Business
Page: 404
Universal Music Publishing Group has signed Yahritza to a global publishing deal. As part of Yahritza Y Su Esencia, a sibling trio which has helped ushed Regional Mexican into the mainstream, she is one of Mexico’s most sought after stars.
Blackx, a new Asia-focused music fund, has acquired a catalog 230 songs from Frances Wang, a notable Taiwanese songwriter. Songs included in the deal span 30 years of work, including hits performed by Faye Wong, A-Mei, Jeff Zhang Xin Zhe, Oaeen, Eason Chan, Wan Fang and Tiger Huang Xiao Hu. This is one of Blackx’s first purchases in Asia. The fund launched in September 2022 with an initial $100 million in financing.
UMPG Germany has signed Berlin-based artist and songwriter Chris James to a worldwide publishing deal. As co-writer on “Komet” (Apache 207 and Udo Lindenberg), his work holds the honor of being the longest running #1 German-language song in 16 years, according to a press release. Most recently, he was listed as a co-writer on Jimin’s recent K-pop smash “Like Crazy” which debuted at No. 1 on the Hot 100.
Universal Music Publishing UK has signed LF System, a chart-topping producer duo, to a global publishing deal. Comprised of Conor Larkman and Sean Finnigan, the duo is a top name in international dance music. Their song “Afraid to Feel” recently topped the UK Singles Chart for eight consecutive weeks.
Sony Music Publishing has signed 1da Banton, a Nigerian songwriter, artist and guitarist, to a global publishing agreement. He recently gained international acclaim with his song “Miss You” with Tungevaag, and his next EP is set to release next month, featuring 255, Rugged and Pimp.
Warner Chappell Music has signed a worldwide publishing deal with Spanish singer-songwriter Ana Mena. With nearly six million monthly listeners on Spotify, Mena’s “Música Ligera” won song of the year at Los40 Music Awards 2022. Most recently, she released her second studio LP Bellodrama, which follows her 2018 debut album Index.
Warner Chappell Music has signed Nia Archives to a worldwide publishing agreement. A DJ, producer and singer-songwriter, she won Best Electric/Dance Act at the MOBOs, Best Producer at the NME Awards, named Introducing Artist of the Year by BBC, and was shortlisted for the Rising Star Award at the BRITs 2023.
Universal Music Publishing Classics and Screen has signed Pulitzer Prize winner Kevin Puts and rising Puerto Rican composer Angélica Negrón to exclusive worldwide publishing deals. As part of the agreements, Universal’s Classics & Screen division also acquired Puts’ compositional catalog.
Angry Mob Music Group has signed UK-based Richard Walters to a worldwide co-publishing agreement. Currently signed to Nettwek Music Group on the label side, Walters next single is out May 26th. As a songwriter, he has worked alongside Joe Henry, Alison Moyet, Solomun, 3LAU, Sony Fodera, Sultan + Shepard, and more.
Warner Chappell Music has joined with Matchless Publishing and Artist Development to sign a global publishing deal with Nashville-based singer, songwriter and producer Dan Pellarin. Pellarin has co-written with acts like Filmore, Atlus, and Savage Hands.
Warner Chappell Music and Cornman Music have teamed up to jointly sign Graham Barham to a global publishing deal. A Nashville-based newcomer, he first gained attention with his popular track “Preachers Need People.”
Creative Nation, an independent music company, has signed Nashville-based songwriter and producer Oscar Charles to a publishing deal. He has written songs with Chase Rice, Elvie Shane, Boy Named Banjo, Madeline Edwards, Hannah Dasher and more. He has released songs with Carly Pearce, Charlie Worsham and Jacob Powell, among others.
Promotions are pouring in at Elektra Entertainment, with the Warner Music cohort of Elektra, Fueled by Ramen and Roadrunner elevating Chris Brown, Katie Robinson and Johnny Minardi to various leadership roles across the company.
Effective immediately, Brown is elevated to executive vp of Elektra and co-head of Roadrunner, while Minardi is promoted to head of Fueled by Ramen, co-head of Roadrunner and senior vp of A&R at Elektra. Rounding things out, Robinson is named head of marketing across all of Elektra Entertainment.
The elevations arrive following a major change at Elektra, where co-president Mike Easterlin recently announced his shift to a consultant role “as part of the recent changes at the company.” As a result, Gregg Nadel now has the president title to himself, with Robinson and Minardi (Los Angeles) and Brown (New York City) all reporting to him.
“Elektra’s fierce commitment to artist development is only equaled by our dedication to executive development, and it’s been a privilege to watch Chris, Katie, and Johnny grow into their own as leaders,” said Nadel in a statement. “Elektra wouldn’t be what it is today without them. They’ve all individually made such a strong, tangible impact and delivered exceptional results that have elevated our artists on the global stage.”
Brown was most recently head of marketing at Elektra while his successor, Robinson, was svp of marketing. Their department’s big wins in recent years include successful campaigns for Slipknot, Fall Out Boy, Turnstile, twenty one pilots, Maisie Peters, jxdn, Alec Benjamin and others. Minardi, previously vp of A&R for Elektra, is credited with signing Tones and I, Fall Out Boy, The Band CAMINO and Grandson, among others, and played a key role in bringing Travis Barker’s DTA Records into the Elektra fold.
In the Warner family tree, Elektra Entertainment (formerly Elektra Music Group) is one of the branches of 300 Elektra Entertainment (3EE), led by chairman & CEO Kevin Liles. WMG, the third-largest label group, disclosed quarterly earnings this week that were saddled by flat results across its recorded music division but showed a strong three months for publishing.
On Thursday (May 11), Roc Nation penned an open letter about their desire to build a casino in the New York City. The full page letter — which resides in the New York Post, New York Daily News and Amsterdam News — includes plans to “enhance the lives of everyday New Yorkers” as the company is currently competing with four other billionaire groups, which include New York Mets owner Steve Cohen, Miami Dolphins owner Stephen Ross, Stefan Soloviev, and John Catsimatidis.
“The winning group must have a track record of turning words into deeds—of putting New York City and its residents first—people of all races, religions, ethnicities, genders, sexual orientations and socio-economic statuses,” reads the letter. “New Yorkers in every corner of every borough – all of us. The winning organization must have a history of campaigning for fair hiring, representation, and reform. Hate, as well as groups that have a history of oppressing the most vulnerable, have no place in New York.”
In December 2022, Jay-Z partnered with SL Green and Caesar Entertainment in their bid to open NYC’s first full-scale casino in Times Square. “The winning licensee must always put the well-being of New Yorkers at the top of their agenda and do right by its residents,” the letter continues. “This is too important of a moment in our city’s illustrious history. Times Square, the epicenter of entertainment with a palpable energy, is unmatched. Roc Nation and our partners are here to ensure Times Square remains connected to all facets of culture. There’s no better location for a Caesars Palace entertainment destination than the Crossroads of the World.
Roc Nation lays out the plan to bolster the lives of New Yorkers, which includes “giving back to all surrounding businesses, investing money into sanitation and security from the bowtie all the way west into Hell’s Kitchen, developing and delivering a much-needed transportation plan, and protecting the interests of the actors, producers, theatre staff, writers and patrons that represent the true heart and soul of Broadway.”
Read the full letter here:
pic.twitter.com/YY71guGYgB
— Roc Nation (@RocNation) May 11, 2023
What if we had the power to bring back the dead? As far as recordings are concerned, we might be getting pretty close.
The viral success of the so-called “Fake Drake” track “Heart on My Sleeve,” which apparently employed AI technology to create realistic renderings of vocals from Drake and The Weeknd without their knowledge, has raised the possibility that perhaps any voice can now be imitated by AI, even artists who died decades ago.
Last week, producer Timbaland did just that. “I always wanted to work with BIG, and I never got a chance to. Until today…” he said in an Instagram Reel, pressing play on an unreleased song clip that sounds like Notorious BIG, rapping on top of a Timbaland beat, despite the fact that the rapper was murdered in a drive-by shooting 25 years prior. (A representative for Timbaland did not respond to Billboard’s request for comment. A representative for Notorious BIG’s estate declined to comment).
But this is not the first time a deceased stars’ voice has been resurrected with AI. The HYBE-owned AI voice synthesis company Supertone recreated the voice of late-South Korean folk artist Kim Kwang-seok last year, and in November, Tencent’s Lingyin Engine made headlines for developing “synthetic voices in memory of legendary artists,” like Teresa Teng and Anita Mui. To see more even examples of this technology applied to late American singers, take a few minutes on TikTok, searching phrases like “Kurt Cobain AI cover” or “XXXTentacion AI voice.”
Some artists – like Grimes and Holly Herndon – have embraced the idea of this vocal recreation technology, finding innovative ways to grant fans access to their voices while maintaining some control through their own AI models, but other artists are showing signs that they will resist this, fearing that the technology could lead to confusion over which songs they actually recorded. There is also fear that fans will put words into artists’ mouths, making them voice phrases and opinions that they would never say IRL. Even Grimes admitted on Twitter there is the possibility that people will use her voice to say “rly rly toxic lyrics” or “nazi stuff” – and said she’d take those songs down.
In the case of artists like Notorious BIG or Kurt Cobain, who both passed away when the internet was still something you had to dial-up, it’s impossible to know where they might stand on this next-gen technology. Still, their voices are being resurrected through AI, and it seems these vocals are getting more realistic by the day.
It calls to mind the uncanny valley nature of the Tupac hologram which debuted at Coachella in 2012, or even the proliferation of posthumous albums in more recent years, which are especially common to see from artists who passed away suddenly at a young age, like Juice WRLD, Lil Peep, and Mac Miller.
Tyler, the Creator has voiced what many others have felt about the posthumous album trend. At an April 26 concert in Los Angeles, he noted that he’s written it into his will that he does not want any unreleased music put out after his death. “That’s f-cking gross,” he said. “Like, half-ass ideas and some random feature on it…like no.” It remains unclear if Tyler’s dying wishes would be honored when that time comes, however. Labels often own every song recorded during the term of their contract with an artist, so there is financial incentive for labels to release those unheard records.
Some who look at this optimistically liken the ability to render an artists’ voice onto a cover or original track as an emerging, novel form of fan engagement, similar to remixing, sampling, or even writing fan fiction. Similar to where this new technology seems to be headed, remixes and samples also both started as unsanctioned creations. Those reworkings were often less about making songs that would go toe-to-toe with the original artists’ catalog on the Billboard charts than it was about creativity and playfulness. Of course, there were plenty of legal issues that came along with the emergence of both remixing and sampling.
The legality of bringing artists’ voices back from the grave specifically is also still somewhat unclear. A celebrity’s voice may be covered by “right of publicity” laws which can protect them from having their voices commercially exploited without authorization. However, publicity rights post-mortem can be limited. “There’s no federal rights of publicity statute, just a hodgepodge of different state laws,” says Josh Love, partner at Reed Smith. He explains that depending on where the artist was domiciled at the time of their death, their estate may not possess any rights of publicity, but in states like California, there can be strong protection after death.
Another potential safeguard is the Lanham Act – which prohibits the use of any symbol or device that is likely to deceive consumers about the association, sponsorship, or approval of goods and services — though it may be less of a potent argument post-mortem. But most cases in which rights of publicity or the Lanham Act were used to protect a musician’s voice – like Tom Waits v. Frito Lay and Bette Midler v. Ford – were clear examples of voices being appropriated for commercial use. Creative works, like songs, are much more likely to be deemed a protected form of free speech.
Some believe this could be a particularly interesting new path for reviving older catalogs, especially when the artist is not alive to take part in any more promotion, for the estates and rights holders who control the artists’ likeness. As Zach Katz, president and COO of FaZe Clan and former president of BMG US, put it in a recent press release for voice mapping service Covers.ai: “AI will open a new, great opportunity for more legacy artists and catalogs to have their ‘Kate Bush’ or “Fleetwood Mac’ moment,” he said. “We are living in a remix culture and the whole fan-music movement is overdue to arrive in the industry.”
Though Covers.ai, created by start-up MAYK, was only just released to the public today, May 10, the company announced that it already amassed over 100,000 sign ups for the service leading up to its launch, proving that there is a strong appetite for this technology. With Covers.ai, users can upload original songs and map someone else’s voice on top of it, and the company says it is working to partner with the music business to license and pay for these voices. Its co-founder and CEO, Stefan Heinrich, says this idea is especially popular so far with Gen Z and Gen Alpha, “the product we’re building here is really made for the next generation, the one coming up.”
Between Supertone, Lingyin Engine, Covers.ai, and others competitors like Uberduck coming into the marketplace, it seems the popularization of these AI voice synthesizers is inevitable (albeit legally uncertain) but playing with dead artists’ voices adds another layer of moral complexity to the discussion: is this more akin to paying respects or grave robbing?
Ben Platt signs with Interscope Records, both for his own recordings and a deeper relationship that will enable the award-winning entertainer to operate an imprint, Billboard can exclusively reveal.
Currently, Platt is working on new music which will be released through Interscope at an unconfirmed future date.
“Ben is an extraordinary artist in every way,” comments John Janick, chairman and CEO of Interscope Geffen A&M, in a statement. “He’s as comfortable on a Broadway stage as he is headlining Madison Square Garden. We’re so excited to have him on the label and are looking forward to working with him and his team on his future releases.”
The Grammy, Tony and Emmy Award-winning singer and actor has two full-length solo albums to his name, 2019’s Sing To Me, which peaked at No. 18 on the Billboard 200; and 2021’s Reverie, which reached No. 84 on the chart.
Set to be announced Thursday (May 11), the new arrangement is an extension to an alliance which has included the Dear Evan Hansen OST, released in 2021 via Interscope. Platt won the Tony Award for best actor in a musical for his performance in the titular role and went on to reprise his role in the Universal film adaptation.
In a joint-statement, Platt pays tribute to Interscope’s Janick, Steve Berman, Sam Riback, Michele An and the entire team as “wonderful, deeply creative collaborators on our Parade and Theater Camp albums, and I so look forward to teaming up on my next solo record and on many projects of all kinds to come.”
Details remain sketchy on Platt’s imprint, for which the artist will have the opportunity to sign and develop talent.
“I’m thrilled for Ben’s future recorded music to be coming out on Interscope, a label known for its roster of culture moving iconic artists,” enthuses Platt’s manager, Adam Mersel. “We’re looking forward to working alongside John, Steve Berman and the entire IGA team on the next phase of Ben’s career.”
The price tag on opening the much-anticipated Sphere arena in Las Vegas is now at a whopping $2.3 billion after the company added an additional $125 million recently, according to documents filed with the SEC on Wednesday (May 10).
That’s more than $1 billion increase from the original projection of $1.2 billion when the Sphere was first announced in 2018, although industry experts say the more realistic estimate came the following year when architects from architecture firm AECON estimated the actual cost of the project would likely be $1.7 billion.
The project’s price has continued to rise since breaking ground in 2021 due to negative effects on the construction business caused by the coronavirus pandemic and the the one-of-a-kind entertainment complex’s unusual nature and design. Company officials cited the “overall complexity of the project” for the current increase while noting they had made “significant progress,” including completing the “LED installation on the Exosphere earlier in the third quarter” that will allow the venue to make dramatic design and appearance changes at the push of a button. Company officials have also made significant progress building out “the venue’s interior spaces, including the suites and hospitality areas,” the filing states.
U2 will open the venue on Sept. 29 with a five-week, 17-show run that has already generated hundreds of millions of dollars in sales with tickets averaging between $1,200 to $1,500 apiece.
On March 30, Madison Square Garden Entertainment finalized plans to spin off its live entertainment business, and launch a new company called Sphere Entertainment Co. that included the Sphere venue, as well as its MSG’s sports television network MSG Networks and Tao Group Hospitality. Shortly after, the company sold its majority interest in Tao Group to Mohari Hospitality for about $300 million.
As of Tuesday, the Sphere Entertainment Co. had over $230 million in cash available, according to the SEC filing, thanks in part to the Tao Group sale, as well as $65 million in funds in a delayed draw term loan facility with Madison Square Garden Entertainment Corp. The recently spun-off company reported revenues of $363.3 million for its first quarter as Sphere Entertainment Company — a 3% increase of $10.8 million as compared to the same business sectors in prior year quarter. The company reported a 1.1% decrease in operating loss to $70.3 million and a 2.1% increase in adjusted operating income to $19.4 million.
MAYK’s artificial intelligence-powered voice recreation tool officially launched to all users today (May 10).
Covers.ai lets users upload their own original songs and then try on other AI-voices on top of it, including the voices of Billboard Hot 100-charting talent. According to a company press release, Covers.ai’s tool topped over 100,000 sign-ups prior to its launch.
Its founder and CEO, Stefan Heinrich — an entrepreneur who previously worked in high-ranking positions for Cameo, TikTok, Musical.ly and YouTube — explains that, for now, most of the models available for users to work with are “community models.”
“This is open source,” he explains. “There are users that make these models with various celebrity voices out in the wild, and those can be uploaded and marked at ‘community models’ on our site. At the same time, we are working with artist teams to license the voices of specific talent so we can find a way to compensate them for their official use.”
Eventually, Heinrich says he also hopes to find a way to license song catalogs from rights holders so that users can mix and match tracks with various artists’ voices they find on the site. Through these licensing agreements, he hopes to find a way to create a new revenue stream for talent, but to date, these licenses have not yet been finalized.
MAYK is backed by notable music investors including Zach Katz (president/COO of FaZe Clan, former president of BMG US), Matt Pincus (co-founder and CEO of MUSIC), Jon Vlassopulos (CEO of Napster, former global head of music at Roblox), Mohnish Sani (principle, content acquisition, Amazon Music) and more.
The launch arrives as conversations around AI and vocal deepfakes are at a fever pitch. Just last month, an unknown songwriter called Ghostwriter went viral for creating a song called “Heart on My Sleeve” using supposed AI-renderings of Drake and The Weeknd’s voices without their knowledge. Soon after, Grimes responded to the news by launching her own AI voice model to let users freely use her voice to create music.
In just a few minutes of searching, it’s apparent that TikTok is already flooded with songs with AI-vocals, whether they are original songs employing the voices of famous talent, like “Heart on My Sleeve,” or mashing up one well-known song with the voice of a different artist.
This AI vocal technology raises legal questions, however.
Mimicking vocals may be a violation an artist’s so-called right of publicity – the legal right to control how your individual identity is commercially exploited by others. Past landmark cases — like Tom Waits v. Frito Lay and Bette Midler v. Ford Motor Company — have established that soundalikes of famous voices cannot be employed without their consent to sell products, but the precedent is less clear when it comes to creative expressions like songs, which are much more likely to be deemed a protected form of free speech.
Heinrich hopes that Covers.ai can help “democratize creativity” and make it far more “playful” in an effort to get music fans from the lean-back forms of music discovery, like listening to radio or a pre-programmed editorial playlist, to a more engaged, interactive experience. “I think what music is really changing right now,” he says, noting that Covers.ai’s earliest adopters are mostly Gen Z and Gen Alpha. “The product we’re building here is really made for the next generation, the one coming up.”
Months after a high-profile mistrial, T.I. is headed back to federal court Wednesday for a second trial in his lawsuit claiming that toymaker MGA stole the design of its “OMG” dolls from the OMG Girlz – a defunct teen pop trio created by his wife Tameka “Tiny” Harris.
The intellectual property case initially went to trial in January, but Judge James V. Selna granted a sudden mistrial after jurors heard inadmissible racially-charged testimony, including a claim that MGA “steals from African Americans.”
The battle began in 2021, with T.I. (real name Clifford Harris) and Tiny claiming that MGA had committed both “cultural appropriation and outright theft of the intellectual property” by stealing the look of a group of “young multicultural women.”
Their complaint against MGA included side-by-side images, aiming to show how each OMG doll was directly based on a particular member of the OMG Girlz, a group that included Tiny’s daughter Zonnique Pullins.
“This cultural appropriation is legally actionable where, as here, it has resulted in MGA’s unlawful copying and dilution of the OMG Girlz brand, and misappropriation of their name and likeness,” lawyers for T.I. and Tiny wrote.
MGA, for its part, says it has done nothing wrong – that the dolls were more often branded as L.O.L. Surprise! O.M.G., and that consumers would not confuse the toys for the “short-lived” band.
The case went before a federal jury in January, seeing five days of testimony. But on the fifth day of the trial, jurors heard videotaped deposition testimony from a woman named Moneice Campbell, a former MGA customer who said she would no longer purchase the company’s products because MGA “steals from African Americans and their ideas and profit off of it.”
Earlier in the case, Judge Selna had already expressly prohibited such testimony from the trial. After MGA’s lawyers demanded an immediate mistrial, the judge agreed to grant one.
“There is no way to unring the bell of the jury’s hearing Ms. Campbell’s emotionally charged accusations that MGA has been ‘stealing’ from the African-American community,” the MGA attorneys wrote. “Her improper testimony cannot be challenged, rebutted or cured without drawing further attention to it.”
The new trial began with jury selection on Tuesday and will see opening statements on Wednesday.
Maria Becerra has signed a deal with Warner Music Latina in a new joint venture with 300 Entertainment, Billboard can exclusively announce today (May 10).
“I am thrilled to be a part of the Warner Music Latina family,” Becerra said in a statement. “I know that together we will achieve incredible things and that this union will allow me to go even further in my career and solidify my global expansion. I’m honored to be part of their roster and look forward to working with such a skilled and talented team.”
For Alejandro Duque, president of Warner Music Latin America, having the Argentine singer-songwriter on the roster is an honor.
“She’s a standout artist with a strong team behind her, and her past successes are a testament to that. We’re excited to continue the path that was started by 300 Entertainment and Kevin’s team, and are very excited for our future together,” he added.
The news of the signing comes on the heels of Becerra receiving the Visionary Award at the inaugural Billboard Latin Women in Music gala.
Maria Becerra at Billboard Latin Women In Music held at the Watsco Center on May 6, 2023 in Coral Gables, Florida. The show airs on Sunday, May 7, 2023 on Telemundo.
Natalia Aguilera
To date, the YouTuber-turned-artist has achieved three entries on the Billboard Hot Latin Songs chart, including her hit “Qué Más Pues?” with J Balvin, as well as two top 10 entries on Latin Airplay (the No. 1 hit “Te Espero” with Prince Royce, and “Éxtasis” with Manuel Turizo at No. 9), and five entries on Latin Rhythm Airplay.
In 2021, Becerra was nominated for best new artist at the Latin Grammys, and her latest album La Nena de Argentina (2022) has garnered more than 300 million plays on Spotify alone, to name a few career highlights. Additionally, she signed with 300 Entertainment in 2020, becoming the first Latin artist to join the label’s roster.
“We are very happy and deeply grateful to 300 Entertainment, Kevin Liles, and his entire team, for the support they have provided Maria since the beginning, because due to their dedication, efforts, and teamwork, Maria has been able to achieve the success she celebrates today, which leads us to this important next step with Warner Music Latina, spearheaded by Alejandro Duque, to continue growing with the next albums,” noted Jose Levy, Becerra’s manager.
Kevin Liles, chairman and CEO of 300 Elektra Entertainment, added: “It’s been amazing to see the growth of Maria as an artist, and I’m so proud of everything that we’ve been able to accomplish together so far. Tapping into the vast, global reach of our Warner Music Group family with the addition of Warner Music Latina to the team behind her, there is absolutely no limit on where she can go.”
Up next, Becerra is working on new music to be released under the Warner/300 venture and is expected to announce a tour.
Maria Becerra signs with Warner Music Latina.
Miguel Valencia/Warner Music Latina
A Delaware judge has dismissed a shareholder lawsuit against financial technology company Block Inc. over its 2021 acquisition of majority ownership in Tidal, the music streaming service partly owned by rapper Jay-Z.
A pension fund shareholder alleged that Block founder and CEO Jack Dorsey and the company’s board of directors breached their fiduciary duties in agreeing to pay roughly $300 million to take control of Tidal as it was failing financially and the target of an ongoing criminal investigation.
Chancellor Kathaleen St. Judge McCormick ruled Tuesday that the pension fund had failed to demand that Block’s board pursue legal action itself before filing a derivative lawsuit on behalf of the company. Under Delaware law, shareholders must make such a demand or demonstrate that doing so would be futile because a majority of directors were self-interested, lacked independence or faced a substantial likelihood of liability.
McCormick noted that the demand requirement is a manifestation of Delaware’s business judgment rule, under which courts defer to the decision-making of corporate directors unless there is an indication they acted in bad faith. That deference remains even if a corporate decision turns out to be unwise.
“It seemed, by all accounts, a terrible business decision,” the judge said of Block’s acquisition of Tidal. “Under Delaware law, however, a board comprised of a majority of disinterested and independent directors is free to make a terrible business decision without any meaningful threat of liability, so long as the directors approve the action in good faith.”
Tidal, which presented itself as an artist-friendly alternative to other music streaming services, was formed when a group of recording artists led by Jay-Z, whose real name is Shawn Carter, acquired Norwegian streaming service Aspiro in 2015 for $56 million. Rebranded as Tidal, it struggled to attract subscribers, logging multimillion-dollar losses for 10 consecutive quarters by mid-2020. It also churned through five different CEOs by 2020, when Carter personally extended a $50 million loan to the struggling outfit. Meanwhile, Tidal became the target of a criminal investigation in Norway for artificially inflating its streaming numbers.
Nevertheless, Dorsey, who is also the co-founder and former CEO of Twitter, began thinking of acquiring Tidal after summering with his friend Carter in the Hamptons in 2020, according to court documents. By videoconference from the Hamptons, he raised the issue during a Block board meeting. The directors agreed to form a transaction committee while Dorsey drafted and submitted a nonbinding letter of intent to purchase Tidal for $554.8 million.
A management report to the transaction committee in October 2020 raised several red flags. They included Tidal’s difficulties in attracting subscribers in a market dominated by Spotify, with most of the remaining market share captured by Apple and Amazon. The report also noted the Norwegian criminal probe and a federal lawsuit by performing artists who said Tidal was withholding royalties they were owed. A week later, the committee was presented with another report discussing Tidal’s history of quarterly losses, expiration of artist contracts, and $127 million in accrued liabilities. A slide presentation noted that Dorsey was the only person advocating strongly for the deal, which had received “substantial push back” from Block’s senior executives.
The committee nevertheless instructed management to continue pursuing the deal. In early 2021, after Tidal missed its financial forecasts for 2020 and Block’s management reduced its valuation of Tidal to $350 million, Dorsey proposed buying 88% of the company for $309 million. The deal closed on April 30, with Block paying $237.3 million after adjustments for an 86.23% stake.
“It is reasonably conceivable that Dorsey used corporate coffers to bolster his relationship with Carter,” wrote McCormick. The judge also noted that the defendants conceded that Carter, who joined Block’s board as part of the deal, could not be considered impartial.
McCormick concluded, however, that the plaintiffs had failed to demonstrate bad faith by members of the transaction committee in approving the deal.
“Plaintiff has alleged sufficient facts to make a reasonable person question the business wisdom of the Tidal acquisition, but plaintiff has failed to plead that the committee defendants acted in bad faith and thus faced a substantial likelihood of liability for that decision,” she wrote.