Business
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In his Washington, D.C. office, Michael Huppe rolls his chair past gold records, an Elvis Costello poster and an electric guitar to a back shelf to locate a key and unlock a drawer. “Let me see if I still have it here,” the SoundExchange president/CEO says before pulling out a black vest with capital yellow letters that read “RIAA Anti-Piracy Unit” and draping it over his coat.
Prior to collecting performance royalties from digital radio stations, as well as broadcast companies such as SiriusXM and distributing them to creators for non-interactive digital streaming through SoundExchange, Huppe helped hunt down piracy rings around the country for the RIAA to ensure artists weren’t losing out on revenue. “I have gone on raids — flea markets, cassette operations, some CD operations,” he says.
Since Huppe joined SoundExchange in 2007, his tactics have changed — but his primary goal of getting performers and rights owners paid has not. Over the past two decades, he has helped raise their royalty rates and helped track them down at locations from music festivals to Mississippi Delta homes to distribute earned royalty payments. Now SoundExchange is marking its 20th anniversary and, in May, announced it had distributed $10 billion overall in payments. According to the organization’s most recent annual report released in July, SoundExchange collected $1 billion in digital royalties from more than 3,600 digital streaming platforms and distributed them to over 600,000 creators and rights holders in 2022 alone.
“You recognize you’re really making a difference in people’s lives,” Huppe says.
Explain what it means for SoundExchange to cross what it calls the “$10 billion distribution milestone.”
The growth rate of our payments surprised everyone, including me. When I came over to SoundExchange, I saw streaming was going to grow. We pay significant amounts of money to the big superstars, but also good amounts to working-class musicians that you may or may not have heard of. It makes a difference as to whether they stay in the industry. During the pandemic, for a lot of those musicians, we were the only revenue stream. The emails we received … it’s really gratifying.
What are some examples of those messages?
One band with regional popularity had been driving around trying to make it in a van, crashing on friends’ couches, barely getting by. We were trying to find them because we had money for them. They were literally about to hang it up — they were at the end of their run, running out of steam. That initial SoundExchange payment made all the difference and incentivized them to keep going.
There was a widow of a Delta blues singer we had been trying to find forever. We finally found her, and she was in tears because they were about to foreclose on her house and because of that [payment], they saved her house.
Country artist Randy Travis (seated), his wife, Mary Travis, and Michael Huppe.
Courtesy of SoundExchange
After working at the RIAA, you joined SoundExchange in 2007, which had been operating for four years. What were those early days on the job like?
We were still sending out paper checks. Back then, they were quarterly or semi-annually, and half the staff would gather into a room and run the distribution. That makes me think how far we’ve come, from paper checks to a system that processes 35 billion [digital] performances a month from 600,000 accounts. We were like, “Oh, my God — the next $100,000 [comes in] this quarter!” Now we’re regularly doing $1 billion [in payouts] per year.
It’s SoundExchange’s 20th anniversary. What have been the company’s biggest achievements during your tenure?
When I first started working — I guess I was still at the RIAA — SiriusXM was paying 2% of revenue, and now it’s 15.5%. And streaming rates we get from webcasting have more than quadrupled. We’ve done a really good job of demonstrating and achieving the value for music. [Editor’s note: In August, SoundExchange filed a lawsuit against SiriusXM claiming the platform is “gaming the system” to “grossly underpay the royalties it owes” to the amount of $150 million by manipulating how it bundles satellite services with web streaming services. A representative for SiriusXM has denied the allegations.]
How has SoundExchange helped those rate increases?
For the first few years, we would go before this three-judge panel at the Copyright Royalty Board. We’ve had a good track record of convincing them why we should be paid higher rates for music, which is so important to these services. The last satellite radio proceeding we had went from 11% to 15.5% overnight. So Dec. 31 of one year [2017], it was 11%, and the next day, they were paying us 15.5%. For the most part, it has been a gradual uptick.
What is SoundExchange’s general strategy for helping to persuade the CRB to raise the rates?
You put on artist witnesses and people from the union and record-label folks who explain what goes into the making of sound recordings. You bring in experts who can talk about the profitand-loss situation or what the future five years of the industry is projecting. You do all that the right way and make a convincing case, and the court increasingly recognizes the value music plays in the services. They are big, long, expensive cases, but it’s worth it because we have to look out for the value of music.
How quickly does SoundExchange make those payments?
Ninety percent of our royalties are out the door in 45 days, whereas around the world, on average, folks pay out annually, semi-annually or quarterly. We’re working for the creators. Our job is to take their money from the digital service providers and get it to them as accurately and efficiently as possible.
Are you a musician?
I’ve played piano since I was 4 years old. My chops are not what they used to be! So don’t ask me that. I played in different bands through high school. I’ve always loved music.
I’ll be honest with you: I never thought I’d end up in the music industry. I’m a recovering lawyer. When I was in law school, I got really interested in intellectual property [IP]. It’s this thing you can’t touch, you can’t hold, it’s not tangible — but the government vests a property right in it because they want to incentivize investment in creation. It just was a really interesting concept. [Without it], you wouldn’t have research in the next cancer treatment. You wouldn’t have people investing in music or movies or software.
Rapper Armani White (left) and Michael Huppe.
Courtesy of SoundExchange
After Harvard Law School, you started at the RIAA in 2000. How did you get to that job?
I clerked in court in the Eastern District of Virginia. We saw a lot of IP — when someone’s infringing your patent, you could be losing millions of dollars a day or tens of millions, and it makes a difference going to a quick court. When I started out as a lawyer in a law firm here, I tried to do IP if I could, but I was just doing general litigation. I got this headhunter to [help me] come over to work at this place called the RIAA, which happened to be across the street from where I was working. I came in to do litigation and piracy work and a lot of other things at the RIAA.
Like what?
There were still full-blown, big, commercial pirate cassette operations. I was helping to develop processes and cases. Slowly, that work moved from cassettes to commercial CDs to burnable CDs and downloads, and by the time I left, it was all streaming. We had eight offices around the country, probably 60 people in the department, tons of investigators. I helped create a system where we could build our own cases against pirates because we started to move toward the civil side instead of just criminal.
Any stories about busting flea markets?
The more tense times are when you’re going to someone’s house and they’ve got a CD-burning factory in the basement. Then you move on to the internet. It’s a whole different ball of wax. You’ve got people hiding behind 14 different anonymizers who may not even be based in this country. It was an interesting way to get into the business, that’s for sure.
In addition to Michael Huppe, SoundExchange is guided by an executive leadership team consisting of (from top) chief business officer Tommy Korpinen, CFO/COO Anjula Singh, general counsel Tim Dadson and chief technology officer Luis Bonilla.
Elliot O’Donovan
What are the next big goals for SoundExchange?
SoundExchange, 10 years from now, is going to be an even bigger part of the industry than we are today. When we moved into publishing in June 2022, part of that was to bring some of the same philosophy and perspective and transparency into the publishing world that we brought into the sound-recording world. The ultimate thing is to marry up the metadata. Wouldn’t it be great if there was one central nonprofit place where you had all the authoritative data about who wrote the song, who owns the publishing, what are the splits, who played [in the] background, who sang vocals? It’s interesting and a little crazy we don’t have that as an industry. If we can move in that direction, that removes friction.
Obviously, [artificial intelligence] is a big topic. There are a lot of benefits and a lot of threats. We would like to play a part in making sure AI is rolled out responsibly so we can take advantage of all the benefits, but also set up guardrails so it doesn’t hurt creators — and, by the way, society.
I would love to continue our work in making the business side of music flow more smoothly. The sign of success, in 10 years, is that no one’s even talking about transparency or metadata or mistaken lineups or not knowing who wrote a song. I hope in 10 years, we’re not even talking about that because we’ve solved the problems that got us here.
How has SoundExchange changed over 20 years?
In those early years, people didn’t necessarily know who SoundExchange was. We would have money for somebody and contact them: “Just give us your name and number and bank account.” Understandably, people rarely give that up unless they get to know you. I think people know who we are now. At South by Southwest, we get a list of all the bands, we cross-reference bands, we put up fliers: “Do you know this band? Send them here. We have money for them.” If you’re commercially active in the industry and you don’t know who SoundExchange is, that’s kind of more on you than it is on us.
SoundExchange’s Fight for Fairness
Visitors are cast in silhouette at the top of stairs near the Capitol Visitors Center at the United States Capitol on Wednesday, Oct. 5, 2022 in Washington, DC.
Kent Nishimura/Los Angeles Times/Getty Images
Under its president/CEO, Michael Huppe, SoundExchange has consistently supported the American Music Fairness Act — which would, for the first time ever, impel terrestrial radio companies to pay performers and copyright holders when airing their songs.
Since U.S. Reps. Ted Deutch, D-Fla., and Darrell Issa, R-Calif., introduced the bill in June 2021, it has slowly progressed through Congress. In December 2022, the House Judiciary Committee approved the legislation. “For decades, broadcast corporations have made hundreds of billions of dollars while denying creators royalties for music played on AM/FM radio stations,” Huppe said in a statement at the time. “That’s fundamentally wrong.” In February, Sens. Marsha Blackburn, R-Tenn.; Alex Padilla, D-Calif.; Thom Tillis R-N.C.; and Dianne Feinstein, D-Calif., reintroduced the bill into the U.S. Senate.
On its website, SoundExchange summarized a key exception for small, local broadcasters: Those making less than $1.5 million in annual revenue and whose parent companies make less than $10 million annually would pay just $2 per day to rights holders so they could play any song they want over the air.
The National Association of Broadcasters, which opposes the bill, last December called the legislation an “onerous performance fee” and a “new performance tax” that would “irrevocably damage local radio.” Since the Copyright Act of 1909, broadcasters have consistently won this argument. In the 1930s, top bandleaders Fred Waring and Paul Whiteman formed an advocacy group called the National Association of Performing Arts; in the late 1980s, Frank Sinatra wrote letters to fellow pop stars to build a unified artist coalition; and in the 1990s, Congress passed laws forcing digital services to pay royalties and exempted over-the-air broadcasters from doing the same.
In a December 2022 Billboard op-ed, Huppe countered the NAB: “Corporate broadcasters argue that a ‘mutually beneficial relationship’ exists between AM/FM radio and music creators,” he wrote. “Yet their actions belie that claim, as they spend millions to fight this legislation and avoid sharing the billions of dollars they make in advertising from music.”
This story originally appeared in the Aug. 26, 2023, issue of Billboard.
Word Collections, the publishing administration firm launched in July 2020 by serial music industry entrepreneur Jeff Price, has closed on a $5 million investment round to boost the company’s global licensing and collection efforts. Metallica‘s Black Squirrel Partners was the lead investor in the round in Word, which specializes in musical and comedic recordings.
Word Collections handles global licensing for — and collections from — digital music services, thus bypassing traditional mechanical and digital performance collection societies around the world. This reduces administrative fees and helps ensure the data of its songwriters and comedians’ works are properly registered at each DSP.
As for other publishing income streams and licensing — including synchronization and performance for television, radio, and general licensing to stores, bars, hotels and, etc. — Word has a joint venture with Blue Water Publishing International that promotes Word’s catalog and handles collections from those sectors, which includes being a member of over 40 collection societies around the globe.
Current Word clients include the publishing catalogs for Metallica and the band’s guitarist Kirk Hammett, Greta Van Fleet, Thomas Dolby, Songwriters Guild Of America, Gerencia360, St. Nicholas, Baroness, The Offspring’s Bryan “Dexter” Holland, Shriekback, DLG., Bazanji, Gomba Music, John Oates, Switchfoot and Grace Potter, among other musical songwriters. It also represents the comedy catalogs of Robin Williams, George Carlin, Margaret Cho, Jerry Seinfeld, David Cross, Ron White, Bill Hicks, Bill Engvall, Billy Crystal and numerous other authors and comedians.
Jeff Price
Courtesy of Jeff Price
Prior to starting Word Collections, Price co-founded TuneCore and also launched Audiam, now owned and/or controlled by other entities, respectively Believe Music and the SESAC. According to Word Collections’ announcement of the new financing, the funds will be employed to accelerate global direct licensing and for the enhancement of Word Collections’ proprietary technology and systems.
Black Squirrel was founded in 2020 by former Morgan Stanley executive Paul Donahue, Metallica and its in-house leadership team (Tony DiCioccio, Marc Reiter and Vickie Strate), WG&S founder Eric Wasserman and Artist Management firm Q Prime, with music industry executive Rick Krim also a partner of Black Squirrel.
A new social action platform, ShowUp, wants to make it easy for artists to integrate activism into album releases, touring strategies and other components of their work.
Launching Monday (Aug. 28), ShowUp connects artists with organizations supporting the causes they care about in order to create, support and scale activism in the music industry. The platform is currently linked with more than 300 hand-selected nonprofit organizations across climate justice, social justice, women’s rights, LGBTQ activism and more. (Using a broader search, users can access more than 1.7 million international organizations.)
ShowUp will be activated by artists as the demand for projects that incorporate activism grows within the industry and among fans. This connection to artists is being facilitated by ShowUp’s partners at launch: ADA Worldwide, Downtown, EMPIRE, The Orchard and Symphonic Distribution.
“Ultimately, ShowUp is an artist services tool, and collectively our partners act as a broadcast point for us to over 100,000 artists and growing,” says ShowUp co-founder/CEO Mat Hall. “ShowUp provides timely and forward-thinking, actionable information and tools to our partners to inform and activate artists.”
Hall continues, “How can artists help our neighbors in Maui? What local organizations can artists support during Hispanic Heritage Month? How can an artist support women’s reproductive health in Mississippi? The teams and leaders we work with daily at our partners help us identify artists across their roster interested in this work and help shape the campaigns we create.”
ShowUp also makes it possible for qualifying artists to select an organization to dedicate a portion of their royalties to via a new release or catalog track. Admin for this function happens seamlessly through existing split-share technology on each partner’s backend.
ShowUp will also provide artists with data regarding who gave what, where and when so that artist teams can identify the activism-oriented segments of their fanbases.
“Our goal isn’t to turn every artist into an activist,” says Hall. “This work isn’t for everyone. However, we do want to make sure that any artist practicing activism, or who may be inclined to do so, has the tools and support so that, when they decide to speak out about what’s important to them, their message reaches the broadest possible audience and drives the greatest financial impact possible to the communities and concerns they are supporting.”
Hall adds that this goal makes label and distribution partners essential to ShowUp’s work.
“Providing a scalable platform for artists to raise awareness and engagement while delivering impactful, measurable results for causes they support enhances our value proposition in meaningful ways,” The Orchard president/COO Colleen Theis adds in a press release. “We are proud to partner with ShowUp to make advocacy and fundraising integral components of The Orchard’s client offering.”
“We all know ‘why’ this work is imperative, but many of us get lost at ‘what’ and ‘how,’” added ADA Worldwide president Cat Kreidich. “ShowUp helps answer these questions, and has been a valuable and practical starting point for our artists and teams as we all consider our potential for impact.”
Added Downtown Music Holdings chief commercial officer Tracy Maddux: “Activism is becoming an increasingly important part of how creators interact with their audience and the world around them. ShowUp provides them a platform to do this authentically and effectively and Downtown is a proud partner in helping make their voices heard.”
“Integrating the ShowUp platform allows our artists to seamlessly support the things that matter to them,” said EMPIRE chief product officer Stephen White. “When artists make these commitments, our artist teams have an incredibly powerful new marketing tool that not only drives advocacy and fundraising, but new channels of fan and streaming engagement. Everyone benefits.”
Sony Music Publishing earned the top publisher ranking on the Top Radio Airplay, Hot 100 Songs and Country Airplay charts for the first two quarters of 2023. That dominance came thanks, in part, to stakes in “Flowers” by Miley Cyrus (No. 1 on Top Radio Airplay for the second quarter), “Last Night” by Morgan Wallen (No. 1, Hot 100 Songs) and “Dancin’ in the Country” by Tyler Hubbard (No. 1, Country Airplay).
BMG-affiliated Pedro Julian Tovar Oceguera Jr. earned the top songwriter ranking on Hot 100 Songs in the second quarter for penning “Ella Baila Sola” by Eslabon Armado x Peso Pluma. Country hit-maker and SMP signee Ashley Gorley held the top songwriter spot on Top Radio Airplay.
Tracy Chapman’s publishing company, Purple Rabbit Music, made an impressive showing at No. 10 and No. 7 on the Top Radio Airplay and Hot 100 Songs rankings, respectively, thanks to Luke Combs’ cover of her 1988 hit “Fast Car.” With that song alone, Chapman held 2.32% of all publishing market share for the Hot 100 Songs chart in the second quarter.
SMP once again grew its share of the 100 Top Radio Airplay songs, to 31.46% from 30.26% in the first quarter. The number of shares it held in songs on the ranking also rose quarter to quarter, from 66 to 69. That makes nine quarters in a row that Sony has summited the Top Radio Airplay chart.
Though SMP also remained in the top slot of the Hot 100 Songs ranking, its share fell from 30.56% in the first quarter to 27.67% in the second. The songs it had on that chart also dipped, from 67 to 60.
Universal Music Publishing Group scored big with top songs “Calm Down” by Rema & Selena Gomez and “Kill Bill” by SZA. The publisher held on to its No. 2 spot on both Hot 100 Songs and Top Radio Airplay. While UMPG grew its Top Radio Airplay market share quarter to quarter from 21.26% to 22.59% and increased its song share from 48 to 49, the publisher slipped from 23.45% to 21.32% on the Hot 100 Songs ranking over the same period. Its song count also dropped from 52 to 51. For the second consecutive quarter, UMPG’s top Hot 100 song was “Kill Bill.”
Warner Chappell Music held the No. 3 spot on both the Top Radio Airplay and Hot 100 Songs charts (as well as No. 2 on Country Airplay). The publisher’s Top Radio Airplay market share dropped to 17.21% from 20.71% in the first quarter, and its song count fell from 52 to 45. Its top song was Cyrus’ “Flowers.”
Warner Chappell’s Hot 100 Songs market share also dropped, from 21.73% to 19.94%, even as its song count remained the same at 47.
Kobalt held steady at the number four spot on each of the three lists – with the help of “Last Night” by Wallen and “Creepin” by Metro Boomin. Though it is notably smaller than the three majors, Kobalt held 9.61% of market share on the Top Radio Airplay charts with shares in 36 songs — up from 8.72% and 31 songs in the previous quarter — and 8.80% of the Hot 100, with 31 songs — up from 6.89% and 26 songs.
BMG finished fifth on all three rankings thanks in large part to “You” by Dan + Shay, “Ella Baila Sola” by Eslabon Armado x Peso Pluma and “Boy’s a Liar” by PinkPantheress. BMG earned 2.83% of the second-quarter Radio Airplay market with eight songs on the chart, down from 3.28% and 11 songs from the previous quarter. The publisher ended the quarter with a 4.68% Hot 100 Songs share from nine songs — most notably, the surprise hit, “Ella Baila Sola” — more than double its 2.13% first quarter market share and enough to leapfrog it over Pulse for a fifth-place finish.
Another Latin hit, Peso Pluma’s “Por Las Noches,” put Downtown back on the Hot 100 ranking. The publisher finished the second quarter with a 2.8% share from six songs.
Pulse maintained its No. 6 ranking on Radio Airplay with a 1.93% market share and a share of six songs on the chart; the biggest being Cyrus’ “Flowers.”
Reservoir re-entered the Top Radio Airplay ranking with a 1.62% share after sitting out the first quarter. The publisher’s return had a lot to do with Kane Brown’s “Thank God.” The publicly traded independent fell from No. 9 to No. 10 on the Hot 100 scorecard. It also ranked ninth on country radio airplay aided by its shares of “Snooze” by SZA and “Tennessee Orange” by Megan Moroney, respectively.
Hipgnosis rose two slots from No. 10 to No. 8 on Top Radio Airplay, although it gained only 0.15 percentage points in market share (from 1.40% in Q1 to 1.55% in Q2). This bump resulted largely from the 2020 hit “Heat Waves” by Glass Animals which is still holding strong at pop radio.
Anthem dropped from No. 8 to No. 9 on the Radio Airplay ranking despite a minuscule 0.02 percentage point drop in market share quarter-to-quarter, from 1.47% to 1.45%. Meanwhile, Vim Music made the publisher rankings for the first time thanks to placing two songs on the quarter’s Hot 100 chart, with its top song, Chino Pacas’ “El Gordo Trae El Mando,” coming in at No. 68. That placed Vim Music –the publishing company of Mexican label Rancho Humilde co-owner Jimmy Humilde and Fuerza Regida lead singer JOP — at No. 9 with a 1.48% share.
METHODOLOGYFor the Top 10 Publishers Top Radio Airplay chart, percentage calculations were based upon the overall top 100 detecting songs from 2,968 U.S. radio stations electronically monitored by Mediabase (and provided through Luminate) 24 hours a day, seven days a week during the period of March 31 to June 29. For the Top 10 Publishers Hot 100 Songs, percentage calculations were based upon the top 100 songs as ranked by Billboard Hot 100 points calculated from Luminate-compiled digital sales and streaming data and Mediabase-tracked radio airplay detections during the same period as above, reflecting the issue dates of April 15 through July 8. Publisher information for musical works on both charts has been identified by the Harry Fox Agency. A “publisher” is defined as an administrator, copyright owner and/or controlling party.
Live music companies’ stocks fell an average of 4.4% on this week’s Billboard Global Music Index despite their optimism about sustained consumer spending and healthy revenue and ticket sales in the second half of the year. While Live Nation shares rose 0.5% to $84.79, the other promoters and ticketing companies in the index had down weeks: Madison Square Garden Entertainment fell 2.7%, CTS Eventim dropped 5.7% and Sphere Entertainment Co. plunged 9.6%.
Sphere Entertainment shares have gained over 19% since the company turned on the external display on its state-of-the-art Las Vegas venue and showcased the potential inside the structure on July 5. The company’s second quarter results, released Tuesday, showed revenue of $129.1 million — with the Sphere contributing just $700,000 and the remainder coming from MSG Networks. Sphere’s share price rose nearly 8% to $39.58 following Tuesday’s earnings results but fell nearly 15% over the next three days. The $2.3-billion Sphere will open on Sept. 29 with a 25-date residency by U2.
iHeartMedia shares rose 6.6% for the week to close at $3.56 on Friday (Aug. 25), making the radio giant the week’s greatest gainer on the Billboard Global Music Index. However, radio companies’ struggle with weak national advertising has hurt their share prices overall in 2023. Year to date through Friday, iHeartMedia was down 41.9% and Cumulus Media had lost 41.9%. Audacy, troubled by debt on top of the soft advertising market, was de-listed by the New York Stock Exchange on May 16 and currently trades over the counter at 75 cents per share despite a reverse stock split on June 30 raising the price from 7 cents to $2.13. Audacy was removed from the Billboard Global Music Index following the de-listing.
Overall, the 21-stock Billboard Global Music Index was flat this week at 1,298.80. Ten stocks finished the week in positive territory, ten stocks lost ground and one stock, Round Hill Music Royalty Fund, was unchanged. Record labels and music publishers were the top performing sector with an average gain of 1.7% and only one company, Universal Music Group (down 0.7%), finished in negative territory. Streaming companies and radio companies suffered average weekly losses of 1.3% and 1.7%, respectively.
Year-to-date, the index has increased 11.2%, even as it’s now on its fifth straight week without a gain.
Stocks in general performed better than music stocks. In the United States, the S&P 500 gained 0.8% and the tech-heavy Nasdaq composite gained 2.3%. In the United Kingdom, the FTSE gained 1%. South Korea’s KOSPI composite index gained 0.6%.
The week’s biggest loser, streaming company Anghami, fell 17.5% to 94 cents per share. The stock traded below $1 per share from Wednesday to Friday, marking the first time since July 18 the stock has dropped below $1. On Monday, Anghami announced the sale of a convertible note worth $5 million to SRMG Ventures, a venture arm of Saudi Research and Media Group. The company plans to use the proceeds for working capital, growth and other corporate purposes.
How long will consumers keep spending $200 on concert tickets, $15 on a cocktail at the venue (and God knows what for parking) and $11 on a music subscription? Judging from recent comments by some executives, people may be dealing with inflation, but they will still pay to be entertained.
“After another quarter of record-breaking [gross order value], it is clear consumers continue to prioritize live events experiences,” said Vivid Seats CEO Stan Chia on the company’s Aug. 8 earnings call.
Investors, though, seem worried about the potential effects of millions of American student loan borrowers resuming payments this fall after years of pandemic-era forbearance. In over three years, the forbearance on student loan debt totaled about $185 billion that was spent elsewhere or saved, according to an estimate by Goldman Sachs. Asked by an analyst about the possibility that loan payments will put a crimp in concert spending, Live Nation president/CFO Joe Berchtold said the company doesn’t expect a problem. Live Nation’s analysis is that the positive impact of fans returning to live events after the pandemic “is about 10 times the impact of any potential headwind coming from the student loan payments needing to get made,” Berchtold said during the company’s July 27 earnings call.
Chia echoed Bechtold’s optimism. Vivid Seats sees “resiliency” in consumer demand and strong trends for live music, he said. To that point, Vivid Seats increased its guidance for 2023 for the second time this year and now expects marketplace gross order value (GOV) of $3.4 billion to $3.6 billion and revenues from $630 million to $650 million.
What’s more, Live Nation expects people won’t be shy about opening their wallets. Full-year concerts margin will increase in 2023 thanks to an “increase [in] the per-fan profitability” from on-site spending — things such as food and drink — and “containing to focus on the costs,” said Berchtold. Price-conscious consumers “are continuing to spend strongly,” he said, and Live Nation is seeing an increase in both the number of fans per show and per-head spending.
Eventbrite, which increased the mid-point of its 2023 revenue guidance from $323.5 million to $325 million, is finding people are still eager to do things in the real world after COVID-19 lockdowns moved much of their lives online. In an Aug. 3 earnings call, CEO Julia Hartz said the company’s improved outlook comes from “strong demand signals across the board, particularly for categories like music, film and media, food and drink, nightlife, performing and visual arts.” What’s more, Eventbrite is seeing “people really want to get out and connect with one another,” she added: “Singles and dating events are 50% up year over year. Independent singer-songwriter-hosted events were up 60%.”
German promoter CTS Eventim expects moderate growth in internet ticket volume and live entertainment revenue this year. And while CTS believes its future is clouded by unquantifiable effects of geopolitical security uncertainty, persistently high inflation and a potential economic stagnation or recession, the company said in its mid-year earnings report that “earnings figures should improve substantially compared with 2022.”
Consumer spending on music subscriptions also appears to be strong going into 2024. Spotify, which raised the price of its individual plan by $1 per month in the United States in July, expects to have 224 million subscribers by the end of September, after adding 15 million in the first half of the year. Its third quarter revenue guidance of 3.3 billion euros ($3.56 billion) would mark a nearly 9% gain from the prior-year period, although analysts surveyed by StreetAccount expected guidance of 3.4 billion euros ($3.67 billion). And its gross margin guidance of 26% would be a marked improvement from 25.2% and 24.1% in the first and second quarters, respectively.
While consumer spending continues unabated, brands’ spending on advertising — an important revenue stream for labels and publishers — is a different story. A soft advertising market has hurt everything from radio revenues to online advertising (though Live Nation’s advertising and sponsorship revenue has rebounded nicely from the pandemic and has seen no slowdown, according to Berchtold). iHeartMedia expects third-quarter revenue, excluding the impact of political advertising, to decline in the low-single digits, as July revenue was down about 5% year over year.
But radio advertising could rebound in the second half of the year, according to B Riley Securities analyst Daniel Day, and Cumulus Media’s better-than-expected second quarter earnings results were a positive sign. While iHeartMedia investors weren’t enthusiastic about the company’s second quarter earnings — its share price fell 17% the day earnings were announced and dropped another 6% through Thursday — the company remains optimistic. “While there was some softness in our larger advertisers, in Q2 our smaller advertisers remained resilient,” said iHeartMedia CEO Bob Pittman during the Aug. 8 earnings call. “And we saw a gradual improvement from our larger advertisers as well, which leads us to believe that we’ll continue to see improvements in the business through the remainder of the year.”
A stagehand hired to prepare The Weeknd‘s After Hours Til Dawn Tour stopover at AT&T Stadium in Arlington, Texas on August 14, 2022, has filed suit against Live Nation Entertainment, alleging his leg was run over by a forklift while the stage was being built.
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Stagehand Steve Genovese was reportedly working for a company hired by Live Nation to construct the stage for the concert when the accident occurred. The complaint alleges five counts of civil liability including negligence, negligent hiring and gross negligence.
“Genovese was reported ‘run over by a forklift which was being operated by another worker on site,’” the complaint reads. “As a result, plaintiff suffered severe, excruciatingly painful and permanently disabling injuries to his leg. The flesh and muscle were torn away from his leg and were detached from the bones.”
The lawsuit also names concert promoter C3 Presents, business management firm David Weise & Associates and Cowboys Stadium, LP (which owns AT&T Stadium) as defendants. The Weeknd is not listed as a defendant.
“Defendants had the knowledge, ability, and duty to prevent the severe and life-altering injuries,”the complaint reads, but allegedly “placed more value on their own financial gain than on the safety of the workers who helped put on The Weeknd concert.”
According to the suit, there was no ambulance or EMS personnel on site when the accident occurred, which “significantly delayed” medical care. The complaint continues: “[Genovese] spent more than a month in the hospital where he underwent numerous surgeries to save his leg, which is now horrifically and permanently disfigured and impaired.”
Genovese is seeking damages for medical expenses, physical pain and suffering, mental anguish and emotional distress, loss of earning and earning capacity, physical impairment, disfigurement, “loss of society and enjoyment of life,” out of pocket expenses and more.
Three weeks ago virtually no one knew who Oliver Anthony was. But in the 18 days since radiowv published a video of the Virginia singer/songwriter performing his everyman anthem “Rich Men North of Richmond” to YouTube, he has become a household name.
Not only has “Rich Men North of Richmond” soared to the top of the Billboard Hot 100 — making him the first artist to debut at No. 1 with no prior chart history — he has become so ubiquitous that Wednesday night’s Republican presidential candidate debate included a question about the song.
Propelled by the right’s embrace of the song because of its themes about working class people’s struggle, unfair taxation and its dismissive tone about “obese” people on welfare, “Rich Men North of Richmond” has become a touchstone for the country’s divisiveness and a rallying cry for the disenfranchised.
Though labels and booking agencies are clamoring to get into business with Anthony — one record executive told Billboard, “I don’t think I’ve ever seen anything like this before” — Anthony has said he is in no rush to sign any deal. His co-manager, Draven Riffe, told Billboard that they planned to “take it slow” while surveying potential offers and also expressed a desire to do as much as they can on their own.
While Anthony plots his next move in hopes of turning a runaway hit into a lasting career, Billboard asked a number of top country executives what advice they might offer to help the newcomer navigate his way onward and through the feeding frenzy.
Jon Loba, president, BMG Nashville president: “Not that he needs advice from me, but my guidance would be, stay true to yourself and authentically who you are. Early on, it’s obvious that’s exactly what he is doing, which impresses me as much as his music. While different sides of the political spectrum are celebrating or roasting him, he doesn’t let any side take ownership of who he is and what he stands for. He is not afraid to say he is middle of the road and hopes for unity, which in this day and age can be a risky proposition.”
Tim Wipperman, managing director, ONErpm Nashville: “There is no reason for him to give away ownership of his intellectual property in a traditional deal. That is the annuity for him and his family. We have deal structures that have all the benefits of worldwide scale in the digital realm without the encumbrances of a corporate box. Keep your ownership, and don’t trade that for a big advance.”Derek Crownover, partner and vice chair, music Industry, Loeb & Loeb: “Songs and lyrics on controversial topics and particular viewpoints, whether it’s love, alcohol, religion or politics, are age old. The song and the passion Oliver is delivering through his vocals are speaking loudly to a group obviously; however, there is also the new viral phenomenon of curiosity, which the media is helping to fuel. So there is some uplift that’s there too. It seems Oliver did a lot of this on his own, so he should preserve the rights he has as best he can. Maybe a record distribution deal and a publishing admin deal to help him collect the money on those songs he put out and then a go-forward [publishing deal] with more investment to build off his platform.”
Jay Turner, program director, Sunny 102.5 Country, Santa Maria, Calif.: “A guy like Oliver Anthony could make as much money as he needs the rest of his life without ever sitting down with William Morris or CAA or Universal Music or Sony. He doesn’t need a deal with Red Light to manage him, he doesn’t need a deal with William Morris to book him…. He would be wise to do that, but he doesn’t have to do it. If [he does sign a deal], he would be very wise to enlist somebody to help him dot the i’s and cross the t’s. Will he? I don’t know. He’s going to have a lot coming at him real fast.”
Tracy Gershon, co-founder, Northern Lights Music/Shero Consultants: “Oliver Anthony’s success speaks to the shifting power from the gatekeepers to the fans. His authenticity and independence has resonated, and whomever he picks for his team needs to honor this.”
Chris Kappy, chief navigation officer, Make Wake Artists: “Fans. First.”
Scott Stem, manager (Scotty McCreery), Triple 8 Management: “It’s important that Oliver knows who he is as a person and an artist and stays true to his vision, while also continuing to evolve as all artists do. He needs to surround himself with people he can trust to have his back, who will help him grow from a momentary phenomenon to an established artist. He should be wary of anyone wanting to work with him who doesn’t feel genuine to him. While I think it would be good for him to chat with any legitimate label, publisher and concert promoter that wants to meet with him, he should take some time, learn his options, and determine what fits best with his personal and artistic goals. He can’t wait forever and miss this moment, but he doesn’t have to make snap decisions either. He should put some money where his mouth is and partner with an existing charitable organization or create his own foundation to help find solutions and make life better for those folks he sings about. He will make mistakes, as everyone does, but he can learn from them and move forward — and perhaps not be photographed eating a fudge round.”
John Shomby, owner/CEO, Country Radio’s Coach: “I would tell him, ‘Dude, this might be your 15 minutes of fame right here, so take advantage of it and perform in front of people as much as you can. Use the digital services and radio as much as you can. What do you want?’ If he says, ‘I want to make a lot of money,’ then, OK, sign with a label. But if he says, ‘I just want to do my music,’ then I’d tell him to stay in the independent music mode and not change anything because he’s done so well doing it this way… There’s a possibility that he signs a big label deal and then falls flat on his face; that’s what I’d be concerned about if I were his manager. I would say let the 15 minutes of fame go away and then see what happens from there… I think this guy is genuine, everybody’s trying to paint him into a corner. That’s another thing I would be real careful about: who we put him in front of. I would not send him to any political rallies. I wouldn’t do any of that.”
Jacquelyn Marushka, founder, Marushka Media: “With respect for Mr. Anthony, and because I am not a professional musician or songwriter but I greatly appreciate those with this gift, I’d humbly encourage him to keep writing and singing about what moves him and about what’s true to him. I’d further encourage him to be true to himself no matter what. His honesty translates in his voice; a quality that connects with listeners. Finally, if he decides to dive into the business, I’d recommend he vet partnerships very carefully and find a brilliant attorney, business manager … and a protective and savvy publicist … hint hint.”
Assistance provided by Jessica Nicholson and Steve Knopper.
If it’s Friday that means another spin around the Executive Turntable, Billboard’s comprehensive(ish) compendium of promotions, hirings, exits and firings — and all things in between — across the music industry. As the newly retired Charles Martinet likes to say, Let’s-a-go:
BMG promoted Tony Abner to global general counsel and executive vp of business and legal affairs of the music company, often billed as the world’s fourth largest after the three majors. Based in Berlin and reporting to BMG CEO Thomas Coesfeld, Abner manages the firm’s global legal teams and, as GC, advises senior management on all legal matters. Abner has been part of the BMG family since 2018, first as vp of business and legal affairs before adding an “s” to the title two years later. He was formerly based in Los Angeles before moving to Germany a year ago. Prior to BMG, he held executive posts at PMP Records and Loud Records, as well as senior attorney positions at Lenard & Gonzalez and Davis Shapiro Lewit Montone & Hayes.
Universal Music Group Nashville promoted Stephanie Alexa to svp of finance and operations, and Gary Keffer to vp of strategic marketing for the label group, which hems in Capitol Records Nashville, EMI Records Nashville, MCA Nashville and Mercury Nashville. Alexa has “transformed the finance department” during her five-year run as vp of finance, says UMGN evp and COO Mike Harris. Prior to joining Universal, she oversaw finance and business affairs at ATO Records. Keffer has over 20 years of experience in marketing, the seven with UMGN, where he and his team scour for ways to connect UMGN artists with brands, partners and wider audiences. Before pivoting to music, Keffer was director of media and partnerships at arms manufacturer Remington. “His expertise and attention to detail have ensured that our partners and artists are always supported for success,” glowed Lori Christian, the label group’s evp of marketing.
Mark Logsdon has been named vp of publicity at BMG Nashville, succeeding former vp of p Jay Jones, who exited earlier this year. Logsdon reports to evp of BMG Nashville JoJamie Hahr and in his new role, will lead the overall publicity strategy for BBR Music Group’s roster, including Jason Aldean, Jelly Roll, Lainey Wilson, Dustin Lynch, Chase Rice and Parmalee, as well as guiding BMG Nashville’s corporate communications. Logsdon previously worked at PLA Media, where he began in 2007 as a coordinator and rose through the ranks over the past 16 years to a vice president role. Prior to PLA, his career included time at Sony, RLM/Mission Management, and the Atlantis Music Conference. During his career, Logsdon’s clients have included The Tina Turner Museum, the Johnny Cash Museum, Patsy Cline Museum, the Birthplace of Country Music Museum, Warner/Chappell Production Music, RCA Studio A, Ingram Content Group, and artists including Tyler Williams, Michelle Wright and Lynn Anderson. –Jessica Nicholson
The Orchard hired music marketing mainstay Gita Williams as its new senior vp of artist and label services in the U.S., a role in which she’ll develop and market current roster artists — and sign future ones. She is based in Los Angeles and reports to Mary Ashley Johnson, evp of sales and artist and label services. Prior to joining the Sony-owned independent music distributor, Williams ran her own management and marketing firm, The Mehan Group, and before that held senior roles at Roc Nation, Epic Records, Interscope and RCA Records. “Gita’s experience in artist management and major label leadership roles will prove invaluable as we refine our Artist Services division and strive to achieve the best possible results for our clients,” noted Johnson. You can reach Williams at gita@theorchard.com.
John Dolak joined the National Association of Music Merchants (NAMM), where he leads all communication and PR efforts for the music-and-sound trade show. The UCLA alum spent 20 years at Sony Electronics, where he rose to vp and head of communications and, notably, was the point person for participation and activations at major trade shows like CES and NAB. Additionally, NAMM announced the creation of a Member Services team, which consolidates the membership, professional development and public affairs departments. Zach Phillips, previously NAMM’s director of professional development, will now become director of member services. Erin Block, formerly NAMM’s associate director of registration and analytics, has been promoted to associate director of membership. You can reach Dolak at johnd@namm.org.
The International Bluegrass Music Association selected Ken White as the organization’s next executive director. Beginning Oct. 2, White will take over for Paul Schiminger, who held the role for six years before retiring in 2021 — but who then returned in March after Pat Morris’ resignation for personal reasons. White’s bluegrass bonafides include decades of writing and performing the art form in venues including Grand Ole Opry, Telluride Bluegrass Festival and the IBMA World of Bluegrass. For the last 21 years, he has led the Howerton+White integrated marketing agency, building the business to over 40 clients. Over the years he has also served as president of the Wichita Jazz Festival and co-produced a popular season concert series at Bartlett Arboretum in Belle Plaine, Kansas. White will be returning to Nashville for the IBMA gig.
Sound Talent Group hired veterans Jon Pleeter and John Lashnits as talent agents at the five-year-old independent booking agency. The LA-based Pleeter joins STG after working as vp of concerts at ICM, while New Yorker Lashnits arrives from APA. Both have client rosters that lean on the rock side of life, including Saving Abel and Saliva for Pleeter, and Destroy Boys and The Wrecks for Lashnits. STG was formed in 2018 by former UTA agents Dave Shapiro, Tim Borror and Matt Andersen, and boasts a vast — and diverse — roster that includes Calle 13, Clutch, Gwar, Hanson, Hatebreed, Hoobastank, Pierce the Veil, Story of the Year, Vanessa Carlton and many more.
Sony Music Publishing Nashville promoted Kenley Flynn to vp of creative A&R, where Flynn will be responsible for signing and developing talent, as well as driving creative opportunities on behalf of Sony Music Publishing Nashville’s roster. During his tenure at the company, Flynn has helped propel the creative success of breakout talent including Nate Smith (“Whiskey On You”), Trannie Anderson (Lainey Wilson’s “Heart Like A Truck”) and James McNair (Luke Combs’ “Going, Going, Gone”) as well as artists and writers including Madeline Merlo, David Morris, Tim Nichols, and Ben Hayslip. Flynn began his career at Combustion Music, before joining Sony in 2020 as senior director of creative A&R. “Kenley is a songwriter’s best friend,” said Josh Van Valkenburg, evp of creative at Sony Music Publishing Nashville. “Over the last few years, he’s been instrumental in building the careers of some of today’s biggest breakthrough hitmakers. This promotion is so well deserved.” –JN
Lauren Papapietro joined Warner Music Group as vp of communications for Rhino and Warner’s global catalog team. The 15-year PR veteran has the mighty task of helming publicity strategy campaigns for the catalogs of WMG/Rhino’s roster of icons, including one-namers like “Aretha,” “Frank,” “Sabbath,” “Otis,” “Madonna,” “Van,” “Halen” and… the list goes on. Pappapietro most recently served as head of publicity for Crush Music, where she worked with major acts, including WMG/Rhino artists Alanis Morissette and Green Day. Prior to that, she led publicity at Glassnote Entertainment Group. She is based in New York and reports to Kevin Gore, president of global catalog, recorded music at WMG.
ICYMI: Amazon Music’s head of hip-hop/R&B Tim Hinshaw is exiting the company to launch his own agency, Free Lunch … Recently photographed former president Donald Trump hired Gunna’s lawyer in his racketeering case in Atlanta … and longtime NPR programming executive Anya Grundmann is leaving the network after nearly 30 years.
SoundExchange said Tino Gagliardi, the newly elected president of the American Federation of Music, has joined its 18-seat Board of Directors. Gagliardi replaces recently retired AFM president Ray Hair on the board. “Tino is joining the SoundExchange Board of Directors at a pivotal time for the company and the music industry,” said Michael Huppe. “With his first-hand experience as an artist and expertise representing musicians for over 13 years, we couldn’t be more elated to welcome him to the board.”
Monument Records promoted Casey Thomas to director of marketing, publicity and creative. Additionally, Joel Beaver has been promoted to associate director of marketing. In her expanded role, Thomas will continue to oversee publicity and creative services, while taking on a more active role in marketing strategy, while Beaver will be responsible for marketing, brand partnerships, international and sync relations for the label’s roster which includes Alex Hall, Walker Hayes and Pillbox Patti. Thomas joined Monument from the Country Music Hall of Fame and Museum in 2018, and she previously served at Monument as director of PR and creative. Beaver joined Monument in 2017 as an intern and became a staffer a year later. Beaver has been in the center of marketing campaigns across the artist roster, most notably with Hayes and the buzzy “Fancy Like” campaign for Applebee’s. –JN
Partisan Records promoted Bryant Kitching to global director of communications. Previously director of publicity in the U.S., Kitching joined Partisan in 2018 and over the years has overseen press campaigns across Partisan’s entire roster, including PJ Harvey, IDLES, Fontaines DC, Laura Marling, the Fela Kuti estate, Beth Orton and more. He is based in NYC.
Nashville Notes: Space Colonel bulked up its management division by adding Jesse Schuster, Chris Mueller and Evan Hunsberger to its team. The Nashville-based entertainment company, launched by Adam Barnes and J.R. Denson in 2019, represents over 15 artists and producers, including Shooter Jennings, Jason Boland and new signee Beau Bedford. Space Colonel also launches S || C Records and is gearing up for the release of Lillie Mae’s upcoming third studio album … Black River Publishing hired Sarah Hudspeth as creative coordinator. Hudspeth will provide support to vp of publishing Rebekah Gordon and assist the creative staff in the company’s day-to-day operations … The Country Music Hall of Fame and Museum hired R.J. Smith, a former editor for Los Angeles magazine and The Village Voice. The museum also promoted Sam Farahmand to director of creative content … Leo33 welcomed Tracy Gibson as director of promotion and marketing. She previously worked as Big Machine regional promotion director.
Back in January 2020, singer-songwriter Ryan Tedder was jogging through the flats of West Hollywood while talking to his friend and investment partner Abe Burns when they struck upon an idea.
“What if you could take tranches of your favorite songs and securitize them, go through the [U.S. Securities and Exchange Commission (SEC)], invest in your favorite songs and trade them on the public market?” he recalls telling Burns. “Why can’t fans do this?”
The OneRepublic frontman and prolific songwriter behind megahits like Beyoncé’s “Halo,” Adele’s “Rumour Has It” and Leona Lewis’ “Bleeding Love” is less well known for his investing acumen. But over the last decade or so, Tedder has proved to be a successful venture capital and commercial real estate investor who owns stakes in lucrative properties like the sites of a 24-hour Walgreens on the Las Vegas strip and American Airlines’ call center headquarters in Fort Worth, Texas. “That’s all well and good,” Tedder says, but to be able to share in some of the greatest pop songs — that he didn’t write himself? That would be thrilling.
Music lovers like Tedder will soon be able to do just that. Beginning Sept. 12, music fans and everyday investors can reserve stakes in the royalty streams of more than 100 songs — written by Tedder; Diplo and the trio he co-founded, Major Lazer; and rock band American Authors — through a new music investing platform, JKBX (pronounced “jukebox”). This initial batch includes songs performed by Beyoncé, Adele, Taylor Swift, Colbie Caillat and Ed Sheeran and features by Justin Bieber, Travis Scott, Ellie Goulding, Jonas Brothers, MØ and Trippie Redd.
Like dividend-paying stocks, royalty shares acquired on JKBX’s platform will give investors the right to a slice of the income a specific song generates. The types of royalty streams offered — for example, publishing, recording and whether there are geographic boundaries attached — will vary by song and be disclosed in each offering.
Founded by Sam Hendel and John Chapman of venture capital and private equity firm Dundee Partners, JKBX aims to become the Fidelity of music investment — a platform where fans can buy, trade and sell royalty shares of songs with strong, sustained records of income. The company says all of the tracks offered will have been released over 18 months ago, with most of them older than 10 years. They include Major Lazer’s perennially streamed hit “Lean On” (it has over 1.8 billion streams on Spotify) and American Authors’ “Best Day of My Life,” a synch sensation that has been used in ads for Best Western Hotels, Ford and Jeep.
Early adopters won’t initially have to put any money down, and the reservations will be nonbinding while JKBX awaits the final approval from the SEC to make public offerings available to investors. In February, the company announced that it had partnered with GTS Securities, one of the largest Designated Market Makers on the New York Stock Exchange, to mitigate volatility and promote liquidity and competition on a secondary trading market for JKBX’s royalty shares.
JKBX has yet to choose a broker dealer or alternative trading system — it is in talks with several — and until that happens, there is no secondary market where investors can sell or trade their royalty shares.
The company says it will not set a royalty share’s initial price or determine how many shares will be made available; a separate issuer will do that. The type of Regulation A offering JKBX is attempting to provide can sell up to $75 million worth of shares in a 12-month period, which it expects to do.
Because it’s still seeking SEC qualification for its first batch of offerings, JKBX was careful to state in interviews with Billboard that it’s not offering or soliciting investors in securities and that any future offerings will provide investors with all the normal disclosures, including how much revenue a song has generated over the past three years and ongoing audited financials.
Tedder and other creators with songs on the platform won’t be directly involved in the investment process — at least for now. JKBX’s deals are with labels, music publishers and catalog funds that own the copyrights. But the company says writers with songs on the platform will get a cut of trades if they are part of its Creator Program, which includes a pool of money set aside for them.
Ryan Tedder of OneRepublic performs onstage during the Lollapalooza Paris Festival – Day Three on July 23, 2023 in Paris, France.
Sadaka Edmond/SIPA/AP Images
If JKBX clears these hurdles and its business strategy takes flight, rights holders, artists, JKBX and individual investors stand to profit from a new, potentially transformative income stream generated by the masses betting on the continued earning power of songs — an asset class previously restricted to institutional investors, private equity and music publishers. Hendel estimates the total addressable market for JKBX could reach billions of dollars based on the music industry’s growth trajectory and the 60 million individual investment accounts that Americans hold.
In the meantime, sources say the company has taken on a top-shelf collection of music company investors such as Spotify, Live Nation, YouTube, Red Light Management and Bertelsmann Digital Media. Financial backers include Mike Novogratz’s Galaxy Digital, Valor Equity Partners, and Tyler and Cameron Winklevoss, sources say. According to a recent SEC filing, JKBX raised $16 million from investors in January alone.
“I see it as a potential game-changer in the music rights world,” says Round Hill CEO Josh Gruss (who is not an investor).
JKBX is not the first company to test these waters. Masterworks and AcreTrader both launched in 2018 as marketplaces where the average person could invest in top-end commodities by purchasing fractional shares of securitized fine art or farmland to earn returns. In music, Royalty Exchange, SongVest and Royal have all been doing something similar for years, but industry insiders and artists say that JKBX’s backers, song catalog and SEC validation give it a serious leg up.
Its launch also comes at a time when fans wield more power than ever to send old songs viral again, by using snippets of them in TikTok videos, for example, and may therefore have more interest in owning a share of these songs’ earnings than they did in the past.
Sources say JKBX has secured the rights to hundreds of hit songs worth over $4 billion, substantially more than prior companies in this space, and is in talks with several major rights holders, including Hipgnosis, BMG and at least one of the majors.
JKBX says it is not working directly with songwriters because it’s currently focused on securing deals that can deliver a diverse list of assets up front, though it is open to working with artist-owned catalogs in the future. Instead, it divides music assets into royalty shares and submits those shares to the SEC for qualification as Regulation A offerings. Every time an investor buys, trades or sells shares on its platform, JKBX earns a commission.
While the artist is not directly involved in the offering or investment, JKBX CEO Scott Cohen says the company actively tries to make original recording artists aware of its listings and get the artists’ blessing for songs that appear on the platform.
DJ-producer Diplo, who partnered with Royal in March 2022 to sell tokens linked to the streaming revenue of his song “Don’t Forget My Love,” says JKBX’s “business-minded” leaders and their embrace of conventional market rules — only SEC-registered and -regulated investments will be offered — convinced him the platform stands the best chance of succeeding.
“This has major artists,” he says. “It has the best chance of winning because there is real cash flow in music. There is already a money chain — and it is really SEC-regulated.” (JKBX currently is not involved with blockchain or non-fungible tokens — technologies other startups in this space have used.)
Ape Drums, Diplo and DJ Walshy Fire of Major Lazer attend Preakness 146 hosted by 1/ST at Pimlico Race Course on May 15, 2021 in Baltimore, Maryland.
Paul Morigi/Getty Images
Tedder says that when Chapman and JKBX approached him with their pitch, “I think they got maybe two or three sentences in before I said, ‘Hold on a minute. You’re pitching me on the exact same idea that I had.’ ” He says he also told them, “ ‘The devil’s in the execution and your partners — getting [Universal Music Group (UMG) chairman/CEO] Lucian Grainge, getting giant funds like Hipgnosis. Whoever gets the largest collection of catalogs first, gets the signoff from the SEC first, jumps through all the hoops first is the winner.’ And they’re like, ‘Yeah, that’s us.’ ”
An early example of the financialization of music assets came in 1997, when David Bowie partnered with the Prudential Insurance Company and attorney David Pullman to raise $55 million through the sale of what became known as Bowie Bonds. It was the first example of an artist getting investors to bet on the income a back catalog would generate.
“This is a natural progression,” Pullman, chairman/CEO of The Pullman Group, wrote in an email. “The interest in investing has continued since these first … landmark deals where you have seen the biggest, savviest investors enter the market to recognize this asset class of music that keeps growing. It’s only natural [that] investors and fans would want to invest in their favorite songs. Song by song gives more choice.”
JKBX’s idea to allow investors to create customized portfolios of songs follows the recent launch of several exchange-traded funds, including David Schulhof’s MUSQ, where investors buy shares to gain exposure to 48 different music companies, including Warner Music Group (WMG), Spotify and Live Nation, and TUNE, a fund providing exposure to 50 music and digital companies, including UMG, Netflix and The Walt Disney Company.
“As long as the deals and investors are selective,” Pullman wrote, royalty streams “can be a sound investment.”
The JKBX interface through which investors can buy stakes in song royalty streams.
Courtesy of Jukebox
One key difference between owning stock in publicly traded companies and royalty shares in music assets is that the latter doesn’t give the investor any right to say how a song is marketed or promoted.
“You’re basically buying an income stream. You have no control over or input into how the song is used,” says Don Passman, renowned copyright expert, lawyer for Taylor Swift and author of the music industry handbook All You Need To Know About the Music Business. “The prices will be higher [than more conventional investments],” he explains, “because of two things: the sexiness of it and being able to buy it in little bitty pieces. It’s a little like fantasy sports, except with real money.”
Hendel and Cohen like the fantasy sports comparison for a couple of reasons: Fans who invest in sports tend to spend more money overall on merchandise and experiences linked to games, and labels are eagerly searching for ways to find and reach their artists’ superfans.
“We view this as a way to connect people more deeply to their favorite artists and elevate the catalog,” says Hendel. JKBX’s market research tells it superfans are one of their three target audiences. “A lot of our partners are looking at this not as a way to make money — the real thing is fan engagement.”
Cohen acknowledges that selling the platform’s potential to investors comes with a substantial learning curve, but he has successfully schooled the industry on similarly challenging concepts. As co-founder of groundbreaking digital music distributor The Orchard, he helped administer the first music downloads to mobile phones when consumers were still buying CDs.
“Trying to explain to people that they would be not only consuming music on their mobile device, they would be creating and engaging — just impossible,” Cohen says. “They’d go, ‘You want to download music? Why? I have a six-CD changer in my car.’ ”
Between 1995 and 2003, The Orchard racked up $3 million in debt. “We owed everybody money,” says Cohen. “We owed every artist money, our employees, the electric bill, the rent. I had lost all of my possessions.” And the IRS was hounding the company. At one point in the early 2000s, he recalls living out of The Orchard’s Lower East Side office subsisting on a diet of beans and rice cooked on a hot plate in the pantry. “I discovered there is a level of poverty; that zero, it turns out, is not the bottom,” he says. “It goes much deeper.” Cohen adds, “It was really dark times, but I was super confident in this space.”
Scott Cohen, JKBX CEO
Susanna Cappellaro
When Apple’s iTunes Store launched in 2003, The Orchard owned roughly one-third of the digital rights to all of the songs in it. The first check the company received exceeded its total 2002 revenue. The next month, that figure doubled, Cohen says. “It was confirmation of eight years of incredible struggle.”
The Orchard paid off all of its debts a short time later thanks to a several-million-dollar infusion from media investor Daniel Stein, who Cohen says gave him sage advice: “He said, ‘You made it this far, but now you’re going to have competition. Everyone is going to pour into this space, and all that hard work to get into the lead will evaporate overnight because new people will come in fully capitalized without any debt and they’ll eat your lunch.”
This time around, Cohen is the new guy that Stein warned him about, and he claims that puts JKBX at an advantage. “With The Orchard, we were first. With JKBX we are — whatever. Twentieth,” he says. “You enter the space without all the baggage of the past, you learn from everyone else, you’re fully capitalized and, wow, you can do a lot of damage.”
However, Cohen will have to manage investors’ expectations for returns, which will be highly dependent on how quickly JKBX can achieve scale.
Company representatives decline to reveal how many customers it needs to break even, but Cohen, who runs JKBX’s 35-person team remotely from his London home, reiterates that he’s not concerned about that number. “We’ve modeled the company around a very modest growth curve — like ridiculously small numbers of people. We have enough runway to last us a very, very long time without me having to lose all my possessions and become homeless again.
“When I look at the next year to 18 months, it’s a long, slow, educational curve where we just march forward month after month, quarter after quarter on a very clear path of what we want to do and not get stressed that every rights holder, artist and consumer isn’t on board on day one,” he continues. “It is going to take a moment for this to catch on, and as long as we are seeing the growth, we feel we are in the right place.”
Cohen has a preternatural confidence and comfort in technology’s ability to improve the human experience. In addition to founding The Orchard and later helping WMG “see over the horizon” as its chief innovation officer, he co-founded wearable technology company CyborgNest in 2017 and became one of its test subjects, implanting a device called NorthSense into his chest that vibrated when he faced magnetic north.
“We only know what we know because of the sensory information that comes into our brains,” he says. “What if we give [the brain] a new signal? How would your brain interpret it? The thought was that it would make me more human, not less.”
Cohen attempted to implant three different devices, but his body ultimately rejected all of them. While he hopes to resume these explorations, he says the opportunity to run JKBX was irresistible, and he doesn’t need a wearable gadget to navigate the royalty share business: “We don’t have a road map, but we have a compass, and that’s all that matters. We are doing something new, and I know where we’re headed.”
It is too soon to project what JKBX investors can expect in terms of return on their investment, but two sources estimate royalty shares will provide a base rate of return of around 3%. By comparison, the S&P 500 Index is up about 14% so far this year, and the yield on the ultra-safe 10-year U.S. Treasury notes are at 15-year highs of 4.35% (as of Aug. 21). While JKBX’s royalty shares are a fledgling asset class compared with both of those investments, it is worth noting that on average, the stock price for companies that filed initial public offerings in 2022 rose by an average of 10%, and Royalty Exchange, which launched over a decade ago, now says it provides annual returns to investors of 13.3% a year.
Hipgnosis Songs Fund, a pioneer in providing investors exposure to music royalties through its publicly listed trust, said in July that its investors have earned 27.9 cents per share of dividends since its July 2018 IPO — a 69% net asset value return to shareholders.
Many factors affect investor returns, including market conditions, initial price, demand on a secondary market, how long an investor holds an asset and when the investor buys it. JKBX thinks this will appeal to superfans, people looking to diversify their portfolios, and crypto and Web3-savvy investors.
JKBX and financial experts argue that the rules of efficient markets incentivize issuers to price royalty shares competitively in order to create demand and foster the success of the platform.
When JKBX executives pitch rights holders and artists, they highlight older songs that achieved fresh success from viral moments on TikTok and Spotify — songs like Miguel’s 2010 hit “Sure Thing.” JKBX presents a new way to cash in on catalog-caliber songs and could help identify fans who share and promote them most, JKBX executives say. If users agree to it, JKBX sees a future where artists and labels could directly connect with superfans on the platform, potentially driving future social media revivals.
In the meantime, publicly traded music trusts like Hipgnosis, whose stock is trading at a discount, and labels, which are under investor pressure for the high prices they paid to acquire catalogs, can use JKBX “as an outlet to raise liquidity to justify their acquisitions and a higher share price to the public,” Pullman says.
As for the average investor, Passman is skeptical that they will earn high returns from JKBX, given the price record labels and catalog funds have had to pay to acquire hit song catalogs in recent years.
“It is unlikely that consumers will be able to get [royalty shares] at an initial price that would have any kind of decent return just because the multiples will be high and because there is a sexy value to owning a piece of your favorite artist’s song,” Passman says, cautioning that returns will be song-specific and lesser-known songs might present better returns.
Larry Miller, director of New York University’s Music Business Program at the Steinhardt School, says that JKBX’s success hinges on “the belief that [royalty shares] will be worth more in the future than they are worth today, and having in place a transparent, fast and highly liquid secondary market is essential in having this be more than an interesting, fun and curious hobby for fans.”
If JKBX can get that in place, Miller says, “there is a great deal of potential impact here.”
This story will appear in the Aug. 26, 2023, issue of Billboard.