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A federal judge on Monday (May 22) dealt a major blow to a lawsuit that claims YouTube enables piracy by restricting access to copyright tools like Content ID, refusing to allow the case to proceed as a class action that could have included tens of thousands of rightsholders.
The lawsuit, filed by a composer named Maria Schneider, claims that YouTube has become a “hotbed of piracy” because the platform provides “powerful copyright owners” like record labels with Content ID to block and monetize unauthorized uses of their content, but fails to do the same for “ordinary owners.”
But in his ruling on Monday, Judge James Donato said that Schneider could not team up with tens of thousands of other rightsholders who she claims suffered similar harm from YouTube’s policies, dramatically reducing the scope of the lawsuit.
Cases can only be “certified” as class actions if the various accusers share similar complaints against the defendant. And in Schneider’s case, Judge Donato said different rightsholders would have very different cases against YouTube.
“It has been said that copyright claims are poor candidates for class-action treatment, and for good reason,” the judge wrote. “Every copyright claim turns upon facts which are particular to that single claim of infringement [and] every copyright claim is also subject to defenses that require their own individualized inquiries.”
Filed in 2020, Schneider’s lawsuit claims that YouTube (owned by Google parent Alphabet) forces songwriters and other smaller rights holders to use “vastly inferior and time-consuming manual means” of policing infringement, allowing piracy of their material to flourish on the platform.
For its part, YouTube says it’s done nothing wrong. In court documents, the company has argued that it’s spent “spent over $100 million developing industry-leading tools” to prevent piracy, but that it limits access because “in the hands of the wrong party, these tools can cause serious harm.”
With a trial date looming next month, attorneys for Schneider had urged Judge Donato to let the case move forward as a class action. An expert retained by her legal team suggested that the class “at a minimum” would include between 10,000 and 20,000 aggrieved copyright owners.
“The Copyright Act does not countenance such blatant disregard of individual artists’ intellectual property rights,” her attorneys wrote. “Class actions were created for this institutionalized misbehavior that relies upon the disincentives and lack of resources for a lawsuit absent collective action. A class action is the superior method through which YouTube’s participation in and facilitation of copyright infringement can be held to account.”
But in Monday’s ruling, Judge Donato strongly disagreed. He said the many individual claims against YouTube would require “highly individualized inquiries into the merits,” including a case-by-case assessment of whether YouTube possibly had a valid license to those particular songs.
“Whether YouTube has a license for a particular work will be a matter of intense inquiry at trial,” the judge wrote. “The answer to this inquiry will depend upon facts and circumstances unique to each work and copyright claimant.”
Monday’s order won’t end the case, but it will now proceed to trial based only on copyrights owned by Schneider and two other plaintiffs (Uniglobe Entertainment and AST Publishing). The lawsuit is scheduled for a June 12 trial, though it’s unclear if that date will be changed in the wake of Monday’s decision.
An attorney for Schneider and a representative for YouTube did not immediately return requests for comment on Monday’s order.
Social media company TikTok Inc. filed a lawsuit Monday seeking to overturn Montana’s first-in-the-nation ban on the video sharing app, arguing the law is an unconstitutional violation of free speech rights and is based on “unfounded speculation” that the Chinese government could access users’ data. The lawsuit by TikTok itself follows one filed last week by five content […]
Warner Music Group executive vp/CFO Eric Levin reiterated the label’s call for streaming services to raise their prices while speaking at a conference hosted by JP Morgan Chase & Co on Monday (May 22).
Levin, who worked at HBO between 1988 and 2002, told the group of investors and Wall Street analysts that, unlike streaming services, the cable network almost annually raised prices during that period because the company knew customers wanted its content enough to pay a premium.
“I think and I am hopeful now that much of the [streaming] industry has done a round of rate increases successfully…that they start to understand that the industry can bear it,” Levin said.
Levin’s comments echo WMG CEO Robert Kyncl‘s previous call to streaming company hold-outs to raise prices, delivered during a wide-ranging presentation in March that touched on WMG’s growth strategy if streaming growth slows as well as its light release schedule in the first two quarters.
An increase in music streaming revenue, the main driver behind WMG and other major music companies’ double-digit growth in recent years, is expected to decline from 10% growth in 2024 to 3% growth in 2029, according to a recent presentation by MIDiA Research. That projection, which is far gloomier than Goldman’s forecast for a 12% compound annual growth rate for streaming revenue until 2030, prompted several questions to Levin about WMG’s streaming revenue expectations and how it may grow even if the streaming engine slows.
“We still have a lot of conviction that streaming has a lot of growth,” Levin said while noting that growth may come from a series of drivers.
“When we went public three-ish years ago, our growth story really revolved around subscription streaming,” he said. “Now … it includes ad-supported streaming [and] emerging [sources] of streaming, social, fitness, gaming, etc. So the facets of growth have really diversified.”
The industry has seen steady growth in subscription streaming since roughly 2015, and growth in that area remains present in all economic forecasts, Levin added.
Other revenue drivers like ad-supported streaming, he continued, are more impacted by “cyclicality based on slowdowns when the economy slows and rapid recovery when the economy is solid.”
Emerging sources of streaming revenue, such as from social media and short-form video apps, have significant growth potential, Levin said, because “you have potential for multiple products per person in a home — people have multiple social media accounts in one home.”
This month, WMG reported its second straight quarter of basically flat recorded music revenue, driven by a slower first half of the year for music releases. Recorded music streaming revenue declined nearly half a percent from the prior year due to the light release schedule.
Pressed to provide greater detail around why the company is experiencing a modest release slate this year, Levin said the May 5 release of Ed Sheeran‘s – (pronounced Subtract) is expected to be the first in a slate of upcoming releases by prominent artists — and indeed, the company is already showing signs of a second-half rebound. Still, he acknowledged WMG has lost ground to its competitors.
“We lost a little bit of momentum, but we fully expect to get it back,” Levin said.
Veeps, the Live Nation-owned streaming platform has named Eileen Mercolino as its first chief marketing officer. She joins Veeps most recently from SPIN where she served as CMO and has held a number of senior marketing and partnership roles at leading entertainment brands including The Walt Disney company, festival producer Danny Wimmer Presents, Hard Rock […]
Terrace Martin — the artist, producer, and multi-instrumentalist known for working with Kendrick Lamar, Snoop Dogg, and Robert Glasper, among others — announced a partnership between BMG and his Sounds of Crenshaw label on Monday (May 22). The results will be six jazz albums, with the first of which is due out this summer. According […]
The Recording Academy’s Black Music Collective (BMC) and Amazon Music selected five students as the recipients of the Your Future Is Now scholarship, designed to give students at Historically Black Colleges and Universities (HBCUs) the opportunity to learn and explore all facets of the music industry.
The scholarship, first launched in February 2021, offers students the chance to receive $10,000 for the 2023-24 school year and the opportunity to be part of an immersive rotation program with Amazon Music and Recording Academy department leads, providing each student a detailed look at their particular field of work within the music industry.
The five students chosen are Joseph Michael Abiakam (Norfolk State University), Langston Jackson (Hampton University), Kennedi Amari Johnson (Clark Atlanta University), Courtney Roberts (Texas Southern University), and Caleb Wilkerson (Florida A&M University).
“We are immensely proud to collaborate with Amazon Music in renewing this exceptional scholarship program for the third consecutive year,” Ryan Butler, vp of DEI at the Recording Academy said in a statement. “The imperative of Black representation in the music industry cannot be overstated, and this scholarship is a tangible manifestation of our unwavering commitment to promoting the aspirations of future Black music leaders.”
“The Your Future Is Now scholarship was created to foster an inclusive environment where Black creators can realize their career objectives,” Phylicia Fant, head of music industry and culture collaborations at Amazon Music, said in a statement. “…This year’s class of students represents the next generation of Black musicians and executives, and it’s an honor to play a part in their development as individuals and future leaders.”
The BMC and Amazon Music will also award two HBCUs a $10,000 grant each for equipment for their music programs to be announced later this summer.
In addition, as part of Your Future Is Now, Amazon Music, The Same House and the Recording Academy are coming together to host the Your Future is Now Business Development Seminar for select members of the 2023 graduating class of Morris Brown College. Revealed this past weekend at Morris Brown’s commencement by the Recording Academy’s chief DEI officer, Zing Shaw, this new, half-day music business seminar taking place on June 17 will offer professional development expertise in music business, publishing and music production. Facilitators at the event will include Recording Academy’s Atlanta chapter president Justin Henderson and Frankie Yaptinchay of Amazon Music.
Following the music business seminar, graduates will be treated to a suite experience at State Farm Arena in Atlanta for the annual ATL Birthday Bash Concert where they will have the opportunity to network with representatives from the Recording Academy and Amazon Music, as well as other key music industry executives.
For more information on the Black Music Collective and the Your Future Is Now scholarship, visit here.
The European Union slapped Meta with a record $1.3 billion privacy fine Monday and ordered it to stop transferring users personal information across the Atlantic by October, the latest salvo in a decadelong case sparked by U.S. cybersnooping fears.
The penalty of 1.2 billion euros is the biggest since the EU’s strict data privacy regime took effect five years ago, surpassing Amazon’s 746 million euro fine in 2021 for data protection violations.
Meta, which had previously warned that services for its users in Europe could be cut off, vowed to appeal and ask courts to immediately put the decision on hold.
The company said “there is no immediate disruption to Facebook in Europe.” The decision applies to user data like names, email and IP addresses, messages, viewing history, geolocation data and other information that Meta — and other tech giants like Google — use for targeted online ads.
“This decision is flawed, unjustified and sets a dangerous precedent for the countless other companies transferring data between the EU and U.S.,” Nick Clegg, Meta’s president of global affairs, and chief legal officer Jennifer Newstead said in a statement.
It’s yet another twist in a legal battle that began in 2013 when Austrian lawyer and privacy activist Max Schrems filed a complaint about Facebook’s handling of his data following former National Security Agency contractor Edward Snowden’s revelations of electronic surveillance by U.S. security agencies. That included the disclosure that Facebook gave the agencies access to the personal data of Europeans.
The saga has highlighted the clash between Washington and Brussels over the differences between Europe’s strict view on data privacy and the comparatively lax regime in the U.S., which lacks a federal privacy law. The EU has been a global leader in reining in the power of Big Tech with a series of regulations forcing them police their platforms more strictly and protect users’ personal information.
An agreement covering EU-U.S. data transfers known as the Privacy Shield was struck down in 2020 by the EU’s top court, which said it didn’t do enough to protect residents from the U.S. government’s electronic prying. Monday’s decision confirmed that another tool to govern data transfers — stock legal contracts — was also invalid.
Brussels and Washington signed a deal last year on a reworked Privacy Shield that Meta could use, but the pact is awaiting a decision from European officials on whether it adequately protects data privacy.
EU institutions have been reviewing the agreement, and the bloc’s lawmakers this month called for improvements, saying the safeguards aren’t strong enough.
The Ireland’s Data Protection Commission handed down the fine as Meta’s lead privacy regulator in the 27-nation bloc because the Silicon Valley tech giant’s European headquarters is based in Dublin.
The Irish watchdog said it gave Meta five months to stop sending European user data to the U.S. and six months to bring its data operations into compliance “by ceasing the unlawful processing, including storage, in the U.S.” of European users’ personal data transferred in violation of the bloc’s privacy rules.
If the new transatlantic privacy agreement takes effect before these deadlines, “our services can continue as they do today without any disruption or impact on users,” Meta said.
Schrems predicted that Meta has “no real chance” of getting the decision materially overturned. And a new privacy pact might not mean the end of Meta’s troubles, because there’s a good chance it could be tossed out by the EU’s top court, he said.
“Meta plans to rely on the new deal for transfers going forward, but this is likely not a permanent fix,” Schrems said in a statement. “Unless U.S. surveillance laws gets fixed, Meta will likely have to keep EU data in the EU.”
Meta warned in its latest earnings report that without a legal basis for data transfers, it will be forced to stop offering its products and services in Europe, “which would materially and adversely affect our business, financial condition, and results of operations.”
The social media company might have to carry out a costly and complex revamp of its operations if it’s forced to stop shipping user data across the Atlantic. Meta has a fleet of 21 data centers, according to its website, but 17 of them are in the United States. Three others are in the European nations of Denmark, Ireland and Sweden. Another is in Singapore.
Other social media giants are facing pressure over their data practices. TikTok has tried to soothe Western fears about the Chinese-owned short video sharing app’s potential cybersecurity risks with a $1.5 billion project to store U.S. user data on Oracle servers.
It was a good week for music stocks overall and an even better week for concert promoters, who made the biggest gains on the Billboard Global Music Index ahead of the blockbuster summer touring season.
The index rose 4.4% to 1,256.06 this week, with 15 of the 21 stocks ending in positive territory. It was led by concert promoter Madison Square Garden Entertainment’s (MSGE) 19.4% gain amidst multiple news items that influenced the share price. On Wednesday (May 17), Guggenheim initiated coverage of MSGE with a buy rating, while a report claimed that MSG Entertainment may sell the theater at Madison Square Garden for about $1 billion. On Thursday, the company released first-quarter results that showed a 4% increase in revenue to $201 million, though the company’s executives did not comment on the report during Thursday’s earnings call.
Shares of German promoter CTS Eventim also made big gains, rising 9.2% to 64.30 euros ($68.61). On Thursday, the company’s first-quarter earnings showed a 163% revenue jump to 366.2 million euros ($396 million) — beating pre-pandemic levels from the first quarter of 2019 by 29.5%. Year-to-date, CTS Eventim has sold 18 million tickets online, a 58% increase from the prior-year period. Meanwhile, Live Nation, the world’s largest concert promoter, improved 8.4% to $84.73 and is now up 21.5% year to date. Sphere Entertainment Co., which spun off MSG Entertainment in April, improved 6.1% to $23.61.
The S&P 500 improved 1.6% to 4,191.98 and the Nasdaq composite rose 3% to 12,657.90. The U.K.’s FTSE 100 index was unchanged at 7,756.87, while South Korea’s KOSPI composite index rose 2.5% to 2,537.79.
K-pop companies continued their hot streak this week. Two companies not in the Billboard Global Music Index, JYP Entertainment and YG Entertainment, gained 22.7% and 17.8%, respectively. Year-to-date, shares of JYP Entertainment, home to Stray Kids and Twice, have gained 70.6%. Shares of YG Entertainment, whose roster includes recent Coachella headliner Blackpink, are up 109.8% in 2023. Shares of HYBE dropped slightly by 0.4% but have gained 62% year to date. Likewise, shares of SM Entertainment gained only 1.1% this week but have grown 40% this year.
A couple of years after the COVID-19 pandemic took radio listeners out of their vehicles and a recession caused an advertising slowdown, the radio industry is experiencing another decline. That has complicated the financial position of Audacy, the second-largest radio company in the United States and a major player in the podcast market.
Warning lights appeared again last week when the company revealed in its May 10th 10-Q filing that “current macroeconomic conditions” such as rising inflation and interest rates and lower advertising revenue “have created, and may continue to create, significant uncertainty in operations.” Those factors “have had, and are expected to continue to have, a material adverse effect” on Audacy’s forecasted revenue, which is “unlikely to be sufficient” to maintain compliance of the financial debt covenants its lenders impose to ensure it can make its interest payments. As a result, Audacy explained, the company could default on its debt — which could then cause that debt to become immediately payable.
On Tuesday (May 16), a week after the March 10 filing, the New York Stock Exchange (NYSE) decided to halt trading of Audacy’s shares in order to delist the company. It was an expected move. Audacy, which changed its name from Entercom in March 2021, last traded at $0.09 per share — down nearly 63% year-to-date — before trading on the NYSE was halted. The NYSE, which has rules to maintain minimum share prices, issued a warning to Audacy on July 31 because its average closing price over a consecutive-day trading period was below $1. Audacy last closed above $1 per share on July 5, 2022 — meaning it remained below $1 for 218 consecutive trading days.
Investors have lost some faith in radio companies’ stocks as advertising growth weakened in 2022. Year-to-date, shares of iHeartMedia, the nation’s largest radio company, have fallen 55.3%. Likewise, shares of Cumulus Media, the third-largest radio company, are down 47.5%. Market conditions appear to be improving, however. iHeartMedia expects its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to improve throughout 2023, CEO Bob Pittman said during the company’s May 2 earnings call. “And if this advertising market recovery trend continues in 2024,” Pittman added, “we expect to resume our growth trajectory that was interrupted by this period of advertising softness.”
The advertising market is part of Audacy’s problem, but it’s not the entire problem, according to Craig Huber, media analyst at Huber Research Partners. “The number one issue is too much debt in a secular declining industry,” says Huber. Audacy acquired most of its $1.9 billion of long-term debt from its 2017 merger with CBS Radio. That deal increased Audacy’s revenue more than four-fold, from $367 million in 2016 to $1.7 billion in 2018, but also increased its debt from $468 million at the end of 2016 to $1.86 billion at the end of 2017.
The debt has been a drag on Audacy’s cash flow. In 2022, Audacy’s net interest expense was $107.5 million — about 8.6% of the company’s annual revenue of $1.25 billion. After paying interest to service its debt, Audacy’s free cash flow in 2022 was -$31.8 million. “They haven’t done enough to take out costs” to achieve positive free cash flow, says Huber, and revenue hasn’t met the company’s own expectations.
When the merger with CBS Radio was announced in 2017, the combined companies had adjusted EBITDA of $500 million, including “expected transaction synergies,” according to the press release. In 2022, adjusted EBITDA was just $138 million. Even though Audacy was in compliance with its debt covenants on March 31, the company has expressed concern about its ability “to continue as a going concern” over the next 12 months.
Audacy operates in a difficult business that’s losing listening time as people change their listening habits and migrate to streaming platforms. Although Audacy, like iHeartMedia and Cumulus, has invested in digital platforms — it acquired podcasting companies Pineapple Street and Cadence13 in 2019 and was the No. 8 podcasting network in Q3 and Q4, according to Edison Research — revenue fell about 14% between 2018, the first full year after the CBS Radio merger, and 2022.
With no way around the soft advertising market, Audacy has started cutting costs and selling non-core assets. The company expects its costs will decline 4%, or $35 million, in the last three quarters of 2023, chairman/president/CEO David Field said during the May 10 earnings call. He also said the company raised $17 million in the first quarter from sales of broadcast towers and expects to close on the sale of two stations for $15.5 million in the second or third quarter.
As for Audacy’s stock, trading volume will decrease now that it’s been delisted. Since it started selling only over the counter (through a broker-deal, not on an exchange), the share price has fallen: On Wednesday, Audacy shares declined nearly 24% to $0.04, and they ended the week at $0.06.
The company will now take steps to get back to the NYSE. “While we are disappointed by the NYSE’s decision, we are hopeful we will find our way back to the exchange later this year as we execute our action plans which include a reverse stock split to satisfy NYSE rules, the continued execution of our liability management plans and working with our financial advisors to refinance our debt,” Field said in a May 16 press release. Shareholders will vote on the reverse stock split at the annual meeting on May 24. By working with the factors it can control, Audacy can soften the impact of the broader market conditions it cannot control.
Federal prosecutors want a judge to sentence Fetty Wap to as much as nine years in prison after the rapper pleaded guilty last year to drug charges, citing lyrics they say “glamorize the drug trade” and arguing that the court needs to “send a message” to kids.
The filing came just a day after lawyers for “Trap Queen” star (real name Willie Junior Maxwell II) asked for just five years, arguing that he only turned to crime to support family members as his touring income dried up during the COVID-19 pandemic.
In their own brief on Thursday, prosecutors told a darker story: Of a successful musician who had already earned millions but chose to “supplement his income” by selling “drugs he knew would ruin lives.” In a particularly notable move, they pointed to Fetty’s music itself, arguing he had used his “fame, sizeable platform and influence to glamorize the drug trade.”
“Before his arrest, the defendant became famous singing about his experience cooking crack cocaine, selling drugs and making substantial money from those illegal endeavors,” prosecutors wrote, also citing a recent song that they says contains coded references to drugs. “Even after his arrest and while awaiting trial in this very serious federal drug case, the defendant continued to glamorize the drug trade.”
The use of rap lyrics in criminal cases is a controversial tactic. Critics say references to drugs and violence are stock elements of hip hop and should not be treated literally — and that by doing so, prosecutors infringe on free speech and sway courts with unfair evidence. Lawmakers in California recently enacted a law that sharply restricts the practice, and a similar bill has been proposed to do so in federal cases.
But in Thursday’s filing, prosecutors repeatedly referenced Fetty Waps works. Pointing to “Trap Queen” – a song that reached No. 2 on the Hot 100 – they claimed the rapper had “admitted” to a probation officer that it was an “ode to a former girlfriend who assisted him a cocaine base distribution operation.” They also cited the music video for that song, claiming Fetty had “enlisted young children who stood behind him while he idealized selling drugs.”
Now, with the rapper facing a prison sentence for selling drugs, prosecutors said the judge has a “responsibility to send a clear, unambiguous deterrent message” to fans of his music.
“Young people who admire the defendant and are considering selling drugs need to be sent a message that selling drugs is not a glamorous lifestyle and, if they participate in that trade, they will receive lengthy prison sentences,” prosecutors wrote. “That message is even more important in this case, as the defendant has promoted and profited from his drug dealing through his fame and music.”
Fetty Wap was arrested in October 2021 at Rolling Loud New York, after prosecutors unveiled an indictment against him and five others. Prosecutors claimed group had shipped more than 100 kilograms of the drugs from California and distributed them on Long Island, contributing to “the addiction and overdose epidemic we have seen time and time again tear people’s lives apart.”
In August, Fetty admitted to participating in the scheme, pleading guilty to a single charge of conspiring to distribute at least 500 grams of cocaine. He faces sentencing next week by U.S. District Judge Joanna Seybert.
The sentence requested by prosecutors on Thursday — between 87 and 108 months – is the same as what’s suggested by federal sentencing guidelines. But it came just a day after attorneys for Fetty Wap said he should face only five years, the minimum sentence allowed under the law.
In that filing, his lawyers said the rapper “realizes the terrible mistake he made” and is “truly sorry for the loss and hurt he has caused.” They argued he only turned to crime amid the pandemic, as his touring income dried up: “Desperate to keep up with his financial obligations, Mr. Maxwell became involved in the instant offense for a few months in the spring of 2020.”
In their own filing on Thursday, prosecutors said Fetty was perhaps not quite as reformed as his attorneys had claimed. They cited an incident last summer in which the rapper’s bail was revoked for pointing a gun and threatening to kill someone on a FaceTime call in which he called someone a “rat.”
“The defendant’s conduct while on bail is also extremely troubling,” the prosecutors wrote. “While none of us is clairvoyant, the defendant’s possession of a firearm and threatening conduct while on bail is a concerning predictor of future behavior.”
An attorney for Fetty Wap did not return a request for comment. A spokesman for the U.S. Attorney’s Office declined to comment.