Business
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Amid the offerings at the LA3C festival that took place in downtown L.A. this past weekend (Nov. 11-12), a presentation from the Saudi Arabia Music Commission put forth a broad view of the music industry currently being developed in the country.
Hosted by VIBE editor-in-chief Datwon Thomas, panelists included Paul Pacifico, CEO of the Saudi Music Commission; Ahmad Alammary, chief creative officer for the Saudi electronic music festival Soundstorm; Gigi Arabia, the founder/CEO of Saudi heavy metal organization Heavy Arabia; Mexican-American songwriter, producer and academic Fernando Garibay, who has worked in the Kingdom; and Saudi singer-songwriter Tamtam.
Saudi Arabia has seen significant social changes in the last decade, as the government has eased restrictions around formerly prohibited activities like playing music in public and co-ed gatherings. These new freedoms have helped lay the groundwork for the formation of a music industry, with the bulk of the panel discussion focused on how this industry is currently being built from scratch.
“We have huge pent-up supply of creativity and music,” said Pacifico, a Brit who joined the Music Commission as CEO in January 2023. “We have huge pent-up demand among audiences that have grown up wanting to go to festivals, concerts, events, to listen to music and enjoy themselves.”
“But we lack enablers,” Pacifico continued. “So over the next one year, three years, five years, it’s going to be all about building the structures that connect those dots that allow people to express themselves creatively and to build platforms that will enable Saudi artists to tell their stories in a way that will be heard around the world.”
“A lot of people working in the [global music] industry ask how we can fix our industry, or how we can rethink our industry,” added Garibay, “but I don’t think we’ve ever had in the history over the past 100 years a chance to think about, ‘How would you start over? How would you start from a new perspective?’”
The discussion emphasized that while Saudi Arabia does not yet have venues, a collecting society and other essential infrastructure, this clean canvas is allowing key players to, Alammary said, “shape it the way we want to learn from the lessons around the world and actually serve artists.”
Pacifico cited the major opportunities for artists in Saudi Arabia with respect to the country’s demographics, saying that “70% of the people are under 35 years old, and the country has 98% Internet penetration. So you have a young, connected, dynamic and unbelievably energized population.”
The panelists agreed that this audience and the emerging industry combined are creating huge opportunities for Saudi artists, as formerly underground scenes are coalesced and, as Alammary said, “unveiled.” These formerly underground scenes include those around genres like electronic music, the focus of the Saudi mega-festival Soundstorm that launched in 2019, along with hip-hop, heavy metal and more.
“All of the events took place in super unconventional places,” Arabia said of the Saudi metal scene before music-related restrictions were lifted. “We have something in Saudi called rest houses, little houses in the middle of nowhere for people to rest in if they’re going on a road trip, where events took place.”
“We’re still growing it event by event,” Arabia added in regard to the country’s current aboveground metal scene. “With the help of the Music Commission and its leadership, now we have been able to go and represent it in the genre globally.” She foresees Saudi Arabia becoming a “hotspot for metal heads” in a fashion similar to the Nordic region.
The Music Commission exists under the Saudi Ministry of Culture, a government entity focused on expanding the country’s entertainment sector through endeavors into music, sports, film and more. These entities exist as part of Vision 2030, the Saudi government’s plan, it says, to diversify the country’s economy, society and culture. (The LA3C panel did not touch on the challenges of building an industry amid the still-existing restrictions of the Saudi government, which does not protect freedom of speech and which, despite some recent advancements, still imposes myriad restrictions on women.)
“There’s an incomplete picture. It’s like a jigsaw puzzle with pieces missing,” Pacifico said of the country’s current industry, “But we see record labels coming up, we see management companies growing. The most amazing thing is the whole music industry is going through an accelerated time of massive change, and Saudi Arabia as a country is going through a massively accelerated time of change. So nothing’s taken for granted… and we can just think again about how to do things better, quicker, more efficiently.”
The presentation also included performances from Tamtam, Saudi pop artist Mishaal Tamer — who released his debut EP in 2020 via RCA Records and opened for OneRepublic on tour this past summer — and Riyadh-based producer and songwriter NTITLED.
LA3C was built to highlight communities creating culture around the world. LA3C created a paid partnership with the Saudi Music Commission to highlight the cultural shift in the commercial entertainment sector and with regional artists that have a presence in the United States and Saudi Arabia. LA3C is owned by Penske Media Corporation which is also the parent company of Billboard.
Attorneys for Eothen “Egon” Alapatt are firing 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.
MF Doom’s widow sued last month, claiming that Egon (a label exec and a former collaborator with the famed rapper) wrongfully took possession of the notebooks as Doom spent a decade in his native England ahead of his shocking death in 2020, and has refused to return them ever since.
But in a strongly worded response filed in court Tuesday (Nov. 14), Alapatt’s attorney, Kenneth Freundlich, sharply disputed those allegations, saying that the “frivolous” case contained “knowingly false statements” about his client.
“Plaintiffs’ complaint is the continuation of a year-long smear campaign filled with baseless and libelous attacks on Alapatt’s integrity and character,” Freundlich wrote.
Doom, whose real name was Daniel Dumile, traveled to the United Kingdom in 2010 to perform but was later prohibited from returning to the United States due to immigration issues. He remained overseas until his sudden passing on Oct. 31, 2020, at the age of 49, from rare complications related to blood pressure medication.
In her lawsuit, Doom’s widow, Jasmine Dumile Thompson, says that when the rapper left the country, he left behind a collection of 31 “rhyme books” in his Los Angeles studio. She says they include “musings and other creative ideations,” including original lyrics to released music, lyrics to unreleased songs and song ideas — a veritable treasure trove for Doom fans and hip-hop historians.
Thompson’s lawyers say that Alapatt “took advantage of Doom’s being out of the country” to buy the notebooks from his landlord for $12,500 without ever consulting the rapper. When Doom himself asked for their return, the lawsuit claims, Alapatt “delayed, obfuscated and deflected” and then ultimately refused to return them. And since Doom’s death, Thompson says Alapatt has made the “astonishing” demand that the notebooks must be donated to an archive — a choice that she says runs contrary to Doom’s wishes that they remain “secret and confidential.”
“Who is Alapatt to decide that the notebooks containing the personal and intellectual property of Doom, the rights to which are plaintiffs’ alone, must be donated to an archive against the will of the deceased artist and his surviving family?” Thompson’s lawyers wrote in their complaint. “Setting aside the fact that the notebooks were stolen, Alapatt’s arrogant paternalism and extreme tone-deafness in trying to dictate that the notebooks be donated is astonishing.”
In Tuesday’s response, Alapatt’s lawyers admit that he took possession of Doom’s materials but denied that Doom had actually been their legal owner when he died. The real owner, they say, was the studio landlord because the notebooks had been left behind at his property and a large amount of rent had been left unpaid. If not for Alapatt’s actions, his lawyers argued that the landlord “would have either sold or possibly destroyed the notebooks.”
“Contrary to the knowingly false statements contained in the complaint, Alapatt saved and preserved the notebooks after he purchased them from DOOM’s former landlord who owned and controlled the notebooks because DOOM had abandoned his studio and was in years’ long arrears on rent,” Freundlich wrote in the court documents.
Alapatt’s lawyers say he later repeatedly tried to make arrangements with Doom and his reps to return the materials during his lifetime, but that the artist had failed to follow up. At one point, his attorneys say, Doom “seemed to have completely forgotten his prior discussion with Alapatt” about returning the notebooks.
Tuesday’s response confirms one key allegation of Thompson’s lawsuit: That Alapatt had said he would only return the notebooks if a digital copy of them was donated to an archive. (In the filing, his lawyers say he suggested “the Cornell Hip-Hop Archive, the Smithsonian, or another accredited archive of their choosing.”)
But his lawyers argue that the request was a fair one because donating the materials would help protect “precious artifacts of hip-hop history” and allow “scholars and researchers to study DOOM’s creativity and further entrench his creative genius — not just in hip-hop but in American history.”
“Rather than accept Alapatt’s generous offer,” Freundlich writes in Tuesday’s filing, “plaintiffs chose to continue their hurtful, and defamatory attacks against Alapatt by filing this frivolous complaint.”
Attorneys for Thompson did not immediately return a request for comment on Wednesday.
Creative agency, record label and artist-services company Big.Ass.Kids has launched a new hub on its website called the Neighborhood, a sort of digital universe where artists, writers, music fans and music industry executives can meet, share their work, tap into creative and artist services and even buy and sell books and music.
The Neighborhood, which is live now on the Big.Ass.Kids website, is a fully-illustrated world with its own characters and storefronts, each of which represents a different functionality for the ecosystem that B.A.K. has created.
One storefront, called the B.A.K. Projects, is a home to showcase the company’s creative work, which has included campaigns for the new Rick Ross and Meek Mill album Too Good to Be True; work with Lion Babe, Smino and Bishop Nehru and MF Doom; and its label compilation, See You Next Year in partnership with Pigeons & Planes, which came out this year and was executive-produced by Mike Dean. (A second volume, due out next year, was recently recorded at Rick Rubin’s Shangri-La Studios in Malibu.) Another, called Ralph’s Used & Rare Books, is a home for artist and executive interviews, industry guides for artists, music-inspired fiction writing and even actual used music book sales. A third, called the Music Man shop, showcases B.A.K.’s label releases, projects by the artists and executives they’ve worked with and audio interviews with artists and execs; it’s also a place for selling used vinyl. Each storefront has its own characters who live and work there, with their own back stories to tell.
Probably most significant for the industry are the Kat Cafe and The Playground. The Kat Cafe is home to B.A.K.’s artist services hub, where artists can go and browse through B.A.K.’s suite of services including management consultation, rollout support, tour management, synch licensing, artist development tools, content and design services, experiential marketing, brand partnerships and radio promotions from B.A.K.’s team. The Playground is a place where artists can find executives to help execute on the projects for which they need help, serving as a sort of vetted industry database for those looking to handpick their own teams based on their individual needs. (Conversely, it’s also a place where freelance industry executives can advertise their services.)
Big.Ass.Kids was formed in 2021 as a label and creative agency focused on collaborative projects, with its See You Next Year album in partnership with Pigeons & Planes and distributed by ADA featuring contributions from Ben Reilly, Teezo Touchdown, Ekkstacy, Wallice and more. The album rolled out with an intro by Dean and a partnership with Converse and will be the first in a series of collaborative albums that the company is aiming to release. On the agency side, B.A.K. worked on the Meek and Ross album through an interactive marketing plan involving a contest through which fans could win $50,000.
“We’ve been ideating on ways to become more impactful and disruptive since our launch,” founder and creative director le’Roy Benros told Billboard in a statement. “We’ve evolved into a creative ecosystem that supports and serves artists, creates moments and builds community. Our newly launched interactive Big.Ass.Kids neighborhood redefines how collaboration between artists and music professionals occur, creates unique ways for music discovery to happen; ultimately, it’s an exciting universe where music lovers, creatives and professionals can unite.”
Moises, an AI music and audio start-up, has partnered with HYPERREAL, a visual effects company, to create a “proprietary digital human asset” called Hypermodel. This will allow artists to create their digital versions of themselves for marketing, creative and fan engagement purposes.
HYPERREAL has already been collaborating with musicians since 2021, when he worked with Paul McCartney and Beck on their music video for “Find My Way.” In the video, Beck went undercover as a younger version of 81-year-old McCartney, using HYPERREAL to swap and de-age their faces.
Moises is a popular AI music and audio company that provides a suite of tools for musicians, including stem separation, lyric transcription, and voice synthesis.
According to the press release, Moises and HYPERREAL believe this collaboration will especially help the estates of legacy artists to bring the artist’s legacy “to life” and will allow artists to sing or speak in another language using AI voice modeling provided by Moises, helping to localize songs and marketing content to specific regions.
Translations and estate or legacy artist marketing are seen as two of the most sought after new applications of AI for musicians. Last week, pop artist Lauv collaborated with AI voice start-up Hooky to translate his song “Love U Like That” into Korean as a thank you to his steadfast fanbase in the region. This is not the first time AI has been used to translate an artist’s voice — it was first employed in May by MIDNATT, a Korean artist who used the HYBE-owned voice synthesis company Supertone to translate his debut single into six languages — but Lauv’s use of the technology was the first popular Western artist to try it.
Estates are starting to leverage AI as well to essentially bring a late artist back to life. On Tuesday, Nov 14, Warner Music announced plans to use AI to recreate the voice and image of legendary “La Vie En Rose” singer, Edith Piaf, for an upcoming biopic about her life and career. Over in Korea, Supertone remade the voice of late South Korean folk artist Kim Kwang-seok, and Tencent’s Lingyin Engine made headlines for developing “synthetic voices in memory of legendary artists,” like Teresa Teng and Anita Mui as a way to revive interest in their catalogs.
“Moises and HYPERREAL are each best-in-class players with a history of pushing creative boundaries enabled by technology while fully respecting the choices of artists and rights holders,” says Moises CEO Geraldo Ramos. “As their preferred partner, we’re looking forward to seeing the ways HYPERREAL, can leverage Moises’s voice modeling capabilities to add incredibly realistic voices to their productions.”
“We have set the industry standard and exceeded the expectations of the most demanding directors and producers time and time again,” says Remington Scott, founder and CEO of HYPERREAL. “In addition to Moises’s artist-first approach, the quality of their voice models is the best we’ve heard.”
Last spring, executives at Onex, AEG’s private equity partner in facility management company ASM Global, notified AEG leadership of their plans to trigger a clause in their agreement that allowed Onex to sell its 35% stake in ASM. Under the terms of the deal, AEG could either buy out Onex or match competing offers.
AEG officials instead elected to get out too, and over about half a year worked with Onex to identify a buyer for all ASM Global. On Nov. 3, Onex and AEG jointly announced that Legends Hospitality was buying ASM, the country’s leading venue management company.
Onex CEO Bobby Le Blanc told investors on a Nov. 10 earnings call that the decision to sell its ASM ownership stake for $2.3 billion was prompted by the company’s rebound in value, quickly recovering in the post-pandemic period after seeing its value dramatically drop when concerts shut down from 2020-2021 due to COVID-19.
The final sale price would double what ASM Global was worth in 2019 when AEG and Onex merged their SMG facility management holdings to create the world’s largest facility manager, Le Blanc confirmed.
Still, AEG’s decision to sell surprised many in the touring industry who had followed the company’s growth in that space.
For one, the sale made AEG a much smaller company, reducing its global footprint from 350 facilities under management to just nine — all of which AEG either owns or partially owns. And unlike Onex, as the world’s second largest concert promoter, AEG was able to enjoy significant synergies from owning ASM that other companies could not. AEG could more easily book its touring shows at ASM-managed facilities, expand its AXS ticketing platform to ASM-managed venues and sell sponsorships through its global partnerships division.
AEG and Onex merged their facilities holdings 14 months after Onex acquired SMG, AEG’s longtime facilities rival. In so doing, ASM Global became the world’s largest venue management company, with little to no competition for potentially large lucrative government contracts. Facility management has long been a predictable contracts business, in which city and county governments would pay SMG or AEG a fee to manage publicly owned venues and split any profits the private companies helped generate.
Merging the industry’s two largest competitors into ASM Global gave Onex and AEG unprecedented scale in the capital-intensive space and access to lucrative contracts. But the honeymoon didn’t last long. Oak View Group, which was founded in 2015 by former AEG CEO Tim Leiweke — who made his own failed bid to buy SMG — began growing as a serious competitor, and peeled away a number of big-name management clients away including PPG Paints Arena in Pittsburgh, the BOK Center in Tulsa and the sprawling McCormick Place convention center in Chicago. While the concert business’ post-pandemic boom has brought impressive profits, a source in facility management says that increased competition and inflation have been eating up ASM’s margins. Additionally, rising interest rates have made it difficult for firms like ASM to offer up capital investments in return for long-term management contracts, and much of the business’ growth was coming from new international venue projects, which were more costly to service.
Most recently, the bulk of AEG’s growth has been in its tour promotion business globally and through its theaters and clubs division. Since the end of the pandemic, both AEG and Live Nation have been looking to expand their network of smaller venues that they manage exclusively.
The company’s sweet spot is “locations with capacities of 1,500 to 5,000,” Rick Mueller, president of AEG Present North America, told Billboard last month. While most arena management deals do not include exclusive booking agreements because no single promoter can provide arenas enough content on their own to sustain a large facility, exclusively programming a club or theater can be much more profitable due to the leverage the contract holder has over other promoters wanting to book the venue, requiring promoters to cut them in on show deals. Now, AEG likely has more than an extra billion dollars to invest in this strategy, should it choose to do so.
Last spring, executives at Onex, AEG’s private equity partner in facility management company ASM Global, notified AEG leadership of their plans to trigger a clause in their agreement that allowed Onex to sell its 35% stake in ASM. Under the terms of the deal, AEG could either buy out Onex or match competing offers.
AEG officials instead elected to get out too, and over about half a year worked with Onex to identify a buyer for all ASM Global. On Nov. 3, Onex and AEG jointly announced that Legends Hospitality was buying ASM, the country’s leading venue management company.
Onex CEO Bobby Le Blanc told investors on a Nov. 10 earnings call that the decision to sell its ASM ownership stake for $2.3 billion was prompted by the company’s rebound in value, quickly recovering in the post-pandemic period after seeing its value dramatically drop when concerts shut down from 2020-2021 due to COVID-19.
The final sale price would double what ASM Global was worth in 2019 when AEG and Onex merged their SMG facility management holdings to create the world’s largest facility manager, Le Blanc confirmed.
Still, AEG’s decision to sell surprised many in the touring industry who had followed the company’s growth in that space.
For one, the sale made AEG a much smaller company, reducing its global footprint from 350 facilities under management to just nine — all of which AEG either owns or partially owns. And unlike Onex, as the world’s second largest concert promoter, AEG was able to enjoy significant synergies from owning ASM that other companies could not. AEG could more easily book its touring shows at ASM-managed facilities, expand its AXS ticketing platform to ASM-managed venues and sell sponsorships through its global partnerships division.
AEG and Onex merged their facilities holdings 14 months after Onex acquired SMG, AEG’s longtime facilities rival. In so doing, ASM Global became the world’s largest venue management company, with little to no competition for potentially large lucrative government contracts. Facility management has long been a predictable contracts business, in which city and county governments would pay SMG or AEG a fee to manage publicly owned venues and split any profits the private companies helped generate.
Merging the industry’s two largest competitors into ASM Global gave Onex and AEG unprecedented scale in the capital-intensive space and access to lucrative contracts. But the honeymoon didn’t last long. Oak View Group, which was founded in 2015 by former AEG CEO Tim Leiweke — who made his own failed bid to buy SMG — began growing as a serious competitor, and peeled away a number of big-name management clients away including PPG Paints Arena in Pittsburgh, the BOK Center in Tulsa and the sprawling McCormick Place convention center in Chicago. While the concert business’ post-pandemic boom has brought impressive profits, a source in facility management says that increased competition and inflation have been eating up ASM’s margins. Additionally, rising interest rates have made it difficult for firms like ASM to offer up capital investments in return for long-term management contracts, and much of the business’ growth was coming from new international venue projects, which were more costly to service.
Most recently, the bulk of AEG’s growth has been in its tour promotion business globally and through its theaters and clubs division. Since the end of the pandemic, both AEG and Live Nation have been looking to expand their network of smaller venues that they manage exclusively.
The company’s sweet spot is “locations with capacities of 1,500 to 5,000,” Rick Mueller, president of AEG Present North America, told Billboard last month. While most arena management deals do not include exclusive booking agreements because no single promoter can provide arenas enough content on their own to sustain a large facility, exclusively programming a club or theater can be much more profitable due to the leverage the contract holder has over other promoters wanting to book the venue, requiring promoters to cut them in on show deals. Now, AEG likely has more than an extra billion dollars to invest in this strategy, should it choose to do so.
The bitter legal battle between Sean “Diddy” Combs and alcohol giant Diageo over their soured tequila venture is going to be paused until at least next spring, an appeals court says.
In a ruling on Tuesday, a panel of judges on New York’s appellate division granted Diageo’s request for a so-called stay of the lawsuit, in which Combs accused the company of racism and failing to adequately support his DeLeon brand of tequila.
Diageo’s attorneys asked for the pause while they try to convince the appeals court to overturn a ruling this summer for Diddy and send the case to private arbitration, which would negate the need for continued litigation. Combs’ attorneys had called Diageo’s request a “desperate attempt to delay judicial scrutiny for its discriminatory conduct.”
Tuesday’s decision means any progress in the underlying case will be paused until at least April, which is when the appeals court said Diageo’s appeal must be ready to be heard.
Following the ruling, Combs’ attorney John Hurston told Billboard: “Once the appellate court considers the actual merits, we are confident that they will reach the same conclusion as two separate judges already: that Diageo can’t avoid a public trial.”
A spokeswoman for Diageo did not immediately return a request for comment.
Combs sued in May, claiming Diageo breached his partnership deal for DeLeon Tequila by failing to properly support the brand. But he also went a lot further than that, leveling accusations of racism and claiming Diageo had treated his product line “worse than others because he is Black.”
“Cloaking itself in the language of diversity and equality is good for Diageo’s business, but it is a lie,” Combs’ lawyers wrote. “While Diageo may conspicuously include images of its Black partners in advertising materials and press releases, its words only provide the illusion of inclusion.”
The case claimed that Diageo had “typecast” his DeLeón Tequila as a “Black brand” that could only be sold to “urban” consumers, harming its sales and leaving it lagging behind competing Diageo brands like Casamigos and Don Julio.
Diageo responded a month later, calling the lawsuit a “bad faith, sham action” filed by a star who had “amassed nearly one billion dollars” from their partnership but now wanted to “extract” billions more.
“These allegations are nothing more than opportunistic attempts to garner press attention and distract the court from the fact that plaintiff’s breach-of-contract claim is entirely without merit,” the company’s attorneys wrote. “Diageo categorically denies these accusations.”
Diageo demanded that the case be sent to private arbitration, citing a provision in Diddy’s partnership contract that they said required such disputes be handled out of court. The company argued that, if Diddy’s “inflammatory rhetoric” about racism was removed, the case was nothing more than a “garden variety” business dispute that must be arbitrated.
But in September, the judge overseeing the case rejected that argument, meaning the case would move forward in state court, with the trial open to the public.
Diageo quickly appealed that ruling, and asked for a stay to prevent the case from moving forward while the appeal played out. Without a pause, the company said it faced “irreparable harm” because it would be forced to “arbitrate and litigate the same issues at the same time.”
After Tuesday’s ruling granting that request, the case will not proceed until the appellate court rules on Diageo’s appeal. Tuesday’s order said the appeal must be “perfected for the April 2024 Term of this Court,” but it’s unclear if that means the case will be decided by then, or merely argued and briefed.
Michael Kushner, Atlantic Records’ executive vp of business & legal affairs/general counsel, will receive the 2024 Entertainment Law Initiative (ELI) Service Award, which is given each year to an attorney who has demonstrated a commitment to advancing and supporting the music community through service.
The award will be presented at the Recording Academy Entertainment Law Initiative event at the Beverly Wilshire Hotel in Beverly Hills, Calif. on Friday, Feb. 2, 2024, two days before the 66th annual Grammy Awards. Michelle Jubelirer, Capitol Music Group chair/CEO, will deliver the keynote address.
“Michael’s dedication to the music industry and his service to the Academy’s Entertainment Law Initiative make him an exceptionally deserving recipient of the ELI Service Award,” Harvey Mason jr., CEO of the Recording Academy, said in a statement. “We look forward to celebrating his accomplishments at the 26th Annual ELI Grammy Week event, and hosting Michelle — a trailblazing woman in music — as the keynote speaker as we gather with the professionals and students making an impact in entertainment law.”
The recipient of the Service Award is selected each year by ELI’s executive committee.
Peter T. Paterno was the Service Award honoree earlier this year. Los Angeles mayor Karen Bass, then newly inaugurated, gave the keynote address.
The ELI event will also celebrate the winner and two runners-up of the Entertainment Law Initiative writing competition, co-sponsored by the American Bar Association (ABA), which challenges students in Juris Doctorate (JD) and Master of Laws (LLM) programs at U.S. law schools to research a pressing legal issue facing the modern music industry and outline a proposed solution in a 3,000-word essay. A $10,000 scholarship is awarded to the author of the winning paper, and a $2,500 scholarship is awarded to two runners-up. The winning paper will be published in the ABA’s journal, Entertainment & Sports Lawyer.
The winner will also receive travel and tickets to Los Angeles to attend the 66th Annual Grammy Awards, MusiCares Person of the Year and the ELI event. The contest is open to JD and LLM candidates at U.S. law schools. Students have until Jan. 3, 2024, to enter the contest. See official rules, detailed prize packages and deadlines at recordingacademy.com/eli.
Individual tickets and a limited number of discounted student tickets to the ELI event will go on sale later this month.
Now that the Hollywood actors’ strike is over, music supervisor Justin Kamps can afford to keep his 3-year-old daughter in daycare. “Things were getting a little bit scary these last couple months,” says Kamps, who picks songs for Bridgerton, Grey’s Anatomy and other hit TV shows. “We were going through the financials and cutting back whatever we can.”
SAG-AFTRA’s 60,000 members voted to approve a deal with studios last Friday, after halting work for nearly four months, following a screenwriters’ strike that lasted from early May to late September — both of which were devastating not just to Hollywood but the $2 billion music-synch industry. “That’s been quite a dark thing,” Stephanie Diaz Matos, head of music supervision for writer-actress Issa Rae‘s music company Raedio, told Billboard in July.
With Hollywood going back to work, TV shows and movies have already resumed sending out briefs to publishers and record labels requesting songs for key dramatic moments and soundtracks. “It’s definitely a relief,” says Alison Dannenberg Frost, vp of film and TV creative for music publisher peermusic. “We saw a slowdown on the creative side and licenses coming in the door. We really just started seeing it affecting our monthly numbers.” The synch business makes up 50% of Spirit Music Group’s publishing revenue, according to Amy Hartman, the company’s senior vp of creative services, film and TV music, who adds, “It’s incredibly important.”
Had the strikes continued much longer, Spirit would have had to consider cutbacks and “do some reevaluating,” Hartman says. “Thankfully, we’re pretty lean and mean, so we weren’t forced to face that question.”
By contrast, music supervisors for films and TV shows are generally freelance contractors and had to scramble to stay afloat financially during the strikes. Laura Webb, a supervisor for Love at First Sight, Monster High and other shows, spent the first month of the strikes on post-production for existing shows, but one of them wound up getting canceled and cut the pay for that job in half. “We have no protections. We were expecting to get that money, and we just lost it,” she says. “The last week has been slower, for sure — the slowest it’s been. But hopefully good timing for things to turn around.”
Webb and her colleagues faced a separate setback over the summer, when the National Labor Relations Board ruled against part-time freelance Netflix music supervisors who’d requested a union certification election in October 2022. After Netflix refused to recognize the union, the supervisors argued they needed collective-bargaining power to improve their financial conditions: “Their responsibilities have expanded, their conditions have deteriorated, and their pay has stagnated,” the International Alliance of Theatrical Stage Employees, which collaborated with the Netflix employees, declared at the time. But Danielle M. Pierce, the NLRB’s acting regional director, wrote in August that “music supervisors are independent contractors who are not employees of Netflix.”
“We’re regrouping and trying to figure out next steps,” Webb says. “It’s not over, but really a big blow.”
Throughout the strikes, music companies pivoted to an increased focus on pitching for synchs in video games and TV commercials — continuing to take music supervisors to lunch to maintain relationships and help out their struggling freelance colleagues. Peermusic donated $100 grocery-store gift cards to out-of-work members of the Guild of Music Supervisors, a non-profit organization.
Although Spirit’s Hartman is ready for the synch faucet to turn back on and “all the beautiful amount of licensing and briefs to come our way,” peermusic’s Frost expects a lag, possibly extending into early 2024. Movie and show projects are likely to restart at the “script and filming stage,” she says, while synch work generally begins during post-production at the end: “I’m predicting it’s going to be a slow pickup, especially now we’re going into the holidays.”
Because Netflix, Disney and other top studios have said they would pull back on new content, the synch business may also begin to flatten after years of growth. Frost predicts a post-strike boom in synchs in early 2024, followed by a longer-term drop-off: “I think it’s going to slow down as streamers adjust to this new world, and they’re picking up less content.” Heather Guibert, a music supervisor working on a documentary about songwriter Diane Warren, adds: “Disney used to make, let’s hypothesize, 100 projects a year; suddenly, that goes down to 50. That’s 50 fewer projects for the music supervisor to work on. It’s rough.”
During the strikes, Amanda Krieg Thomas, a music supervisor for American Horror Story and Monster: The Jeffrey Dahmer Story, had to slash the hours for the three employees of her company, Yay Team — forcing one of them to quit for another job. She’s hopeful — and “still a little cautious” — that the post-strike era will restore her company to maximum financial health. “What’s the new normal? Is there actually going to be less content, and what does that look like for music supervisors?” she asks. “But everybody’s excited to really get going again.”
Chinese music streaming company Tencent Music Entertainment saw its paying users grow to 103 million in the third quarter, up 20.8% year over year and 3.6% better than the previous quarter, the company announced Tuesday (Nov. 14).
A 42% gain in subscription revenue to 3.2 billion RMB ($438 million) helped online music revenue grow 32.7% to 4.55 billion RMB ($624 million). Not only has Tencent Music Entertainment gained paying customers, but they’re also paying more: Average revenue per paying user (ARPPU) rose 17% to 10.3 RMB ($1.41) in the third quarter.
“We will continue to drive solid growth of our online music business, with subscription revenue driven by the subscription base growth and also ARPPU expansion as well,” said executive chairman Cussion Pang during Tuesday’s earnings call. “Outside of the subscription revenue, we expected the revenues from advertising and new initiatives, such as artist merchandise, to continue to grow healthily.”
Tencent Music Entertainment’s 103 million subscribers is well behind Spotify’s 226 million subscribers, but its subscriber base has grown steadily from 85.3 million and 71.2 million in the third quarters of 2022 and 2021, respectively. Its ARPPU of 10.3 RMB ($1.41) is also far lower than Spotify’s ARPU of 4.34 euros ($4.72), reflecting the relatively higher prices in the North American and European markets where Spotify is strongest. Still, Tencent Music Entertainment’s ARPPU showed strong growth last quarter after dropping from 8.9 RMB ($1.23) in the third quarter of 2021 to 8.8 RMB ($1.21) in the third quarter of 2022.
Tencent Music Entertainment operates the music streaming apps QQ Music, Kugou and Kuwo. It also owns WeSing, a social karaoke game. The music-focused company additionally offers podcasts and ventured into audiobooks with its 2021 acquisition of audiobook platform Lazy Audio.
The company touts what it calls a “dual-engine” strategy that improves both the content and the platform’s features and technology. In the third quarter, Tencent Music Entertainment expanded its partnership with K-pop company YG Entertainment to include ticketing, which gave subscribers the ability to purchase BLACKPINK concert tickets. A partnership with another South Korean company, Cube Entertainment, gives Tencent Music Entertainment a 30-day window of exclusivity on new song releases. On the technology side, a new music production tool in the Kugou app allows users to create music in multiple languages. “Through a brief training session, it can effectively and efficiently produce songs in Mandarin, Cantonese, English, Korean and Japanese,” said Pang.
Gains from the music side of the company couldn’t make up for steep declines in Tencent Music Entertainment’s social entertainment segment, however. Company-wide revenue declined 10.8% to 6.57 billion RMB ($900 million) due to a 48.8% year-over-year decline in social entertainment revenue and a 16.8% drop in social entertainment mobile monthly average users.
“For the social entertainment services, we will continue to execute our current operational strategy with the backdrop of the macro factors and competition for 2024,” said Pang. “Our primary target is to stabilize the business and better serve our core users.”
Gross margin improved by 3.1 percentage points to 35.7% due to growth of music subscriptions and the company’s use of its own content. “Looking forward [to] Q4, we expect subscription revenue and advertisement revenue will continue to be strong,” said CFO Shirley Hu. “On the cost side, we expect our in-house made content will have a positive impact on gross margin continually and we will continue to increase our operational efficiency and monitor cost items.”
Shares of Tencent Music Entertainment rose 3.1% to $7.66 on Tuesday. That was slightly better than the gains most stocks posted following a report that inflation was flat in October and up 3.2% from the previous year. The news sparked hope amongst investors that the Federal Reserve would stop hiking interest rates to help tame inflation. The Nasdaq composite gained 2.4% and the S&P 500 gained 1.9%.
Tencent Music Entertainment third-quarter financial and user metrics:
Total revenue of 6.57 billion RMB ($900 million), down 10.8% year over year.
Music subscription revenue of 3.19 billion RMB ($438 million), up 42% year over year.
Social entertainment revenue of 2.02 billion ($276 million), down 48% year over year.
Net profit of 1.26 billion RMB ($173 million), up 15.6% year over year.
Monthly active users (online music) of 594 million, down 4.2% year over year.
Mobile monthly active users (social entertainment) of 129 million, down 16.8% year over year.
Paying users, online music of 103 million, up 20.8% year over year.
Paying users, social entertainment of 7.8 million, up 5.4% year over year.