakers brought in about 750 million euros last year, compared with over 1.2 billion euros in 2022, the company reported.
Of the 300 million-euro profit it earned from the sales of Yeezy shoes last year, the company said it had given away or planned to donate over 140 million euros (about $152 million).
Adidas said deciding to sell a big chunk of its Yeezy inventory and improved operations helped it pull out operating profit of 268 million euros last year, a nearly 60% plunge from the previous year. It blamed a high tax rate for ending the year with a net loss of 58 million euros, a massive turnaround from net income of 254 million euros in 2022.
“Although by far not good enough, 2023 ended better than what I had expected at the beginning of the year,” said CEO Bjørn Gulden, who took over the top job last year.
Looking forward, Adidas expects to make about 250 million euros in sales of the remaining Yeezy shoes this year.
But the Herzogenaurach, Germany-based company points to North America as a persistent problem spot, expecting revenue to decline in the mid-single digits this year and grow everywhere else. It said that North America was “particularly affected by the negative Yeezy impact” and that revenue there dropped 16% last year.
Adidas expects to almost double operating profit to about 500 million euros this year despite “macroeconomic challenges and geopolitical tensions.” It plans to further scale up popular shoe lines like Samba that are seeing “extraordinary demand,” launch new ones and get a boost from major sports events like the Paris Olympics this summer.
Adidas shares were up slightly in late morning trading.
Believe benefitted from geographical expansion and strong streaming growth to post revenue of 880.3 million euros ($952.8 million at the average exchange rate) in 2023, up 15.7% from the prior year, the company announced Wednesday (Mar. 13). Organic growth was 14.4%, matching the guidance the company provided in October of organic growth exceeding 14%. After adjusting for foreign currency headwinds, Believe’s adjusted organic growth rate was 19.5% in 2023 and 21.8% in the fourth quarter.
The current growth rate should extend into the current year. Believe expects to achieve organic revenue growth in excess of 20% in 2024, adjusted to 18% to account for expected foreign currency headwinds. That high growth rate stems from a healthy paid streaming market and the belief that the ad-supported streaming market will rebound in the second half of the year. Believe also expects to make market share gains, especially in countries where it is not yet a top three company for local artists.
In 2023, Believe was helped by price increases at music streaming services in 2023 — Amazon Music in January, Spotify in July and Deezer in November. The company had market share gains in all key countries and with all key digital service providers, Xaiver Dumont, chief financial and operating officer, said during Wednesday’s earnings call.
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Adjusted earnings before interest, taxes, depreciation and amortization (EDITDA) of 50.3 million euros ($54.4 million) was up 45%. Adjusted EBITDA margin rose to 5.7%, surpassing guidance of at least 5.5%. Free cash flow was -3.1 million euros (-$3.4 million), although free cash flow turned positive in the second half of the year.
The earnings release arrived as Believe is the subject of a bid to be taken private by a consortium led by CEO Denis Ladegaillerie and investment firms EQT X and TCV. Warner Music Group (WMG) revealed last week that it’s interested in pursuing Believe and willing to beat the consortium’s offer. Believe’s executives did not address questions about the take-private bid during Wednesday’s earnings call, however.
The publicly traded French music company’s business model is built around helping to develop artists and using digital marketing and distribution to impact local charts. That approach is increasingly relevant when any artist can go viral on social media. Case in point: Believe landed a hit in 2023 when a 2022 single, “Si No Estás’” by Iñigo Quintero, become a TikTok hit in Spain before topping charts in France, Germany, Norway, Sweden, Austria and Belgium. “These success at the top are being achieved in a wider variety of genres of music” including hip-hop, pop and metal, Ladegaillerie said during the earnings call.
Believe also landed 42 albums in the top 200 in its home country and 48 singles in the Top 100 in its second-largest market, Germany. In the United Kingdom, consumption was up 394%. In China, Believe expanded to 80 staffers in five offices that serve 300 record labels. In India, where Believe acquired White Hill Music’s catalog in December, the company had 66 songs on local charts.
Revenue in France, where Believe is in the top three recorded music companies for local artists, rose 14.9% to 147.8 million euros ($160 million). Revenue in Germany dropped 2.4% to 110.9 million euros ($120 million), while revenue in Europe, excluding France and Germany, rose 25.9% to 264.6 million euros ($286.2 million). The Americas accounted for 128.1 million euros ($138.7 million), up 17.4% on strength in Brazil and Mexico. Asia-Pacific and Africa contributed 228.9 million euros ($247.8 million), up 14.9%, with China and Japan being particularly strong. India and Southeast Asia grew at slower paces due to those regions being affected by weakness in the ad-supported streaming market.
Revenue for the company’s premium solutions division rose 15.8% to 825.1 million euros ($893.1 million), while the division’s adjusted EBITDA improved 16.8% to 118.3 million euros ($128 million). Premium solutions mainly consists of the sale, promotion, marketing and delivery of digital content for artists and labels. It also includes some physical sales, synchronization services, neighboring rights and music publishing.
In the automated solutions division, revenue increased 14.6% to 55.2 million euros ($59.7 million), and adjusted EBITDA rose 53% to 10.1 million euros ($10.9 million). The slower growth rate was expected, said Dumont, because of lower ad-supported monetization and a new TuneCore pricing structure launched in 2022 that led to lower average revenue per client and was “not yet compensated by the ramp-up in new clients.”
Ladegaillerie has formed a consortium with two of its shareholders, investment firms EQT X and TCV, to take the company private at 15 euros ($16.43) per share. That offer ran into competition last week when WMG revealed its interest in Believe and said it might be willing to pay at least 17 euros ($18.62) per share. The consortium has attempted to speed the process and waive the board’s condition that an independent expert provide a report to Believe’s ad-hoc committee on the offer’s fairness from a financial viewpoint. The parties are now waiting for French financial regulators to say if the consortium can unilaterally waive the independent expert’s report and whether WMG’s preliminary proposal prevents the waiver of the board’s condition.