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Live Nation officials are at an impasse with a powerful Senate subcommittee over demands that the concert promoter hand over confidential emails, contracts and memos detailing sensitive information about artist compensation.
Attorneys for Live Nation say they have already turned over more than 10,000 documents to investigators working for Sen. Richard Blumenthal (D-Conn.) and the Permanent Subcommittee on Investigations, or PSI, which Blumenthal chairs. Live Nation in-house counsel Dan Wall wrote on Live Nation’s corporate blog on Tuesday (Nov. 21) that the company is willing to hand over more sensitive documents if the PSI agrees to confidentiality protections to ensure the information is kept out of the public domain.
So far, Blumenthal has refused to agree to any restrictions requested by Live Nation and issued a subpoena for the confidential documents on Nov. 16. Live Nation officials plan to challenge the subpoena in court and are preparing for a lengthy legal battle to protect the confidentiality of its artist contracts if the two sides can’t reach an agreement.
“It is only in a subpoena enforcement action [before a federal judge] that Live Nation can assert its rights to protect the confidentiality of this information,” Wall wrote in the blog post.
Live Nation’s insistence on “confidentiality protections” is fairly routine, most legal experts agree, especially when it comes to court proceedings or investigations by government agencies. It’s also common practice for congressional investigators to agree to confidentiality rules while collecting evidence for congressional inquiries, but there’s no legal recourse if a member of Congress or staff discloses confidential information to the public.
News on Monday (Nov. 20) that Live Nation was being investigated by the powerful Department of Homeland Security and PSI surprised many music industry insiders. Created by President Harry Truman in 1941 to investigate wasteful defense spending after World War II, the PSI’s focus for much of its existence has been on matters of national security, including Korean War atrocities, the American Mafia’s influence on major labor unions and the government’s response to Hurricane Katrina.
Under Blumenthal’s leadership, the PSI has shifted its focus to consumer-oriented investigations, like the proposed merger of the PGA and the Saudi-backed LIV Golf league, equity within Medicare Advantage and sexual abuse in federal women’s prisons.
Blumenthal has also long been a critic of Live Nation and its 2010 merger with Ticketmaster, calling for the two companies to be split apart during a high-profile Senate hearing in January. According to a Nov. 16 letter from Blumenthal to Live Nation CEO Michael Rapino, the PSI officially began investigating Live Nation in March, in part for what Blumenthal calls “failure to combat artificially inflated demand fueled by bots in multiple, high-profile incidents, which resulted in consumers being charged exorbitant ticket prices.”
That description is the only public hint of what PSI is focusing on in its Live Nation investigation and doesn’t seem particularly damning of the concert promotion company. While bots, often operated by scalpers, do inflate demand for tickets — especially during high-profile onsales — and can lead to exorbitant ticket prices, it’s almost always Ticketmaster’s competitors in the secondary market who stand the most to gain.
Before Live Nation hands over any documents that contain “highly sensitive client information about artists, venues and others with whom we deal,” Wall wrote in the blog post, the company wants “binding confidentiality protections to prevent its misuse.”
Live Nation’s request might prove more difficult than the company’s leadership realizes, says Andrew Olmem, attorney and partner at Mayer Brown, which specializes in defending clients targeted by major investigations and congressional inquiries.
“Any documents provided to Congress are always vulnerable to public disclosure,” Olmem explains, noting that Congressional members and their staffers enjoy broad protections against criminal and civil liability under the U.S. Constitution’s speech and debate clause.
It is common for attorneys of clients targeted by Congressional inquiries to negotiate terms of documents’ use with investigators requesting the information, Olmem says. Many investigators, he adds, care deeply about reputational trust, knowing that violating confidentiality agreements with targets could make future targets less willing to voluntarily cooperate with document requests and significantly slow down investigations.
“But even if you secure such an agreement, members of Congress and their staffs can’t be liable for releasing confidential documents as part of their official legislative duties, such as submitting (the documents) into the congressional record or reading them on the House or Senate floors for the purpose of informing a legislative debate,” Olmem continues. “There are many circumstances in which members and their staff are incentivized to leak and do leak information for political purposes without consequences.”
While Google usually takes a 15% cut of customer payments for app subscriptions in its Play Store on Android devices, Spotify obtained a deal that allowed it to pay a drastically reduced commission, according to The Verge.
The details of the business arrangement were divulged by Google head of global partnerships Don Harrison on Monday (Nov. 20) in testimony during the Epic Games vs. Google trial: Spotify paid no commission if users bought subscriptions through Spotify, and 4% if users selected Google as their payment processor.
Harrison said in court that Spotify landed this “bespoke” agreement because “if we don’t have Spotify working properly across Play services and core services, people will not buy Android phones.” His testimony also indicated that the deal entailed a $50 million investment by both Google and Spotify in a “success fund.”
In a statement to The Verge, a Google spokesperson said that “a small number of developers that invest more directly in Android and Play may have different service fees as part of a broader partnership that includes substantial financial investments and product integrations across different form factors. These key investment partnerships allow us to bring more users to Android and Play by continuously improving the experience for all users and create new opportunities for all developers.”
A rep for Spotify did not respond to Billboard’s request for comment.
Epic Games, which is known for furnishing the world with the popular game Fortnite, has been battling Google since way back in 2020 over the 30% fee the search giant charges app developers for purchases made on its Play Store on Android devices. Epic tried to circumvent Google’s system by putting its own payment system into the Fortnite app and charging a reduced price; Google hit back by yanking Fortnite off the Play Store.
Epic then sued Google. “Google… is using its size to do evil upon competitors, innovators, customers and users in a slew of markets it has grown to monopolize,” Epic wrote in its complaint. The New York Times reported that Epic’s CEO, Tim Sweeney, said in court on Monday (Nov. 20) that Google “exercises de facto control over the availability of apps on Android.”
Wilson White, a Google vp of public policy, told reporters earlier this month that “Epic wants all the benefits of Android and Google Play without having to pay for them,” according to The New York Times. “The lawsuit [from Epic] would upend a business model that has lowered prices and increased choices,” White argued.
Google had tried to avoid revealing the nature of its relationship with Spotify in court, The Verge reported earlier this month. “Disclosure of the Spotify deal would be very, very detrimental for the negotiation we’d be having with… other parties,” Google attorney Glenn Pomerantz told the judge overseeing the case.
Hall & Oates are locked in a mysterious lawsuit against each other, with Daryl Hall already winning a restraining order against musical partner John Oates.
The case, filed by Hall on Nov. 16 in Nashville court, concerns either a “contract” or “debt,” but little else is known about the case because it was filed under seal — a maneuver used when court documents contain sensitive information.
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The day after Hall headed to court, the judge overseeing the case issued a temporary restraining order against Oates, but there are no details about what the injunction bans the singer from doing. The lawsuit also names Oates’ wife, Aimee, in her role as a trustee of her husband’s investment trust.
The case was first reported Monday (Nov. 20) by Philadelphia magazine. Billboard confirmed its existence by reviewing court records in the Davidson County Chancery Court. An attorney for Hall, and reps for both singers, did not return requests for comment on Wednesday.
Since teaming up as a pair of Philadelphia singers in 1972, Hall & Oates have hit the top of the Billboard Hot 100 a whopping six times, first with “Rich Girl” in 1977 and then with “Kiss On My List,” “Private Eyes,” “I Can’t Go For That (No Can Do)” “Maneater” and “Out of Touch.” The pair have 10 more top 10 hits on the chart, as well as four albums that reached the top 10 on the Billboard 200.
As explained by Philadelphia, the duo have already broken up and reunited several times, sometimes going years without playing together. But they recently founded the HoagieNation Festival in Philadelphia and headlined the event in 2017, 2018 and 2021.
With details of the recent lawsuit under seal, speculation about the dispute swirled on Wednesday. TMZ pointed to a quote from Hall on Bill Maher’s “Club Random” podcast last year in which he said: “You think John Oates is my partner? … He’s my business partner. He’s not my creative partner.” Meanwhile, the Philadelphia Inquirer noted that the pair had “played only a handful of dates in 2022” and none in 2023.
Last year, Hall told the Los Angeles Times that it can be “very annoying” to operate as a musical duo. “Everything you do is juxtaposed against another person. Try doing that sometime. I don’t want to use the word ‘emasculating,’ because that’s male, but it takes away your individuality.”
Guns N’ Roses frontman Axl Rose was hit with a lawsuit Wednesday over allegations that he sexually assaulted a Penthouse model in 1989.
In a complaint filed Wednesday in New York court, attorneys for Sheila Kennedy claim that Rose “used his fame, status, and power as a celebrity and performer in the music industry to gain access to manipulate, control, and violently sexually assault” her.
The alleged attack – in a New York City hotel room in February 1989 — has caused her to suffer “severe emotional, physical, financial and psychological distress” ever since, Kennedy’s lawyers say.
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“Kennedy has experienced symptoms akin to post-traumatic stress disorder whenever she hears Rose’s name or the music of Guns N’ Roses,” her attorneys wrote. “Other sexual encounters have drawn her right back to the night that Rose had assaulted her.”
A rep for Rose did not immediately return a request for comment.
The case against Rose is the latest in a string of sexual misconduct lawsuits filed over the last month against men in the music industry, including industry executives like L.A. Reid and superstar artists like Sean “Diddy” Combs. The spike in cases is due to the looming expiration on Thursday of New York’s Adult Survivors Act, which created a one-year window for alleged survivors to take legal action over years-old accusations that would typically be barred under the statute of limitations.
In her complaint against Rose, Kennedy makes graphic allegations of sexual assault.
After first meeting the rock star at a nightclub, Kennedy says Rose invited her back to a party at his hotel room, along with his friend David Andrew “Riki” Rachtman and another model. After providing his guests with “cocaine, champagne, and alcohol,” the lawsuit claims Rose then “pushed Kennedy against the wall and kissed her.”
“Kennedy found Rose attractive and did not mind this encounter,” her lawyers write. “She was open to sleeping with him if things progressed and if they continued to find each other attractive.”
But Kennedy says the night then got darker – first when she witnesses Rose having “painful” sex with the other model, then when she thought he was encouraging group sex. After she exited the room, she claims Rose stormed into a rage, dragged her back into the room, through her onto the bed, and bound her hands.
“Rose then sexually assaulted Kennedy,” Kennedy’s lawyers write. “Rose forcibly penetrating Kennedy’s anus with his penis. Rose made no attempt to ask for or check that Kennedy was consenting. He treated her like property used solely for his sexual pleasure. He did not use a condom.”
Faced with the ongoing attack, Kennedy’s lawyers say she “felt she had no escape or exit and was compelled to acquiesce” to the assault. “She understood that the safest thing to do was to lie in bed and wait for Rose to finish assaulting her.”
Read Kennedy’s full lawsuit here:
When Dierks Bentley’s band is looking for something to keep it occupied during long bus rides, the group has, at times, turned to artificial intelligence apps, asking them to create album reviews or cover art for the group’s alter ego, The Hot Country Knights.
“So far,” guitarist Charlie Worsham says, “AI does not completely understand The Hot Country Knights.”
By the same token, Music Row doesn’t completely understand AI, but the developing technology is here, inspiring tech heads and early adaptors to experiment with it, using it to get a feel, for example, for how Bentley’s voice might fit a new song or to kick-start a verse that has the writer stumped. But it has also inspired a palpable amount of fear among artists anticipating their voices will be misused and among musicians who feel they’ll be completely replaced.
“As a songwriter, I see the benefit that you don’t have to shell out a ton of money for a demo singer,” one attendee said during the Q&A section of an ASCAP panel about AI on Nov. 7. “But also, as a demo singer, I’m like, ‘Oh, shit, I’m out of a job.’”
That particular panel, moderated by songwriter-producer Chris DeStefano (“At the End of a Bar,” “That’s My Kind of Night”), was one of three AI presentations that ASCAP hosted at Nashville’s Twelve Thirty Club the morning after the ASCAP Country Music Awards, hoping to educate Music City about the burgeoning technology. The event addressed the creative possibilities ahead, the evolving legal discussion around AI and the ethical questions that it raises. (ASCAP has endorsed six principles for AI frameworks here).
The best-known examples of AI’s entry into music have revolved around the use of public figures’ voices in novel ways. Hip-hop artist Drake, in one prominent instance, had his voice re-created in a cover of “Bubbly,” originated by Colbie Caillat, who released her first country album, Along the Way, on Sept. 22.
“Definitely bizarre,” Caillat said during CMA Week activities. “I don’t think it’s good. I think it makes it all too easy.”
But ASCAP panelists outlined numerous ways AI can be employed for positive uses without misappropriating someone’s voice. DeStefano uses AI program Isotope, which learned his mixing tendencies, to elevate his tracks to “another level.” Independent hip-hop artist Curtiss King has used AI to handle tasks outside of his wheelhouse that he can’t afford to outsource, such as graphic design or developing video ideas for social media. Singer-songwriter Anna Vaus instructed AI to create a 30-day social media campaign for her song “Halloween on Christmas Eve” and has used it to adjust her bio or press releases — “stuff,” she says, “that is not what sets my soul on fire.” It allows her more time, she said, for “sitting in my room and sharing my human experiences.”
All of this forward motion is happening faster in some other genres than it is in country, and the abuses — the unauthorized use of Drake’s voice or Tom Cruise’s image — have entertainment lawyers and the Copyright Office playing catch-up. Those examples test the application of the fair use doctrine in copyright law, which allows creators to play with existing copyrights. But as Sheppard Mullin partner Dan Schnapp pointed out during the ASCAP legal panel, fair use requires the new piece to be a transformative product that does not damage the market for the original work. When Drake’s voice is being applied without his consent to a song he has never recorded and he is not receiving a royalty, that arguably affects his marketability.
The Copyright Office has declined to offer copyright protection for AI creations, though works that are formed through a combination of human and artificial efforts complicate the rule. U.S. Copyright Office deputy general counsel Emily Chapuis pointed to a comic book composed by a human author who engaged AI for the drawings. Copyright was granted to the text, but not the illustrations.
The legal community is also sorting through rights to privacy and so-called “moral rights,” the originator’s ability to control how a copyright is used.
“You can’t wait for the law to catch up to the tech,” Schnapp said during the legal panel. “It never has and never will. And now, this is the most disruptive technology that’s hit the creative industry, generally, in our lifetime. And it’s growing exponentially.”
Which has some creators uneasy. Carolyn Dawn Johnson asked from the audience if composers should stop using their phones during writing appointments because ads can track typed and spoken activity, thus opening the possibility that AI begins to draw on content that has never been included in copyrighted material. The question was not fully answered.
But elsewhere, Nashville musicians are beginning to use AI in multiple ways. Restless Road has had AI apply harmonies to songwriter demos to see if a song might fit its sound. Elvie Shane, toying with a chatbot, developed an idea that he turned into a song about the meth epidemic, “Appalachian Alchemy.” Chase Matthew’s producer put a version of his voice on a song to convince him to record it. Better Than Ezra’s Kevin Griffin, who co-wrote Sugarland’s “Stuck Like Glue,” has asked AI to suggest second verses on songs he was writing — the verses are usually pedestrian, but he has found “one nugget” that helped finish a piece.
The skeptics have legitimate points, but skeptics also protested electronic instruments, drum machines, CDs, file sharing and programmed tracks. The industry has inevitably adapted to those technologies. And while AI is scary, early adopters seem to think it’s making them more productive and more creative.
“It’s always one step behind,” noted King. “It can make predictions based upon the habits that I’ve had, but there’s so many interactions that I have because I’m a creative and I get creative about where I’m going next … If anything, AI has given me like a kick in the butt to be more creative than I’ve ever been before.”
Songwriter Kevin Kadish (“Whiskey Glasses,” “Soul”) put the negatives of AI into a bigger-picture perspective.
“I’m more worried about it for like people’s safety and all the scams that happen on the phone,” he said on the ASCAP red carpet. “Music is the least of our worries with AI.”
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The ousted leader of ChatGPT-maker OpenAI is returning to the company that fired him late last week, culminating a days-long power struggle that shocked the tech industry and brought attention to the conflicts around how to safely build artificial intelligence.
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San Francisco-based OpenAI said in a statement late Tuesday: “We have reached an agreement in principle for Sam Altman to return to OpenAI as CEO with a new initial board.”
The board, which replaces the one that fired Altman on Friday, will be led by former Salesforce co-CEO Bret Taylor, who also chaired Twitter’s board before its takeover by Elon Musk last year. The other members will be former U.S. Treasury Secretary Larry Summers and Quora CEO Adam D’Angelo.
OpenAI’s previous board of directors, which included D’Angelo, had refused to give specific reasons for why it fired Altman, leading to a weekend of internal conflict at the company and growing outside pressure from the startup’s investors.
The chaos also accentuated the differences between Altman — who’s become the face of generative AI’s rapid commercialization since ChatGPT’s arrival a year ago — and members of the company’s board who have expressed deep reservations about the safety risks posed by AI as it gets more advanced.
Microsoft, which has invested billions of dollars in OpenAI and has rights to its current technology, quickly moved to hire Altman on Monday, as well as another co-founder and former president, Greg Brockman, who had quit in protest after Altman’s removal. That emboldened a threatened exodus of nearly all of the startup’s 770 employees who signed a letter calling for the board’s resignation and Altman’s return.
One of the four board members who participated in Altman’s ouster, OpenAI co-founder and chief scientist Ilya Sutskever, later expressed regret and joined the call for the board’s resignation.
Microsoft in recent days had pledged to welcome all employees who wanted to follow Altman and Brockman to a new AI research unit at the software giant. Microsoft CEO Satya Nadella also made clear in a series of interviews Monday that he was still open to the possibility of Altman returning to OpenAI, so long as the startup’s governance problems are solved.
“We are encouraged by the changes to the OpenAI board,” Nadella posted on X late Tuesday. “We believe this is a first essential step on a path to more stable, well-informed, and effective governance.”
In his own post, Altman said that “with the new board and (with) Satya’s support, I’m looking forward to returning to OpenAI, and building on our strong partnership with (Microsoft).”
Co-founded by Altman as a nonprofit with a mission to safely build so-called artificial general intelligence that outperforms humans and benefits humanity, OpenAI later became a for-profit business but one still run by its nonprofit board of directors. It’s not clear yet if the board’s structure will change with its newly appointed members.
“We are collaborating to figure out the details,” OpenAI posted on X. “Thank you so much for your patience through this.”
Nadella said Brockman, who was OpenAI’s board chairman until Altman’s firing, will also have a key role to play in ensuring the group “continues to thrive and build on its mission.”
Hours earlier, Brockman returned to social media as if it were business as usual, touting a feature called ChatGPT Voice that was rolling out to users.
“Give it a try — totally changes the ChatGPT experience,” Brockman wrote, flagging a post from OpenAI’s main X account that featured a demonstration of the technology and playfully winking at recent turmoil.
“It’s been a long night for the team and we’re hungry. How many 16-inch pizzas should I order for 778 people,” the person asks, using the number of people who work at OpenAI. ChatGPT’s synthetic voice responded by recommending around 195 pizzas, ensuring everyone gets three slices.
As for OpenAI’s short-lived interim CEO Emmett Shear, the second interim CEO in the days since Altman’s ouster, he posted on X that he was “deeply pleased by this result, after (tilde)72 very intense hours of work.”
“Coming into OpenAI, I wasn’t sure what the right path would be,” wrote Shear, the former head of Twitch. “This was the pathway that maximized safety alongside doing right by all stakeholders involved. I’m glad to have been a part of the solution.”
Spotify’s new royalties model will be a subject of discussion when IMPALA’s board meets later this month.
In a brief statement, the Brussels-based independent music companies association announced it was canvassing its member views on the proposed changes, detailed for the first time in a blog post published on Tuesday (Nov. 21).
“Our focus is and will remain ensuring a fair, diverse and sustainable music ecosystem for all,” reads the trade body’s message, “as set out in our 10-point plan to make the most of streaming, which was released two years and a half ago and was updated earlier this year.”
The board of IMPALA is scheduled to meet next Thursday, Nov. 30.
With its post, Spotify confirmed the broader music industry’s worst-kept secret by sharing details of a three-pronged royalties model, which would funnel more money to popular artists, labels and distributors, lift the streaming threshold, while putting the clamps on streaming fraud.
Among the changes touted by Spotify: tracks must have reached at least 1,000 streams in the previous 12 months in order to generate recorded royalties; labels and distributors will fined per track when “flagrant artificial streaming is detected” on their content; and functional content — think rain noises, whale sounds, recordings of wind rustling the leaves— will be significantly devalued, and its minimum track length increased to two minute into order to be eligible to generate royalties.
By tackling these issues that account for just a “small percentage of total streams,” Spotify reckons, its new policing of content “now means that we can drive approximately an additional $1 billion in revenue toward emerging and professional artists over the next five years.”
IMPALA’s voice has been front and center in the debate for a “fairer, more dynamic” streaming market.
In April, IMPALA published an updated version of its 10-step plan to “make the most of streaming,” which proposed various changes to how digital royalties are allocated, including attaching a premium value to tracks that the listener has sought out, a so-called “Fan Participation Model” whereby artists and rights holders could generate incremental revenue within digital services through offering special features and extra tracks, higher share for master rights and more.
Later, in September, IMPALA raised concerns over the new “artist-centric” streaming model being rolled out by Deezer and Universal Music Group (UMG), warning of a potential “two-tier” music market that unfairly disadvantages indie artists and labels.
The European trade body represents nearly 6,000 independent companies, labels and national associations, including Beggars Group, Cooking Vinyl, Epitaph and PIAS Music Group.
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: Sean “Diddy” Combs is accused of rape amid an ongoing wave of music industry sexual abuse lawsuits; Shakira settles her $15 million tax evasion case on the eve of trial; UMG defeats a lawsuit filed by artists over its lucrative ownership stake in Spotify; and more.
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THE BIG STORY: Diddy Sued As Music #MeToo Wave Continues
Following a string of abuse cases against powerful men in the music industry, Sean “Diddy” Combs was sued by R&B singer and longtime romantic partner Cassie over allegations of assault and rape — and then settled the case just a day later.
In a graphic complaint, attorneys for Cassie (full name Casandra Ventura) claimed she “endured over a decade of his violent behavior and disturbed demands,” including repeated physical beatings and forcing her to “engage in sex acts with male sex workers” while he masturbated. Near the end of their relationship, Ventura claimed that Combs “forced her into her home and raped her while she repeatedly said ‘no’ and tried to push him away.”
Combs immediately denied the allegations as “offensive and outrageous.” He claimed Cassie had spent months demanding $30 million to prevent her from writing a tell-all book, a request he had “unequivocally rejected as blatant blackmail.”
Read the full story on the lawsuit here.
Just a day after it was filed, Combs and Ventura announced that they had reached a settlement to resolve the case. Though quick settlements can happen in any type of lawsuit, it’s pretty unusual to see a case with such extensive and explosive allegations end just 24 hours after it was filed in court. “I wish Cassie and her family all the best,” Combs said in a statement. “Love.”
Both sides quickly put their spin on the settlement. A former staffer at Cassie’s law firm sent out a statement arguing that the quick resolution was “practically unheard of” and suggesting it showed the “evidence against Mr. Combs was overwhelming.” Combs’ lawyer, Ben Brafman, put out his own statement reiterating that a settlement — “especially in 2023” — was “in no way an admission of wrongdoing.”
Read the full story on the settlement here.
The case against Combs is the most explosive sign yet that, six years after the start of the #MeToo movement, the music industry is currently experiencing something of a second iteration.
Sexual assault lawsuits were filed earlier this month against both former Recording Academy president/CEO Neil Portnow and label exec Antonio “L.A.” Reid, and in October longtime publishing exec Kenny MacPherson was sued for sexual harassment. Before that, sexual misconduct allegations were leveled at late Atlantic Records co-founder Ahmet Ertegun; Backstreet Boys member Nick Carter; singer Jason Derulo; and ex-Kobalt exec Sam Taylor.
Many of the recent cases have been filed under New York’s Adult Survivors Act, a statute that created a limited window for alleged survivors to take legal action over years-old accusations that would typically be barred under the statute of limitations. With that look-back period set to end on Thursday (Nov. 23), more cases could be coming in the next few days. Stay tuned…
Other top stories this week…
UMG WINS CASE OVER SPOTIFY STAKE – A federal judge dismissed a class action against Universal Music Group that challenged the fairness of its 2008 purchase of shares in Spotify. The case, filed by ’90s hip-hop duo Black Sheep, accused the company of taking lower-than-market royalty rates in return for a chunk of equity that’s now worth hundreds of millions. But the judge ruled that such a maneuver — even if proven true — wouldn’t have violated UMG’s contract with its artists.
A$AP ROCKY TO STAND TRIAL – A Los Angeles judge ruled that there was enough evidence for A$AP Rocky to stand trial on felony charges that he fired a gun at a former friend and collaborator outside a Hollywood hotel in 2021. The 35-year-old hip-hop star’s lawyer vowed that “Rocky is going to be vindicated when all this is said and done, without question.”
SHAKIRA SETTLES TAX CASE – The Columbian superstar agreed to a deal with Spanish authorities to settle her $15 million criminal tax fraud case that could have resulted in a significant prison sentence for the singer. After maintaining her innocence for five years, Shakira settled on the first day of a closely-watched trial: “I need to move past the stress and emotional toll of the last several years and focus on the things I love,” she said.
ROD WAVE MERCH CRACKDOWN – The rapper won a federal court order empowering law enforcement to seize bootleg merchandise sold outside his Charlotte, N.C., concert, regardless of who was selling it. He’s the latest artist to file such a case to protect ever-more-valuable merch revenue following Metallica, SZA, Post Malone and many others.
MF DOOM NOTEBOOK BATTLE – Attorneys for Eothen “Egon” Alapatt fired back at a lawsuit that claims he stole dozens of private notebooks belonging to the late hip-hop legend MF Doom, calling the case “baseless and libelous” and telling his side of the disputed story.
“THE DAMAGE WILL BE DONE” – Universal Music Group asked for a preliminary injunction that would immediately block artificial intelligence company Anthropic PBC from using copyrighted music to train future AI models while their high-profile case plays out in court.
DIDDY TEQUILA CASE – In a separate legal battle involving Diddy, a New York appeals court hit pause on his lawsuit against alcohol giant Diageo that accused the company of racism and failing to adequately support his DeLeon brand of tequila. The court stayed the case while Diageo appeals a key ruling about how the dispute should proceed.
Universal Music Group (UMG) has won the dismissal of a closely-watched class action that challenged the fairness of its 2008 purchase of shares in Spotify — a case that accused the company of taking lower-than-market royalty rates in return for a chunk of equity that’s now worth hundreds of millions.
The lawsuit, filed last year by the members of the ’90s hip-hop duo Black Sheep, claimed that UMG had secured its now-lucrative stake in the then-nascent streamer by signing an “undisclosed, sweetheart deal” that left artists underpaid to the tune of $750 million. UMG has called the claims “patently false.”
In a decision Monday (Nov. 20), U.S. District Judge Jennifer L. Rochon ruled that even if UMG had taken below-market royalty rates from Spotify in return for equity, doing so would not have breached its contracts with artists — which give the music giant “unfettered discretion” to license its recordings as it sees fit.
“Plaintiffs argue that UMG exceeded the bounds of its discretion under the contract by making an undisclosed licensing deal in exchange for Spotify stock, for which UMG is withholding artists’ rightful share … of the proceeds UMG reaped,” the judge wrote. “But they do not square that conclusion with UMG’s unlimited right to license their work.”
Black Sheep members Andres “Dres” Titus and William “Mista Lawnge” McLean sued in January, claiming Universal acted in “bad faith” when it secretly acquired a 5% stake in the “fledgling streaming service” in 2008 for just a few thousand dollars. The real payment to Spotify, the lawsuit claimed, had been UMG’s willingness to accept “substantially lower royalty payments” — an arrangement that benefited UMG and Spotify but “shortchanged artists” and “deprived” them of fair royalties.
“Universal concealed from artists that it acquired Spotify stock and that royalty payments were depressed as a result,” lawyers for the duo wrote in their complaint. “Over time, the value of the Spotify stock that Universal improperly withheld from artists has ballooned to hundreds of millions of dollars.”
When the case was filed, Universal called the claims “patently false and absurd.” In later court filings, the company flatly denied the core allegation: “UMG disputes that the equity stock acquired in 2008 was part of the consideration that Spotify provided for a license to UMG’s music catalog.”
Reps for both UMG and Black Sheep did not return requests for comment on Tuesday.
The major music companies all acquired equity in Spotify during the streamer’s early days. According to a 2018 report by Music Business Worldwide, the then-Big Four music companies (Universal, Warner, Sony and EMI) plus Merlin paid just €8,804 total for a combined 18% of the streamer divvied up between them. The role that royalty rates played in that deal, and whether artists would eventually see some of the profit, was hotly debated for years.
After Spotify went public in 2018, it started to become clear just how valuable those stakes had become. Sony Music sold 50% of its shares for $768 million in April 2018, followed by Warner selling its entire stake for $504 million in August 2018. Both later made good on previous pledges to disburse some of the proceeds to artists, although reportedly with differing stipulations.
Universal has yet to sell its shares in Spotify, but it made a similar pledge in March 2018. Later that year, when Taylor Swift signed with the company, she reportedly required that UMG further promise to distribute the money to artists regardless of unrecouped balances — meaning artists will be paid regardless of whether they still owe the label money.
But in their lawsuit, Black Sheep argued that such promises were not good enough. They said Universal had already wronged many of its artists in one of two ways — simply by taking lower rates and thus reducing their royalty payments, or by failing to disburse the profits of their equity stakes as royalties.
In Monday’s ruling dismissing the case, Judge Rochon said she did not even need to decide whether or not those allegations were true. Instead, she simply ruled that even if they were true, Universal would still not have violated its record deal with Black Sheep.
“The contract’s plain language does not support plaintiffs’ theories,” the judge wrote about the allegedly reduced rates, noting that the deal gave UMG the “sole, exclusive and unlimited right” to license the recordings. “Given this wide discretion, there is no basis upon which to find that UMG breached the contract by accepting a lower royalty from Spotify.”
Judge Rochon also rejected the argument that UMG should have accounted for the equity profits when paying artists, saying the contract only requires payment for revenue that is “solely attributable” to their specific songs.
“Plaintiffs cannot directly trace UMG’s alleged acquisition of Spotify stock to the use or exploitation of their work alone,” the judge wrote. “UMG did not breach the contract by failing to account for its value when paying Plaintiffs their royalties.”
Even beyond the merits of the lawsuit, the judge also said she would have dismissed most of it for a far simpler reason: That it had been filed far past the statute of limitations. If the case had moved forward, Rochon said it only would have applied to royalty payments made after January 2021, not those reaching back all the way to 2008.
Over the last several years, artists, record labels and streaming services have been doubling down on one of the longtime staples of the music, and particularly live music, business: merch. And there’s good reason for that: As Spotify’s global head of music, Jeremy Erlich, tells Billboard, the company estimates that the music merch business is worth around $8 billion globally. And with streaming now far and away the dominant form of music consumption, merchandise has increasingly become the go-to way to express fandom at a time when purchasing music has become a decidedly niche activity.
In recent months, Amazon Music has been doubling down on its merch efforts, partnering with the likes of Beyoncé, Mariah Carey, Rauw Alejandro and Doja Cat on exclusive merch related to tours (and, in Carey’s case, the year-end holidays). Over the past month, Spotify has also expanded deeper into the merch business — both with a new, dedicated hub for artist merch, which it announced earlier this year, and a new capsule collection that debuted in the past few weeks featuring exclusive one-off drops by the likes of Peso Pluma, Rosalía, Daft Punk, Tyler, the Creator and Tems.
This marks the latest foray into the merch space for streaming market leader Spotify, which has offered artists various ways to promote their own merchandise on their artist pages for several years via partnerships with Merchbar and Shopify. The capsule collections, which are being white-labeled through a partnership with Sony-owned merch company Ceremony of Roses, represent the latest evolution of the Spotify strategy: Erlich tells Billboard they’re “part of a pyramid of merch offers and services that we can provide for artists and fans,” aligning with the company’s stated goal of helping artists make a living from their work.
“Now that we have the merch hub, there’s a destination for people to go [to], and what we’re testing out now is the ability to create unique pieces for the fans and super fans, which have elements of streetwear culture with drops and limited quantities and more ways for people to feel they’re getting a unique experience and a unique product,” Erlich says. “This is step two of a multi-step journey; it’s a pretty limited drop with only five artists, limited quantities, but it’s also helping us really learn the best ways to partner with artists, but also the best ways to contact our users and help them enjoy this.”
The capsule collection was intentionally limited to five artists, all of whom (with the exception of Pluma) had a pre-existing relationship with Ceremony of Roses. That allowed Spotify to test-drive the new feature in a limited capacity with a collection of artists who have a distinct image and track record in the fashion-merch world. Spotify is also using its Fans First tech to drive the drops, which allows an artist’s biggest fans, in terms of listening engagement, first dibs at the exclusive collections — a tactic the company has employed with ticket offerings and other exclusives in the past. Erlich says the company is trying to establish how to use, but not over-use, the Fans First feature “to find out what works in what ways.”
The collections were jointly designed through a collaborative partnership between the artists, Spotify and Ceremony of Roses, the latter of which handled the logistics of production and shipping. As Ehrlich noted, they’re also tapping into the rarities and exclusives elements of streetwear culture, which he acknowledges is “not necessarily native to what Spotify does normally.” It’s what he sees as part of the learning process as Spotify continues to deepen its forays into the merch space.
“Our plan is to go do this again in Q1 with another set of artists, maybe in a more fashion-facing line, and we’ll have learned a lot by then,” Ehrlich says. “It’ll become our primary method to drop exclusive merch throughout 2024 while we find ways to integrate commerce better in-platform. In 2025, hopefully, you’ll see much more integrated and seamless commerce on-platform around merch. And from the moment that we do that, then we can turbocharge the scale with which we do it.”
For Spotify, the merch space offers an additional revenue stream for both artists and itself, as it builds on the back of its first quarterly profit in over a year in Q3, as price hikes and user growth helped tip it into the black. Adding more integration into its sales offerings — ironic as it is for a company that is so associated with helping the music business move on from a music sales model — is what Erlich sees as the present and future of the hybrid model.
“Whether it’s tickets, concerts, physical goods, fans want to express fandom in different ways and that’s a great thing. And the ability to use our streaming platform and data to identify fandom and be much more targeted in what you’re offering is the competitive advantage that we have given our scale and knowledge,” he says. “So I’m excited for us to do more a la carte, but it’s around this expression of fandom rather than access to music.”