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Luke Combs apologized Wednesday after he accidentally sued one of his fans in federal court and won a $250,000 judgment against her, saying she had been caught up in a lawsuit aimed at “illegal businesses” and that she was “never supposed to be involved.”
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The apology came a day after news broke that lawyers representing the country star had sued a woman named Nicol Harness for selling Combs-themed mugs on Amazon. Harness, who suffers from congestive heart failure, sold only 18 tumblers for a total of $380 but was ordered to pay a whopping $250,000 in damages for infringing Combs’ intellectual property — all before she ever realized she had been sued.
In an Instagram post on Wednesday, Combs said he had just learned about the situation and that it “makes me absolutely sick to my stomach.” He said he had already contacted Harness directly and apologized for the incident.
“I spent the last two hours trying to make this right and figure out what’s going on, because I was completely and utterly unaware of this,” Combs said in the video. “We do have a company that goes after folks only, supposedly large corporations operating internationally that make millions and millions of dollars making counterfeit tee shirts, things of that nature, running illegal businesses. Apparently, this woman, Nicol, has somehow gotten wrapped into that.”
The lawsuit against Harness, filed in June in Illinois federal court, accused more than 200 online entities of selling unauthorized Combs merchandise on the internet. It included screenshots of unauthorized t-shirts sold on Amazon that directly copied real apparel the country star sold on his own site.
“This action has been filed … to combat online counterfeiters who trade upon the reputation and goodwill of the American artist Luke Combs,” his lawyers wrote. “The aggregated effect of the mass counterfeiting that is taking place has overwhelmed the plaintiff and his ability to police his rights against the hundreds of anonymous defendants which are selling illegal counterfeits at prices.”
The case highlights a common legal tactic used by big brands like Nike and Ray-Ban to fight fake products on the internet. Filed against huge lists of URLs, such actions enable brands to shut down pirate sellers en masse, win court orders to freeze their assets, and continue to kill new listings if they pop up. They usually result in large “default judgments” against many defendants who never even saw the lawsuit, ordering them to pay large sums in damages.
Though they’re more often employed by retail brands, artists and bands have increasingly turned to such lawsuits to combat counterfeit merch. Nirvana sued nearly 200 sites for selling fake gear in early 2022; a few months later, the late rapper XXXTentacion’s company filed a similar case; in January, Harry Styles filed one.
Such lawsuits are effective at combating a difficult problem, but they’re also increasingly controversial. In a study released last month, professor Eric Goldman of Santa Clara University’s School of Law called the mass-defendant counterfeiting cases “abusive,” saying they allow rightsholders to bypass “basic procedural safeguards” like making sure each defendant is properly served with notice of the lawsuit.
Harness says that’s what happened to her. As reported by Tampa’s local NBC outlet WFLA, she says she had no idea she had been sued until she returned from a hospital visit and saw her Amazon account had been frozen. Harness says she later found an email from Combs’ lawyers, sent to an address she rarely uses and stuck in her spam folder, notifying her of the lawsuit. By the time she was fully up to speed, she says the case had been closed and a judge had granted a default judgment ordering her to pay Combs $250,000.
Though the lawsuit was filed directly in his name, Combs’ Instagram post on Wednesday suggests that it was handled entirely by outside attorneys or other entities empowered to enforce his rights. The attorney who filed the case, Keith A. Vogt, did not immediately return a request for comment.
Combs’ manager Chris Kappy declined to comment on how the case came to be filed, but confirmed that Combs had absolved Harness of any legal debt. And in his Instagram post on Wednesday, Combs said he was committed to making things right.
Since a total of $5,500 was still frozen in her Amazon account, he said he was “going to double that, send her $11,000 today, just so she doesn’t have anything to worry about.” Combs also said that he was going to make his own tumblers to sell in his official online merchandise store and that money from sales of those tumblers will also go to Harness to help with her medical bills.
“This is not something I would ever do,” Combs said. “This is not the kind of person I am, greedy in any way, shape or form. Money is the last thing on my mind, I promise you guys that. I invited Nicol and her family out to a show this year so I can give her a hug and say sorry in person.”
WME‘s music leadership team outlined a new organizational structure for the company’s contemporary music department today in a company-wide memo, detailing strategic changes for the Endeavor-owned agency built around A&R, bookings and crossover opportunities.
In a memo to WME’s contemporary music department, global head of contemporary music Lucy Dickins and global co-head of contemporary music Kirk Sommer further detailed their plans, introduced over the summer months, to build upon the 45,000 concerts their team booked in 2023.
For A&R, which covers new artists signings and artist development, “new artist discovery will be coordinated across all genres and regions,” the memo explains. “Given the globalization of our business and the speed at which new artists break today, we believe this is a critical piece to identifying new talent. Kevin Shivers will be leading these efforts on behalf of the team, working with regional and genre leads.”
For booking, Dickens and Sommer explained, WME will continue to build upon its “multiple regional servicing groups, including an Asia-Pacific presence, Latin-American team, and a robust European operation,” the memo reads. Ron Opaleski will lead global bookings and international touring strategy across North America, while Tony Goldring will lead similar efforts for the company’s international clients. Josh Kurfirst will lead efforts on behalf of festivals, Clint Mitchell will lead non-traditional touring and Ryan Jones will cover the company’s private and corporate events.
Dickens and Sommer wrote also detailed changes at the company’s crossover department, which the two leaders said “is our #1 differentiator.”
“Given its importance,” the memo explained, “WME partner Keith Sarkisian will be stepping in to oversee the coordination of non-touring services for the agency’s roster, working with divisions from across WME and Endeavor.” That includes working with Dvora Englefield, WME partner/head of new music strategy, “who will continue to identify new business opportunities and strategic partnerships on behalf our artists.”
Citing “the growth across each of our offices,” Dickens and Sommer also announced the appointment of the company’s first-ever regional office leads, managed by Brian Aherns who oversees operations for the music team. The leads for WME’s international officers are Kevin Shivers (Beverly Hills), Michael Coughlin (Nashville), Stephanie LaFera (New York), Josh Javor (London) and Brett Murrihy (Sydney).
“These new roles and areas of responsibility reflect the evolution of our business today — we are a truly global operation, we have unparalleled scale, and we have more opportunities to provide our artists than ever before,” the memo continued. “With this new structure highlighting key areas of responsibility and the leadership behind it, we will now be even better equipped to provide best-in-class services to our music clients and partners.”
The memo also announced the promotion of seven agents — Kyle Bandler, Mark Claassen, Andrew Colvin, Beth Hamilton, Sloane Logue, Austin Mullins and Travis Wolfe — to partner at WME, along with the promotion of 16 employees to agent: Sam Dolen, Janelle Flint, Jacob Fox, Josh Green, Lindsey Hastings, Carly Huffman, Dan Kuklinski, Sean McHugh, Meera Patel, Adam Sherif, John Showfety, Jeremy Upton, Carlile Willett, Laura Williams, Cecilia Yao and Ben Yekuel.
A songwriter recently posed a distressing question with me: Do the songs he writes for the church that are classified as “Christian Music” get treated differently by the performing rights societies (PROs)?
The inference that a song is penalized in some way by an organization collecting royalties is not correct, but the songwriter was onto something. Songwriters who write music categorized as Christian often do feel they earn less than their secular counterparts. There needs to be an explanation as to why the perception exists and what can be done to change it.
The explanation goes back to how performance royalties are collected. They flow from three key segments of the market:
Digital service providers (DSPs), such as Spotify and Apple Music
General licensing from bars, nightclubs, restaurants, and live venues
Broadcast media including terrestrial radio and television stations
All genres are treated equally on digital services, in terms of tracking, but Christian music is not your typical soundtrack at most bars, nightclubs and restaurants. And venues for Christian music concerts tend to be small community locations, such as churches. Promoters at these venues are unaware (either genuinely or deliberately) that licensing is required, even though they are holding a commercial concert with ticket sales.
That leaves television and terrestrial radio, and this is where I believe the system is fundamentally broken. The Copyright Royalty Board (CRB) allows “educational” radio stations, typically small nonprofit community stations, to operate with a significantly lower rate structure that is not set on a percentage of revenue such as commercial stations, but rather a fixed fee structure based on the population of the community where the station is located.
For example, here in New York City the station WPLJ 95.5FM broadcasts Christian music to more than 8 million people, and in 2023 will pay a capped amount of performance licensing fees to ASCAP, BMI and SESAC, a total of $15,029, combined. These fees will not vary, no matter how much revenue is generated by the station.
WPLJ is part of the Educational Media Foundation, a 501(c)(3) nonprofit organization that runs a network of almost 500 terrestrial radio stations that broadcast Christian music. They claim the lower non-commercial rate under Section 118 of the Copyright Act and the related CRB rules because it is a nonprofit. When you look at the network’s publicly available information and the CRB rate sheet, you can see that they are paying an estimated combined total of around $1 million dollars in performance license fees.
It may seem reasonable for a non-profit to pay such limited amounts to perform music. But here is where the current regulatory regime is broken. The publicly available 2022 financials show the nonprofit collected $238 million in revenue, primarily through donations and sponsorships to the Christian content focused broadcast network. The network now has over $1 billion in assets, adding $50 million to those assets in 2022. Additionally, the salaries of the executive team for 2022 totaled $5.4 million. This is a far cry from the small volunteer-run community stations the CRB rates are meant to protect. How can it be that executives earn more than five times the total amount the network pays the entire song writer and music publisher community that create the songs upon which its network depends?
It must be said very clearly this network and others like it have done nothing wrong and they are a great resource to the wider community. However, just because it’s not wrong doesn’t make it right. I believe that it’s inherently unfair for these networks to exploit the CRB rate structure that’s available to educational radio stations given their financial profiles and the significant amount of money they raise using music to build a large audience. No matter how much money large non-commercial networks collect, and in this case primarily using Christian music to generate those revenues, the CRB license fee structure is capped. Commercial radio pays rates that are generally set as a percentage of revenue and not capped. Many high-earning Christian stations are paying as low as 10% of what commercial stations earning the same revenue would pay.
So back to the songwriter who felt his work was penalized. The answer is yes, he’s partially right; he is indeed paid less, but not due to prejudice on the part of PROs. The lower earnings are due to the lower royalty fees collected across the broader market that uses Christian music.
If we and the Christian songwriter and publisher communities believe that Christian songwriters should be paid on par with other writers, then the PROs as well as the Church Music Publishers Association (CMPA), should work together to create a dialogue with these high- earning broadcasters and ask that they opt out of the CRB rate structure and negotiate fair license fees for the Christian songwriter community. Or alternately, advocate for a revision of section 118 of the Copyright Act that would exclude wealthy “educational” broadcasters. This, along with financial transparency regarding the revenue collected and music licensing fees paid by anyone who gets a US Government-approved discount, should help level the playing field for all songwriters, regardless of what kind of songs they compose.
Malcolm Hawker serves as chief operating officer for SESAC Music Group, where he is charged with overseeing the operations of all the organization’s portfolio companies. Prior to joining SESAC, Hawker served as the president and CEO of CCLI (Christian Copyright Licensing International), a global rights licensing and resource company.
Lance Freed‘s All Clear Music and the Fuji Music Group have jointly acquired the catalog of Will Jennings, the superstar lyricist behind such hits as Celine Dion’s “My Heart Will Go On,” Steve Winwood’s “Higher Love” and Eric Clapton’s “Tears In Heaven.”
The joint venture deal, first announced in October as an agreement, has apparently just closed. While terms of the deal were not revealed, sources tell Billboard that the catalog carried a valuation in the range of $60-$70 million.
The pact is for 100% of Jennings catalog and includes both publishing rights and writers’ share. Other songs in the catalog include Joe Cocker & Jennifer Warnes’ “Up Where We Belong,” Winwood’s “Roll With It” and “Back in the High Life Again,” Barry Manilow’s “Looks Like We Made It,” Tim McGraw’s “Please Remember Me,” and Whitney Houston’s “Didn’t We Almost Have It All.” Jennings has been inducted into the Songwriters Hall of Fame and the Nashville Songwriters Hall of Fame.
Freed founded All Clear Music, which includes the Nashville arm of Sheltered Music, in 2020. He has deep ties with Jennings, dating back to 1974 when he signed the lyricist to Almo/Irving Music, then a unit of A&M Records.
“Having worked so closely with Will throughout his career, it’s very personal to me, as he is a cherished friend and I have been honored to know and help support him throughout his career,” Freed, who is the son of the late legendary DJ Alan Freed, said in a statement. “When the opportunity to acquire the song catalog presented itself, I called my long-time friend [and chairman of Fuji Music Group] Ichi Asatsuma who had expressed he wanted to work together on something we truly loved. We agreed that this could be that labor of love, and we feel a deep responsibility to take care of his beautiful songs and legacy.”
Freed’s All Clear Music and the Fuji Music Group will administer the catalog globally.
“We are very honored to represent one of the world’s finest songwriters with Lance Freed’s All Clear Music, and will give Will Jennings’ music the very best promotion and all the respect it richly deserves,” Asatsuma said in a statement.
The deal was shopped by Jennings’ long time accountant Charles Sussman of Sussman & Associates, with Jennings’ family input. The deal places Freed, All Clear Music and Fuji Music Group as the caretakers of the “lyricist’s legacy, fostering creative opportunities and ensuring the timeless songs are exposed to new audiences for generations to come,” according to the announcement.
Since its inception, All Clear Music and its Sheltered Music unit have signed deals to represent Rodney Crowell, Emmylou Harris, Dann Huff, Marty Stuart, and the later period catalog of Burt Bacharach, while recent signings include Big Pond and Gordie Sampson, Melissa Peirce and Sara Haze in addition to producer/writer Cameron Jaymes. On the artist development side, the companies have signed up-and-coming artists like Jenna LaMaster and Kelsey Waters.
The Fuji Music Group has made news in recent years by selling its stake in Pulse Music Group to Concord in 2020, and before that a majority interest in its stake of Arc Music to BMG in 2016. While this joint venture appears to mark its return to the acquisition front, sources indicate that the company has been actively monitoring deals being shopped in the music asset marketplace in recent years.
At the SONA Warrior Awards in October, hitmaker Justin Tranter used his acceptance speech as an opportunity to warn the music business: “If we’re not careful,” he said. “We’re just not going to have any songwriters left.”
It used to be a lot easier to make a living as a songwriter. In the days of physical records, songwriters would get paid with each album sale, even if they had the least popular song on the album. Now, in the streaming era, songwriters say the only way to get a livable wage is to write the album’s breakout single. Getting a song on AM/FM radio is still a good way to make money, but radio hits are tough to come by. Plus, there’s the problem with artists demanding cuts of publishing income, even if they didn’t pen the song, and writing rooms have grown bigger than ever. For these reasons and more, songwriters like Tranter say the current business has led to the “decimation of the songwriter middle class.”
To try to alleviate some of the strain facing songwriters, three small independent labels – Tranter’s Facet Records, The Other Songs and Good Boy Records – have made a new pledge they hope will catch on: giving songwriters a percentage of master royalties— or “points” — on every single record.
“We didn’t feel like the industry was changing fast enough to fix this,” says Billy Webber, co-founder of London-based indie label The Other Songs, which has Ren, Navy and SUPER-Hi on its roster. His company, founded alongside brother Alastair Webber, started first as a series of events, offering songwriters the chance to perform their unused pitch songs in front of a crowd of publishers and advertisers. From the start, Webber says, they knew they wanted to not only take care of their artists, but also to look after the writers behind their records.
In 2020, The Other Songs started offering four points to songwriters on every recording, split between however many writers there are. (The policy excludes writers who are also the artist or producer, roles which already receive cuts of the master income.) They call it the “TOS Writer Royalty,” and it is taken from the label’s share of revenue — not the artist’s.
Tranter’s Facet Records — home to emerging talent like Jake Wesley Rogers, Shawn Wasabi and Shea Diamond — announced earlier this year that it would start a similar program, offering three points from the label’s share to songwriters, also split between however many non-performing writers were on the track.
Jaime Zeluck-Hindlin — founder of Nonstop Management which represents hitmakers JKash, Michael Pollack, and Ryan OG — says she has been calling for a standardized system for songwriter master points for years. She explains that her larger writers can sometimes get half a point or a point on a master when they have enough leverage to negotiate it, but it is still considered a luxury for anyone to receive. “It’s not the norm yet,” she explains. These days Zeluck-Hindlin asks for points for all her clients, not just the hitmakers, and has been making some headway, but she notes it’s a careful conversation that varies project-by-project. “More than ever,” she says, “it’s so hard for songwriters to make money, so I don’t feel as bad asking anymore.”
Writers and their teams are in a difficult position when asking for master points: They don’t want to push too hard and threaten getting cut out of sessions for being labeled “too demanding,” and if an A-list artist wants to cut a song, their name and image alone could propel it to success.
Songwriters historically have not received payment for the master recording, because they are not part of that formal recording process like producers and artists. But now, citing economic hardship for writers — even with a song that is a streaming “success” — it has become more common. “I’ve noticed people are way more open to the conversation than they were before,” says Zeluck-Hindlin.
It might seem like giving a songwriter master income is a band-aid for a larger issue, but those who are fighting for it feel it is the best option available, given the current system. Streaming rates on the publishing side have always been considerably lower than on the master side, and in the U.S., publishing income is regulated by the government, making it much more difficult to make changes.
Good Boy Records, a label started by producer Elie Rizk and entrepreneur and manager John Zamora that represents Mazie, Judith and Georgee, is also working on their own system for master points. “We want to give out one point per songwriter,” says Rizk. The team at Good Boy started to work on finding a way to cut in songwriters since Mazie hit it big with her song “dumb dumb,” which helped Good Boy recoup its distribution deal with Virgin and see “real money” for the first time earlier this year.
By May, the team paid every songwriter who had ever worked with the emerging label a small non-recoupable fee as a thank you. “Since then, we have gotten savvier with our system,” says Zamora. “We treat songwriters like we treat producers – with fees and points every time, but we are still evolving as we go.”
Some producers are also hoping to address the economic problems facing songwriters. Producer, Tre Jean Marie, posted to Instagram this summer that he would be giving £500 of his production fee to non-performing songwriters on every major label release he has. “I believe that the record labels, turning over billions of pounds in revenue every year, should shoulder the responsibility of ensuring songwriters are compensated for their time and work, but until that happens, I want to help,” he wrote. Rizk says he has also shared a portion of his producer fee and points with songwriters on the recent single “Heartbroken” by Diplo, Jessie Murph, and Polo G to makes the payments more equitable.
The heads of the three indie labels say that they hope that by being public about their new offerings for songwriters it will encourage other labels, especially larger ones with much greater financial impact, to follow suit. Tranter says they are already talking with one “pretty large company” to discuss how to implement a similar system at that company and is hopeful for more to follow suit.
But he is not confident the majors will accommodate songwriters anytime soon, especially those that are publicly traded. He thinks there are still other changes that can be made within any label to make it more songwriter-friendly, like offering per-diems, free lunch or free transportation to sessions.
“If we can do it [as a new label], then pretty much any record label that’s really taking itself seriously can do it as well,” Webber says. “Songwriters are basically the beating heart of our industry. Without them, we’re not going to have any masters anyway.”
A Taylor Swift fan who filed a class action against Ticketmaster parent Live Nation in the wake of last year’s disastrous presale of tickets to the Eras Tour has agreed to drop her case against the concert giant, months after attorneys on the case said they were engaged in settlement talks.
Swift fan Michelle Sterioff filed her case in December 2022 just weeks after the botched Eras rollout, which saw widespread service delays and website crashes as millions of fans tried – and many failed – to buy tickets. At the time, her lawyers blasted Live Nation as a “monopoly” that had “knowingly misled millions of fans.”
But a year later, Sterioff voluntarily asked a federal judge on Tuesday to dismiss her case. It’s unclear if a settlement was reached, but the two sides reported in August that they were engaged in “ongoing settlement discussions.” Neither side immediately returned requests for comment.
Sterioff’s proposed class action was just one piece of the legal fallout for Live Nation following the error-plagued pre-sale for Eras, which went on the earn hundreds of millions of dollars and dominate headlines as 2023’s biggest concert tour.
After the Nov. 22, 2022 incident, Live Nation quickly apologized to fans and pinned the blame on a “staggering number of bot attacks” and “unprecedented traffic.” But lawmakers in Washington and state attorneys general around the country quickly called for investigations. That included Sen. Amy Klobuchar (D-Minn.), the chair of the Senate subcommittee for antitrust issues, who suggest that regulators consider “breaking up the company” – a reference to Live Nation’s 2010 merger with Ticketmaster.
Days after the incident, the New York Times reported that DOJ had already been investigating Live Nation for months over potential antitrust violations, reaching out to venues across the country to ask about the company’s conduct. Last month, Reuters reported that the probe was ongoing, with federal investigators focusing on whether Live Nation imposed anticompetitive agreements on venues. A Senate subcommittee investigation is also underway, sending out subpoenas last month demanding info about the company’s “failure to combat artificially inflated demand fueled by bots in multiple, high-profile incidents.”
Taylor Swift performs onstage for night three of Taylor Swift | The Eras Tour at Nissan Stadium on May 07, 2023 in Nashville.
John Shearer/TAS23/Getty Images for TAS Rights Management
Sterioff’s case was one of two major class actions filed against Live Nation over the Eras ticket rollout. In her complaint, she accused the company of violating consumer protection and antitrust laws, calling Ticketmaster a “monopoly that is only interested in taking every dollar it can from a captive public.”
“Because Ticketmaster has exclusive agreements with virtually all venues capable of accommodating large concerts, Taylor Swift and other popular musicians have no choice but to sell their tickets through Ticketmaster, and their fans have no choice but to purchase tickets through Ticketmaster’s primary ticketing platform,” her lawyers wrote.
Sterioff’s lawsuit claimed that Live Nation has exploited that dominance to charge “ever more supracompetitive ticketing fees for both primary and secondary ticketing services,” including for “virtually all venues hosting ‘The Eras’ Tour.”
But the lawsuit has largely been paused for months. In August, both sides agreed that it would be better to wait to litigate the case after a federal appeals court rules on a separate antitrust lawsuit against Live Nation, which will decide whether the company can force ticketbuyers to resolve such legal claims in private arbitration rather than open court.
The other class action over the Eras debacle, filed by an outspoken fan named Julie Barfuss and more than two dozen other spurned Swifities, remains pending in California federal court. In her complaint, Barfuss went even further than Sterioff, claiming Live Nation had tacitly allowed the kind of mass-scalping that caused so many problems during the pre-sale.
“Ticketmaster has stated that it has taken steps to address this issue, but in reality, has taken steps to make additional profit from the scalped tickets,” Barfuss’ lawyer wrote. “Instead of competition, Ticketmaster has conspired with stadiums to force fans to buy more expensive tickets that Ticketmaster gets additional fees from every time the tickets are resold.”
After Spotify said it would begin to phase out service in Uruguay on Jan. 1, 2024, the streamer reversed course on Tuesday (Dec. 12). “We can say with great confidence, they transmitted it to us today: Spotify is going to continue operating in Uruguay for the benefit of all users,” Secretary of the Presidency Álvaro Delgado said in a press conference, according to El Observador.
The origin of the dispute: Uruguay’s parliament passed a bill in November that changed the country’s copyright laws and demanded “equitable remuneration” for artists. Spotify objected to the lack of “clarity” in the new bill’s language because it was unclear where that additional “remuneration” would come from. “Changes that could force Spotify to pay twice for the same music would make our business of connecting artists and fans unsustainable,” a Spotify spokesperson warned, “and regrettably leaves us no choice but to stop being available in Uruguay.”
However, as El Observador reported on Tuesday (Dec. 12), Delgado told the press that “after several days of exchange and interaction, especially with legal aspects, the President of the Republic, the Minister of Education and Culture and the Minister of Industry” have come together to “make it clear that there will be no double payment by the platforms.”
Spotify welcomed the news. “The Uruguayan government has issued much-needed clarification of the recent music copyright law changes, specifically that rightsholders are responsible for ensuring artists are fairly paid, rather than requiring Spotify to pay multiple times for the same content,” a spokesperson said in a statement.
“We are pleased that this clarification will allow Spotify to remain available in Uruguay so that we can continue giving artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by it,” the spokesperson continued. “We thank President Lacalle Pou and his team for recognizing the value Spotify provides to local artists, songwriters and fans.”
It has been a tumultuous month for Spotify: Earlier in December, the company announced it was cutting around 1,500 employees in an effort to close “the gap between our financial goal state and our current operational costs,” as CEO Daniel Ek wrote to staff. This marked Spotify’s third round of layoffs in 2023.
Ek acknowledged that a “reduction of this size will feel surprisingly large given the recent positive earnings report and our performance.” But he added he was “convinced this is the right action.”
A few days later, Spotify announced that CFO Paul Vogel would leave the company at the end of March.
This is The Legal Beat, a weekly newsletter about music law from Billboard Pro, offering you a one-stop cheat sheet of big new cases, important rulings and all the fun stuff in between.
This week: Lawyers for Michael Jackson’s estate send a legal threat letter over the recent release of a rare Jackson 5 recording; Sean “Diddy” Combs and a former Recording Academy boss are both hit with sexual assault lawsuits as music’s #MeToo wave continues; Google loses an epic antitrust battle over smartphone apps; and much more.
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THE BIG STORY: MJ’s Estate Threatens Lawsuit Over Rare Recording
“We write to put you on notice regarding several matters that expose you to liability to the Jackson Estate.”
That’s never a great thing to read, but it’s particularly problematic if you’ve just announced to the world that you’re about to digitally release a rare Jackson 5 song that holds the distinction as “Michael Jackson’s first ever studio recording.”
A day after a Swedish company called anotherblock did precisely that, attorneys for Michael’s estate sent a letter warning that they weren’t happy about the plan. They said the release “violates” the estate’s trademark and likeness rights, and that the company was potentially “misleading the public” by claiming the song was the first-ever Jackson recording.
“We have serious doubts that Michael would have ever wanted these recordings released and commercialized,” the estate’s attorneys wrote. “What you are doing is the opposite of honoring Michael Jackson.”
Go read the entire story here, including access to the full letter sent by the estate.
Other top stories this week…
DIDDY SUED YET AGAIN – Another woman — the fourth in three weeks — filed a lawsuit against Sean “Diddy” Combs over allegations of sexual assault. The unnamed Jane Doe accuser claims she was “sex trafficked” and “gang raped” by Combs, former Bad Boy Records president Harve Pierre and another man in 2003 when she was 17 years old. Combs, who had mostly stayed quiet since allegations started flying, responded that “ENOUGH IS ENOUGH” and that he “did not do any of the awful things being alleged.”
MORE MUSIC #METOO CLAIMS – Former Recording Academy CEO Mike Greene and the academy itself were hit with a lawsuit alleging Greene sexually assaulted an Academy employee named Terri McIntyre in the 1990s. The woman claims that during her tenure at the Academy from 1994 to 1996, she was “forced to endure pervasive, incessant and routine sexual harassment and/or sexual assault” from Greene and that the Academy enabled it by failing to take action.
GOOGLE LOSES MONOPOLY CASE – A jury found that Google violated federal antitrust laws by maintaining an illegal monopoly over the Android app market, siding with Epic Games, the maker of the hit video game Fortnite. The case had been closely watched by digital music services like Spotify because Epic’s lawsuit challenges the fees that Google and Apple require apps to pay for in-app transactions and subscriptions.
LIL DURK DOUBLE DIP? – The Chicago rapper was sued by a fintech firm called Exceed Talent Capital, which claims that Durk agreed to grant the company the recording royalties from his song “Bedtime” even though he had already signed an exclusive deal with Sony’s Alamo Records — an alleged double-dip that Exceed called a “manifest fraud.”
TYGA’S INFRINGING SNEAKERS – A federal appeals court sided with Vans and ruled that Tyga‘s “Wavy Baby” sneakers — a parody of the company’s classic Old Skool — likely violate the shoe company’s trademarks. The company that partnered with the rapper to create the sneaker (MSCHF) argued that it had been designed to criticize “sneakerhead” consumerist culture and was thus protected by the First Amendment. But the court said that the shoe was entitled to “no special First Amendment protections” and that the sneaker was likely to confuse consumers into thinking it was an authentic Vans partnership.
TWITTER SUED OVER COPYRIGHTS – SUISA, the music royalties collecting society in Switzerland, sued X Corp. (formerly Twitter) in German court over allegations that the social media site has allowed infringing content to be posted to the platform. The lawsuit mirrors a similar case filed against Twitter in U.S. court in June by dozens of music publishers who are seeking as much as $255 million in damages.
TICKETING REFORM ADVANCES – Legislation that aims to make buying concert tickets an easier, more straightforward process was voted forward by a U.S. House of Representatives committee, clearing the way for a full House vote. Among other features, the proposed STOP Act would require sellers to post final “all-in” prices that include fees, as well as ensure buyers can get refunds after cancellations. Days after the vote, a similar bill, The Fans First Act, was introduced in the Senate by a bipartisan coalition of lawmakers.
CRIP MAC FACES GUN CHARGE – YouTuber and rapper Trevor Hurd, who goes by the name Crip Mac, was arrested in Los Angeles on federal gun charges. The arrest by U.S. Marshals came moments after a California judge agreed to drop state gun charges against Mac over the same alleged wrongdoing — a not-uncommon step after state prosecutors coordinate with the U.S. Attorneys Office.
Songwriters and publishers will see a royalty bump in the new year for physical sales (including vinyl, cassettes and CDs) and digital downloads. According to a new document, published in the Federal Registrar on Tuesday (Dec. 12), the Copyright Royalty Board (CRB) upped the U.S. statutory mechanical royalty rate from the current rate of 12 cents to 12.40 cents if the song has a run time of five minutes or less. (If over five minutes, the rate is 2.39 cents per minute.)
This rate change is based on the Consumer Price Index for All Urban Consumers (U.S. City Average, all times) that was published by the Secretary of Labor.
This form of publishing royalty is paid to songwriters and publishers by record labels, which license their compositions for sound recordings that are then made into digital downloads or physical copies. This system is unlike that for U.S. mechanical royalties for streaming, which are paid to publishers and songwriters by streaming platforms like Spotify, Apple Music and Amazon Music.
Consistent Cost of Living Adjustments (COLA) have been an important (but controversial) part of the conversation around U.S. mechanical royalty rates in recent years. Prior to January 2023, the minimum statutory mechanical rate in the United States had been stuck at 9.1 cents since 2006, losing value each year as inflation climbed. January 2023’s raise represented a 32% rate increase.
In May 2022, when the 2023 adjustment was announced, BMG made a statement criticizing the majors, saying in part, “The entire songwriter community owes a huge debt of thanks to those who fought for this increase in the face of the opposition of major record companies and indifference of music publishers. … Without their belief and commitment, the [Recording Industry Association of America] RIAA (representing record companies) and the [National Music Publishers’ Association] NMPA (representing music publishers) would not have been forced back to the negotiating table.” This is a sentiment also held by independent songwriter George Johnson, who has consistently led the fight for a COLA adjustment through his participation in the Copyright Royalty Board proceedings.
For years, the NMPA didn’t push for the rate to be raised beyond 9.1 cents, while all sides weighed how to first establish streaming models and what rates should be paid for the fast-growing income stream of the music publishing business. While dealing with those larger issues, the NMPA and the labels continued the cycle of a 9.1 cent settlement for every five-year term from 2008 through 2022, and they were ready to do so again for the 2023-2027 term, as indicated in their initial settlement.
When Johnson, followed by other songwriter advocates like the Songwriters Guild of America and Music Creators of North America, pushed against the initial settlement rate of 9.1 cents for that term, the NMPA noted that litigation is costly, running into the tens of millions of dollars — which is why the organization initially focused on adjudicating streaming rates rather than the penny rate for physical and downloads. To litigate for both streaming and the penny rate would be even more costly than the millions the NMPA was already spending.
Moreover, it was argued that spending money fighting for the rate change for digital downloads and physical sales could be a wash for publishers when weighing the legal costs against how much additional revenue a possible rate increase could achieve. While physical and downloads back in 2021 accounted for 15% of market share for labels, for publishers it was a 5% market share. Some in the publishing business were also afraid that if they pushed for a higher penny rate, they would lose the support of the major labels in their quest for better streaming rates.
The CRB judges ultimately tossed out the 9.1 cent settlement for 2023-2027, and then the publishers and major labels came together to put together a second settlement for that term featuring a 12 cent penny rate and a COLA adjustment.
In a Dec. 7 statement about the upcoming adjustment from 12 cents to 12.4 cents for 2024, NMPA president/CEO David Israelite, said: “We are pleased that the Copyright Office has approved a Consumer Price Index (CPI) increase for physical products like vinyl records and digital downloads. Last year NMPA, the Nashville Songwriters Association International (NSAI) and others worked to raise these mechanical royalties from 9.1 cents to 12 cents — a 32% increase with the added insurance of including a mandated Cost of Living Adjustment (COLA) lift each year. While these forms of consumption are not top revenue streams in the current market they still represent a meaningful piece of the music industry and it is important that they continue to grow.”
SiriusXM will merge its publicly traded stock with a Liberty Media tracking stock to create a single, streamlined public stock, the company announced Tuesday (Dec. 12). The deal — a piece of financial engineering rather than an overhaul of the companies’ organizations — will create a new public company that continues to use the SiriusXM brand.
SiriusXM and Liberty Media laid out numerous benefits of the transaction: a simplified equity structure; enhanced trading liquidity; a larger float (a larger percentage of outstanding shares on the market); the elimination of a multi-class stock structure; greater strategic flexibility; and greater potential for inclusion in stock indexes.
Investors have had two ways of investing in SiriusXM: the SiriusXM stock that trades on the Nasdaq and Liberty SiriusXM Group (LXSM), a “tracking stock” created by majority shareholder Liberty Media. (A tracking stock is a stock that depends on the financial performance of a specific business unit or division.) LXSM accounts for 84% of SiriusXM’s 3.84 billion outstanding shares; SiriusXM’s public shareholders own the remaining 16%.
On Sept. 26, with SiriusXM’s typically stable stock price down 26% year to date, Liberty Media announced a proposal to merge the two stocks. As detailed Tuesday, Liberty will separate Liberty SiriusXM Group by creating “SplitCo,” which will holds all LXSM assets and liabilities. SplitCo will immediately acquire SiriusXM in an all-stock transaction to form “New SiriusXM” with one class of common stock. New SiriusXM is expected to continue to be traded on the Nasdaq under the familiar stock ticker SIRI.
Former LXSM shareholders will get 8.4 shares in New SiriusXM for each share of LXSM and will own 81% of the post-merger company’s outstanding shares. Former SiriusXM shareholders will own the remaining 19%.
The new company will have a leverage ratio of 3.9 at close and a target leverage ratio of 3.0 (net debt to earnings before taxes, interest, depreciation and amortization). New SiriusXM has secured financing commitments up to $1.1 billion to fund the refinancing of a LXSM loan and an exchangeable bond. The companies told investors share buybacks will take less priority until that target leverage is reached.
“This combination will create value for all stockholders by eliminating the tracking stock structure, enhancing liquidity and allowing former LSXM stockholders to participate directly in the ongoing performance of SiriusXM,” said Greg Maffei, Liberty president/CEO, in a statement. “SiriusXM commands the largest paid share-of-ear in the car and has proven itself as an incredibly successful and profitable business. We are confident SiriusXM will continue to create value by building on its resilient business model to execute its strategic initiatives.”
“We are pleased that the Special Committee of our Board of Directors has reached this agreement with Liberty Media, which will allow SiriusXM to enter its next phase of value creation,” added Jennifer Witz, CEO of SiriusXM. “In a highly fragmented audio entertainment industry, SiriusXM has differentiated itself as the leading audio entertainment provider by creating an experience centered on our high-quality, premium, human curated radio that is more relevant than ever. In doing so, we have built a profitable business that is poised for continued success.”
The deal is expected to close in the third quarter of 2024 and is subject to regulatory approvals and a majority vote of Liberty SiriusXM Group shareholders. The transaction has been approved by Liberty Media’s board, a SiriusXM special committee and SiriusXM’s board of directors. The deal will be tax-free to Liberty SiriusXM Group and SiriusXM shareholders, except for cash received instead of fractional shares.
SiriusXM’s stock price has dramatically improved since September thanks to news of the merger plan as well as a 10% increase in its dividend in October. Shares of SiriusXM rose 5.6% to $5.30 following Tuesday’s announcement, reducing its year-to-date deficit to 9.2%.