Business
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More than 20 live music organizations are calling on lawmakers to reform the ticketing space and crack-down on scalping,.
Today (March 8), a coalition of talent agencies, management companies, labels and promoters have joined Live Nation and Ticketmaster in support of the Fans & Artists Insisting on Reforms — or FAIR Ticketing Reforms, for short. Signatories include Universal Music Group, Red Light Management, all four major music talent agencies (CAA, UTA, Wasserman and WME) and groups like Black Music Action Coalition in calling on Congress to “ensure a fair ticketing experience for live music fans” by handing more control to the creators.
The letter, however, is missing a few key names including rival promoter AEG and its ticketing arm AXS as any independent US promoters like Another Planet Entertainment, Jam or Outback Presents. The letter is a followup to proposed legislation last month and appeals appeals to policymakers for a handful of “common sense” improvements to the ticketing space, drafted into five principles, which, combined, would “protect fans, artists and the vitality of the live entertainment industry.”
They include giving artists the right to decide how their tickets can be sold, transferred and resold; making “speculative” ticket selling and other “deceptive practices” illegal; expanding and creating stricter enforcement of the 2016 BOTS Act; policing and fining resale sites that serve as a safe haven for scalpers and “knowingly sell tickets that are illegally acquired”; and mandating all-in pricing across all ticketing marketplaces nationally, so that concert-goers know the full out-of-pocket cost of a ticket plus fees right upfront.
“Opponents to these common sense reforms have an agenda to continue to keep tickets flowing directly to both scalpers and the secondary market.” reads a statement in which FAIR Ticketing Reforms is announced.
“Scalpers are fighting hard for unlimited resale – and, unfortunately, they are winning, as there are 12 states where these laws are already in effect or going to a vote for passage soon,” the message continues, noting that through scalper lobbyists, and clever branding, ticket touts are “ultimately harming fans”.
The campaign is a national one, but is sure to catch the attention of live music industries around the world which have long grappled with organized scalpers.
FAIR Ticketing launches as ticketing faces extraordinary scrutiny in the United States. Some of that heat has come from Ticketmaster’s record-busting presale for Taylor Swift’s Eras Tour, during which 2.4 million tickets were sold in a single day. The Swift Eras presale was spoiled by a cyberattack, which disrupted over 100,000 transactions, and resulted in fingers pointed (and lawsuits targeted) at Live Nation and Ticketmaster.
Following that debacle, Live Nation and its sister company decided on a strategy to hit-back at scalpers while educating consumers about how fees are assessed. Through that, Ticketmaster targeted scalpers through legislation and drafted a bill, the FAIR Ticketing Act, that would outlaw drip pricing and grant artists the ability to ban scalper websites from reselling their tickets.
FAIR Ticketing, an extension of that mission, is “not about locking down resale to any one ticketing site, it’s about letting artists set the terms on which their tickets are sold,” reads the official launch statement.
“If all resellers would play by the rules of the content owners, the problem would be solved, and that’s what FAIR reforms aim to make happen.”
Visit FairTicketing.com for more information.
A Los Angeles judge has handed The Offspring a victory in its long legal battle with former drummer Ron Welty, who claimed he was owed millions more in profits from the veteran punk band’s $35 million catalog sale.
Welty, the band’s drummer from 1987 to 2003, claimed that lead singer Dexter Holland tried to “erase” his contributions to the Offspring’s golden era, including by failing to pay him his rightful cut of the sale of the band’s rights to Round Hill Music in 2015.
But Judge William F. Fahey largely rejected his accusations after a bench trial last fall, calling some of Welty’s allegations “completely illogical.” And in a final ruling on Monday, the judge sided with the Offspring on all remaining claims.
“Judgement is entered in favor of defendants Offspring Inc.,” the judge wrote. “Plaintiff Ron Welty shall take nothing.”
In a statement to Billboard on Wednesday, Welty’s attorney Jordanna G. Thigpen vowed to continue the fight: “In the few months I have been working with my deserving client and attempting to resolve this matter, it has become clear that the lower court was not the place where justice will be done. We are absolutely appealing, and look forward to higher authorities’ review of this court’s several decisions and its ultimate judgment.”
An attorney for the Offspring declined to comment on the decision.
Come Out and Pay
Welty joined the Offspring in 1987 and served as the band’s drummer across its heyday, including on its breakout 1994 album Smash and its 1998 peak with Americana, which reached No. 2 on the Billboard 200 and spent more than a year on the chart. When he left the band in 2003, no reasons were reported at the time.
But 17 years on, Welty filed a sweeping lawsuit in September 2020, claiming Holland and the other members had “forced him out of the band without cause” despite his “significant contributions to The Offspring’s success.” His lawyers claimed he was owed millions of dollars, and that the band was trying to “erase Mr. Welty and his achievements from the band’s history.”
“This lawsuit seeks, among other things, redress for The Offspring’s failure to pay Mr. Welty his rightful share of the band’s proceeds and a prohibition against their ongoing efforts to harm Mr. Welty, his legacy with the band, and his ongoing career,” his attorneys wrote at the time.
In particular, Welty’s lawsuit challenged the 2015 sale of the band’s music to Round Hill, which saw the company pay a reported $35 million for both the recorded masters for six studio albums and a greatest hits album, as well as the band’s music publishing rights covering its entire career.
But as revealed in later court filings, that deal was really structured as two separate deals: one $20 million payment split among the band’s key performers for the rights to the recorded masters, and another $15 million paid directly to Holland for the publishing rights, which he had retained exclusively.
In his lawsuit, Welty claimed he had not only been underpaid for his portion of the recordings, but that he was owed a portion of the $15 million Holland had earned from sale of his publishing rights.
But at a bench trial held in October, the other members of the Offspring’s best-known lineup testified that structure of the deal was fair. Both Kevin “Noodles” Wasserman and Gregory “Greg K.” Kriesel told the judge that Holland had written all of the band’s music, thus had rightly retained all publishing rights.
In a written decision in January citing that testimony, Judge Fahey ruled that the deal had been “structured in accordance with industry standards” and that Welty had failed to prove that he was entitled to a cut of Holland’s $15 million.
“It is hard even to envision a reason why these two other band members would agree to such a structure unless they believed that Holland was the creator and owner of the music compositions,” the judge wrote at the time.
“To adopt Welty’s theory would require this court to conclude that Wasserman and Kreisel knowingly walked away from a share of the additional $15 million … as part of some scheme to deprive Welty of additional compensation,” Judge Fahey wrote. “Such a conclusion is completely illogical as well as unsupported.”
The January ruling also rejected Welty’s separate accusations that he was owed hundreds of thousands in unpaid royalties.
Following that decision, other issues in the case remained technically unresolved, and the case might have proceeded to another trial at some point in the future. But in Monday’s decision, Judge Fahey made clear that his January decision had effectively ended the case and that “no issues remained to be tried.” All of Welty’s remaining claims against the band were “premised on the same allegations and present the same factual and legal issues on which the court already ruled in defendants’ favor,” he wrote.
SiriusXM CEO Jennifer Witz said on Tuesday that the company’s recent job cuts were difficult but “the right thing to do” as the business grapples with lower ad sales, a still-delayed recovery in automotive subscription business and major investments in its technology.
SiriusXM announced this week it was letting go of 475 employees, or roughly 8% of its workforce, which totaled 5,869 employees as of Dec. 31, 2022.
“It’s really tough to see the number of talented employees leaving the business,” Witz said Tuesday at a conference hosted by Morgan Stanley. “It was the right thing to do for the business. We absolutely want to make sure we’re disciplined. We will operate much more efficiently going forward and that’s going to give us even more flexibility to invest where we need to to build out this platform and generate future growth.”
Among the employees impacted were Steve Leeds, vice president of talent and industry and a 17-year veteran of the company who developed SiriusXM’s artist branded stations like E Street Radio and recruited talent like Lou Reed and Marshall Chess; and Roger Coletti, senior director and executive producer talk programming who, during his eight years at SiriusXM, helped create Volume, SiriusXM’s talk radio channel dedicated to music topics.
SiriusXM is the latest in a long list of companies in technology, consumer products and other industries to announce it was cutting its workforce and operating leaner due to the uncertain economic climate. Layoff.fyi, a website tracking job cuts in the technology sector, estimates more than 126,000 employees have been let go from tech company jobs so far in 2023, compared to 161,000 employees let go in all of 2022.
Witz, a former Viacom executive who has been with SiriusXM since 2002, said the company has been reviewing areas to reduce costs since the middle of last year. It made cuts to new hiring, content development, discretionary marketing and the company’s real estate footprint, but ultimately prepared to reduce staff as ad sales slowed in December.
“Advertising is definitely a headwind,” Witz said. “That’s 20% of our revenue… And subscriber volume — we expect this to be modestly negative. The auto sales, we haven’t seen a recovery materialize. The first quarter is going to be tough.”
Witz said that operating with a leaner workforce will enable the company to capitalize on growth opportunities she sees in automotive subscriptions at the high end, where customers pay as much as $35 per month.
SiriusXM reaches roughly 150 million listeners across its divisions, including 34.3 million Sirius XM subscribers, 6.2 million Pandora subscribers, and podcasts, according to the company’s most recent annual report.
SiriusXM’s core product — satellite subscription radio programs — have historically been consumed in cars, with SiriusXM radios available in about 152 million vehicles, as of Dec. 31, 2022, according to filings.
As the company looks to smart speakers and other connected devices to expand its reach to consumers, it is also expanding it content offering and prioritizing podcasting.
“We do see a bright spot in podcasting,” Witz said.
The American Society of Composers, Authors and Publishers on Wednesday (March 8) posted a 14% increase in collections to $1.522 billion while also reporting its fund available for distributions to songwriters and publishers grew 10.7% to $1.388 billion in 2022. In the prior year — 2021, when the economy was still impacted by the COVID pandemic — the performance rights organization disclosed revenues of $1.335 billion and distribution funds at $1.254 billion.
Moreover, the double-digit percentage increase for collection and distribution funds represents a significant bump from the pandemic-scarred 2021 when ASCAP posted a less than 1% increase in collections from 2020’s $1.327 billion and a 3.4% increase in distribution funds from $1.213 billion.
The PRO attributed its rebound and continued growth to its 2015-launched strategic growth plan, which focused on revenue growth, technological innovation and operational efficiency.
“It is our technical innovation coupled with an unparalleled work ethic that grew our domestic revenue 16.5% in 2022 and yielded a 6% compound annual growth rate since the inception of our strategic plan eight years ago,” ASCAP CEO Elizabeth Matthews said in a statement. Beyond that, ASCAP also noted the organization had achieved a 7% compound annual growth rate for total distributions to members over the same time period.
In an apparent reference toward ASCAP’s competitors — BMI, SESAC and GMR — Matthews continued her statement by noting it is “the only US PRO that operates on a not-for-profit basis which is a key differentiator among PROs. ASCAP creator and publisher members are the sole beneficiaries of this growth because we invested years ago in cloud computing, enabling us to address the challenges of digital streaming efficiently, and because we only pay songwriters and publishers, not private investors.”
Breaking out collections, ASCAP said its domestic receipts grew 16.5% to $1.178 billion from 2021’s $1.011 billion; while foreign receipts grew 6.3% to $344 million from the prior year’s total of $323.5 million. It attributed the discrepancy in growth rates to “challenges due to foreign currency exchange volatility.”
Moving over to funds available for distribution, ASCAP said domestic distribution funds totaled $1.048 billion — a 14.9% increase over the prior year’s total of $912.6 million, and further noted that it was the first time those funds had surpassed the $1 billion mark.
“We are elated to share these historic financial revenue and distribution results for 2022 with our songwriter, composer and publisher members, who are the foundation of the music we all love,” ASCAP chairman and president Paul Williams said in a statement. “In the US, we have competition, meaning that creators have a choice, and that choice should be ASCAP. It is in ASCAP’s DNA to ensure that we operate in the best interest of all our members. Our financial success for over 100 years, and a singular commitment to nurture their careers and maximize the value of their music, prove that our not-for-profit model of collective licensing works.”
Meanwhile, foreign revenue funds available for distribution totaled $340 million, or $1 million less than 2021’s total of $341 million. The latter total was larger than the $323 million reported for 2021 foreign receipts, and ASCAP attributed the unusual occurrence to “technological and distribution process efficiencies and timing.”
Finally, the organization said it delivered 90 cents on the dollar back to its members and affiliates, thus implying its expense structure costs 10% of revenue — and that’s down from 12.3% of collections in 2015 — the last time ASCAP publicly revealed detailed financials including a breakdown in its expense structure.
In its latest results, ASCAP said that it grew every major category of performance licensing, reporting general licensing revenue increased by 40%, radio by 32%, audio streaming by 16% and audio-visual by 7%, without breaking out the actual revenue numbers those income streams achieved in 2022 or 2021.
Comedian Bert Kreischer is ready to go back out with a blackout, pulling himself up to the bar for round two of his party-driven Fully Loaded Comedy Festival beginning June 14 and hitting 16 ballparks and arenas across the country.
Aside from Kreischer, this year’s lineup includes Mark Normand, Shane Gillis, Tiffany Haddish, Stavros Halkias, Fortune Feimster, Dave Attell, Lewis Black, Jim Norton, Andrew Santino, Big Jay Oakerson, Jay Pharoah, Dan Soder, Chad Daniels, Ralph Barbosa, Rosebud Baker and Tammy Pescatelli.
“Fully Loaded is the best ticket you can buy in entertainment this summer – Indoors, outdoors, baseball stadiums, arenas, and The Gorge,” Kreischer says, calling the traveling festival “an absolute no-brainer for any comedy fan.”
The concept for the Fully Loaded Comedy Festival, promoted by Outback Presents, was conceived during Bert’s 2020 Hot Summer Nights Tour while performing outdoor shows at drive-in venues (a pandemic consideration). The idea was to created a traveling comedy festival inspired by the original Lollapalooza touring festival and encompass everything he loves: “comedy, the outdoors, good times, and drinking with friends to give fans an experience they will be talking about for years to come,” a release announcing the festival explains.
This year the festival will partner with the charity Comedy Gives Back, an organization founded as a safety net for comics by providing them with financial crisis relief, mental health support and more.
On March 14, he will release his highly anticipated fifth stand-up special, Razzle Dazzle on Netflix and will star in the Legendary/Sony Picture film, The Machine, premiering May 26.
“Set 23 years after the study abroad experience he chronicled in his 2016 Showtime stand-up special, the movie follows Kreischer as the Russian mafia finally catches up with him after all these years and seeks retribution for the crimes that he committed in their country as a rowdy, drunken college student,” according to a press release.
Kreischer is also a popular podcast host with several top comedy podcasts including Bertcast and Two Bears One Cave that he co-hosts with Tom Segura. He also hosts the popular YouTube cooking show, Something’s Burning.
Presale passes are now on sale with a public on-sale scheduled for March at 10 AM. FULLY LOADED COMEDY FESTIVAL 2023:06/14/23 – Forest Hills, NY – Forest Hills Stadium06/15/23 – Baltimore, MD – CFG Bank Arena06/16/23 – Moosic, PA – PNC Field06/17/23 – Gilford, NH – Bank of New Hampshire Pavilion 06/22/23 – Traverse City, MI – Turtle Creek Stadium06/23/23 – Fort Wayne, IN – Parkview Field06/24/23 – St. Louis, MO – Enterprise Center06/25/23 – Lincoln, NE – Pinnacle Bank Arena 07/06/23 – Huntsville, AL – The Orion Amphitheater07/07/23 – New Orleans, LA – Smoothie King Center07/08/23 – Memphis, TN – AutoZone Park07/09/23 – Oklahoma City, OK – Paycom Center 07/12/23 – Las Vegas, NV – T-Mobile Arena07/13/23 – Salt Lake City, UT – Vivint Arena07/14/23 – Boise, ID – ExtraMile Arena07/15/23 – George, WA – Gorge Amphitheatre
Six years ago, Drake delivered a message to Apple Music’s then-global creative director Larry Jackson that would change his life.
“Someone get Larry Jackson on the phone,” Drake rapped on the first verse of Lil Wayne’s “Family Feud,” a track that Jackson heard for the first time while he was vacationing in the Maldives. “I need some ownership if we pressin’ go.”
“I really sat down and started to reflect on my life,” Jackson recalled recently at one of his regular tables on the patio at The Beverly Hills Hotel’s Polo Lounge, where the 42-year-old often spends mornings hobnobbing with music business power brokers and fielding a steady stream of calls from A-list artists seeking his counsel on everything from creative projects to sponsorship deals. Drake’s verse shook him from a “slumber” he says had been induced by his corporate, “hamster wheel” routine, and made him think: “What if there was another level to the video game?”
Jackson says that wakeup call inspired him to revisit an idea for his own venture that he’s now launching as Gamma, a one-stop-shop media company that creates, distributes, and markets content, from music to podcasts to films, offering resources and guidance to artists who want to build their brands and expand beyond music. Backed by investors that include Apple and Todd Boehly’s Eldridge (which also owns a stake in Billboard’s parent company) Gamma debuts as the “best capitalized music company competing with the major labels and signing superstars,” says Raine Group partner Fred Davis, who advised Jackson through his fundraising process, though neither he nor Jackson would disclose the amount raised to date.
“There’s a lot of private equity acquiring catalogs,” Davis tells Billboard, “but this is unprecedented.”
Jackson acquired the distribution platform Vydia in December, subsuming its 76 mostly New Jersey-based employees, and has struck deals with about a dozen of the world’s most influential creators, from Usher to Naomi Campbell to Angelica Nwandu, founder of The Shade Room, one of Instagram’s most popular news channels.
In December, Gamma also quietly acquired a stake in the Death Row Records catalog from Snoop Dogg, who had purchased the catalog last year and pulled it from streaming services. Jackson wouldn’t disclose the terms of his deal with Snoop Dogg, whose real name is Calvin Broadus, but said that it’s a long-term partnership that includes two future albums and allows rights to revert back to Broadus after “we work together to enrich the value of the IP.” Jackson released the catalog exclusively on TikTok last month without disclosing his participation, allowing fans to create their own videos using clips from classic albums like Doggystyle, and to transform themselves into various breeds of dogs using TikTok’s “What Dogg Are You?” AR filter, an effort to drive buzz and engagement for the music before it returns to streaming platforms.
Jackson is betting that with his own distribution pipeline, a bevy of big-name acts, an array of culture-driving shows and an alliance with indie film studio A24 (in which Boehly is also an investor), Gamma could give TikTok a run for its money and “become the new radio, where you could actually break records,” plus sell an array of other goods from concert tickets to beauty products.
“Having the whole thing A to Z creates kind of a farm-to-table situation,” Jackson says. “Everything can’t be about one place where you break music – I’m not going to say what that one place is, but you know what I’m talking about. For us, as a company, I’m looking to decrease our dependence on outside sources. I don’t see that being done anywhere.”
He’s also hoping that as a Black founder and CEO, his leadership will drive more diversity, inclusion and equity at the top of the music business. He wants to run Gamma with a closer focus on — and more sensitivity to — Black culture than the major labels, while structuring deals that help artists retain ownership of their work and build generational wealth.
To build intrigue, Jackson has been mysteriously teasing his new company as he might a new album, drawing on his many years working in the record business. After the Grammys in February, for instance, he hosted a party at Mr. Brainwash Art Museum in Los Angeles, inviting a mix of bankers and stars such as Lil Wayne, Leonardo DiCaprio and Madonna, making guests say “Gamma” as the password for entry. This month, he put up billboards on Los Angeles’s Sunset Boulevard and in New York’s Times Square, featuring cymbal-banging monkeys and the new company logo.
Jackson’s core team includes his co-founder and COO Ike Youssef, with whom he worked at Universal Music’s Interscope Records, where Youssef was CFO. It also includes Ben Cook, who left his post as president of Atlantic Records UK in 2019 amid controversy over an old photo in which he was dressed up as a member of Run-DMC; Cook apologized in a statement at the time, saying he realized his appearance was “offensive” and that he’d only been trying to honor his musical hero.
“I believe in redemption,” says Jackson, noting that he was grateful to get a second chance himself after being fired for cause from Sony’s RCA Records in 2010. (He had offered to personally pay Alicia Keys a sum that exceeded the amount the label had approved for the rights to have Jennifer Hudson record one of Keys’ songs, in an effort to expedite the release of Hudson’s second album.) “In retrospect, I can see how that could be perceived as disrespectful and insubordinate – but I was doing it more with a magnanimous spirit of making sure that the album came out, which would have ensured that the company made its numbers and that all 170 employees got their bonuses. I was trying to honor the artist and honor my colleagues.”
Jimmy Iovine gave Jackson another shot, hiring him almost immediately at Interscope, and it was there during a white-board brainstorming session that same year that Youssef says they came up with the initial notion for a company like Gamma.
Jackson then worked closely with Iovine and Dr. Dre to launch Beats, their headphones and streaming service company, becoming Apple Music’s global creative director when Apple acquired Beats in 2014. Youssef, meanwhile, went on to work at Yeezy, the Kanye West-Adidas venture, as CFO from 2017 to 2018, and in 2019, Jackson and Youssef started raising capital for Gamma and shopping for assets.
Jackson is “really resourceful about creating events that distinguish artists in the marketplace. There are, what, 100,000 songs uploaded to Spotify every day? You need to have someone like Larry to get people to pay attention. He is second to none in that,” Youssef says. He “knows how to cut through the clutter.”
Jackson says he learned his tricks from Iovine, who “used Best Buy to market Beats” and “partnered with artists to market the headphones.” He just plans to expand on Iovine’s ideas, using fashion and film as vehicles for exposure, keeping Iovine close as his “chief consiglieri,” and heeding his advice like “don’t get caught speeding,” “don’t spend foolishly” and “always stay at the table.”
Among Gamma’s first musical releases will be a new album by Usher, through a new joint venture between Usher and veteran music executive L.A. Reid that Gamma will distribute. (Jackson says he’s known both Usher and Reid since he was 17, so he’s been “much more involved” than a typical distributor.) He’s also developing new podcasts with Naomi Campbell, and says he’s been in close touch with Frank Ocean throughout the launch of Gamma, seeking the artist’s feedback on details like the name of the company, but wouldn’t comment on any projects they might have in the works together.
Gamma has been shopping for catalogs besides Death Row, too, bidding for instance on some of Dr. Dre’s music assets – passive income streams including his artist and producer royalties from his solo albums — that were recently on the market, though Dr. Dre ultimately sold them to Universal and Shamrock. Jackson says catalogs “were never was a part of the business plan,” and that he’s only interested in acquiring them “on terms favorable to the original creator.”
“I only make offers,” Jackson says, “on things I feel that we can enhance.”
In the latest bid by lawmakers to crack down on TikTok in the United States, on Tuesday (Mar. 7) a bipartisan group of senators introduced a new bill that would empower the White House to rein in the Chinese-owned video-sharing app.
Led by Sens. Mark A. Warner (D-Va.) and John Thune (R-S.D.) and co-sponsored by 10 others in the chamber, the RESTRICT Act would “comprehensively address the ongoing threat posed by technology from foreign adversaries” including China, Russia and Iran by authorizing the Department of Commerce — led by Commerce Secretary Gina Raimondo — “to review, prevent, and mitigate information communications and technology transactions” that are found to threaten U.S. national security, up to and including an outright ban, according to a press release.
The White House has also come out in support of the new bill, with U.S. national security advisor Jake Sullivan noting in a press release that the legislation “presents a systematic framework for addressing technology-based threats to the security and safety of Americans.”
Though TikTok is not named in the text of the RESTRICT Act, both Warner and Thune invoked the platform in their own statements on the legislation.
“Congress needs to stop taking a piecemeal approach when it comes to technology from adversarial nations that pose national security risks,” said Thune. “Our country needs a process in place to address these risks, which is why I’m pleased to work with Senator Warner to establish a holistic, methodical approach to address the threats posed by technology platforms — like TikTok — from foreign adversaries.”
A representative for TikTok did not immediately respond to Billboard‘s request for comment.
TikTok has been subject to increased scrutiny by the U.S. government recently over fears that national security and consumer privacy could be compromised by the platform, which is owned by Chinese company ByteDance. In December, President Joe Biden signed a bill that prohibits the use of the platform by nearly 4 million government employees on devices owned by its agencies, joining at least 27 state governments and several universities that have passed similar measures. And last month, the administration drew a sharp rebuke from the Chinese government after it gave all federal agencies just 30 days to wipe TikTok from government devices.
Tuesday’s Senate bill follows a separate one introduced in December by Sen. Marco Rubio (R-Fla.), Rep. Mike Gallagher (R-Wis.) and Rep. Raja Krishnamoorthi (D-Ill.) that would have required President Biden to use the International Emergency Economic Powers Act (IEEPA) to restrict U.S. citizens’ access to the app.
In the House on Wednesday (Mar. 1), another bill advanced out of committee that would direct the Treasury Secretary to prohibit Americans from engaging with TikTok and other entities found to be directed or influenced by the Chinese government — though it was criticized by Democrats who said it had not been properly vetted and could affect innocent U.S. businesses. That legislation would additionally empower the President to impose sanctions on TikTok and other companies tied to China.
TikTok has long attempted to assuage fears that the platform, owned by Chinese company ByteDance, has ties to the ruling Chinese Communist party and censors content critical of the Chinese government and other authoritarian regimes. In June, the company announced it had started routing U.S. user data to Oracle cloud servers located in the U.S., instituted audits of its algorithms and established a new department to solely manage U.S. user data for the platform.
The U.S. government has so far been undeterred. “We look forward to continue working with both Democrats and Republicans on this bill, and urge Congress to act quickly to send it to the President’s desk,” said Sullivan on Tuesday.
Concerns about TikTok have also been prevalent in other corners of the West, most prominently in Europe. In January, TikTok CEO Shou Zi Chew met with European Union officials over concerns about child safety and data privacy, among other matters. On Feb. 16, TikTok’s general manager of operations in Europe, Rich Waterworth, attempted to allay some of those concerns in a blog post where he noted that the company plans to establish two additional European data centers, citing a commitment “to keeping our European community and their data safe and secure.” He added that the company is “continuing to deliver against” a data governance strategy they set out for Europe last year, which includes plans to further reduce employee access to European data, minimize data flows outside Europe and store European user data locally.
Zi Chew is slated to appear before the House Committee on Energy and Commerce on March 23, when he’s expected to comment on TikTok’s data security and user privacy policies, the app’s impact on children and ties with the Chinese Communist Party.
SM Entertainment shareholders have until the end of the month to weigh two competing visions for the South Korean music company’s future before its annual general meeting on March 31 — one from SM and Korean tech company Kakao and another from K-pop rival HYBE.
Despite SM Entertainment’s announcement Monday that it had canceled plans due to a court injunction to issue new shares and give Kakao a 9.05% stake in the company, making it the leading shareholder, SM and Kakao are pushing forward with their strategy to maintain control. On Tuesday (March 7), Kakao launched a tender offer to buy a 35% stake from SM’s minority shareholders by March 26 and, if successful, could soon own nearly 40% of SM and hold significant voting power.
SM — home to such K-pop acts as NCT 127 and Aespa — has nominated a slate of independent directors and laid out a plan for adding 260 billion won ($200 million) of revenue by 2025 by setting up operations in the U.S., Japan and Southeast Asia, and making acquisitions — including a publishing company — in the coming years, according to a company presentation to shareholders. If the roadmap is successful, SM believes it can double its annual sales from an estimated 770 billion won ($690 billion) in 2023 to 1.5 trillion won ($1.14 billion) in 2025.
Much of SM’s road map stems from its battle with founder Lee Soo-man. In late 2022, an activist investor, Align Partners Capital, convinced SM’s board to appoint a new auditor and terminate a contract with Lee’s production company, Like Planning. Now, SM is attempting to remake itself under revamped corporate governance and a more decentralized organization than Lee’s hierarchical control of artist development.
The current inside directors — including Lee’s nephew, Lee Sung-soo — will resign their positions “in order to take responsibility for the problems of the [Lee Soo-man] system,” the company stated. In their place, SM is recommending its own slate of three executives: CFO Jang Chul-Hyuk; Kim Ji-Won, head of marketing center; and Choi Jung-Min, head of global business center.
To ensure an independent board of directors, SM has proposed the chairperson be one of its outside directors, not one of its own executives. Among the company’s picks for outside directors are Kim Kyu-Shik, president of the Korean Governance Forum; Moon Jungbien, a professor at Korea University that specializes in environmental, social and corporate governance matters; and Sung M. Cho, CEO of music analytics company Chartmetric. For part-time directors, SM recommends Lee Changhwan, the CEO of Align Partners, and Jang Yoon-Joong, Kakao’s global strategy officer.
Lee Chang-hwan
Courtesy of Align Partners
HYBE, home to the wildly popular boy band BTS, has different ambitions for SM’s future. HYBE acquired a 14.8% stake in SM from Lee, the SM founder, on Feb. 22, and an additional 1% through a tender offer, according to a March 6 regulatory filing. It has blasted “the bias and irrationality” of the SM management that approved the Kakao partnership.
“HYBE has been considering the acquisition of SM for a long time and gave much thought into how the two companies could work together,” Jung Jinsoo, HYBE’s chief legal officer, wrote in a letter to SM shareholders on Thursday.
In the letter, Jung argues HYBE solved two problems when it acquired Lee’s equity. First, HYBE acquired Lee’s shares in two SM subsidiaries: SM Brand Marketing and Dream Maker Entertainment Limited. That solves what Jung called “leakage in SM’s profits” to Lee. Second, HYBE alleges SM still owes Lee fees for three years even though it terminated the Like Planning contract as of Dec. 31.
Jung says HYBE structured the stock purchase agreement so payments to Lee stop “upon the execution of the agreement.” HYBE also added a clause to terminate any transactions from SM to Lee that HYBE did not know about.
While SM sees Kakao as the partner for its transformation into a larger, more global entity, HYBE calls it an “unfair partnership” that would give Kakao permanent and exclusive rights to distribute SM’s music, protect SM’s equity at the expense of other shareholders and create conflict of interests that favor Kakao’s interests. “We believe that these details demonstrate the bias and irrationality of the current SM management who approved such arrangements,” Jung writes.
Beyond SM’s relationship with Kakao, HYBE is concerned with SM’s roadmap to increase the number of artists on its roster by expanding production in Korea and building overseas outposts. Jung is questioning SM leadership’s understanding of the time and resources required to develop and break successful artists.
“It goes without saying but you cannot generate profit in K-pop just by having a longer artist roster,” Jung writes. “What’s important is to nurture artists who are loved by fans and provide a creative environment.”
HYBE has submitted a competing slate of inside director recommendations featuring a handful of HYBE executives: Jung; Lee Jaesang, president of HYBE America; and Lee Jin Hwa, HYBE’s chief of management and planning.
For outside directors, HYBE has recommended Kang Namkyu, managing partner at GAON Law Group; Hong Sounman, professor of public administration at Yonsei University; and Lim Dae Woong, a representative of the United Nations Environment Program Finance Initiative. HYBE’s recommendation for part-time director is Park Byungmoo, managing partner at buyout firm VIG Partners; and Choi Kyu Dam, a former NCSOFT finance executive, for part-time auditor.
SM portrays the battle with HYBE as a fight for its independence from a large company. A HYBE takeover would put its interests over SM’s artists, SM says, and could force SM to downsize or divest assets to meet regulatory approval. What’s more, HYBE might not receive a warm welcome: 85% of SM employees who voted on the workplace app Blind oppose HYBE’s “hostile takeover” and want to “protect the culture diversity of K-pop and the unique identity of SM,” according to SM’s investor presentation.
Ultimately, the two sides have competing visions for a board of directors that will best serve SM shareholders and lead the company. To SM, HYBE’s recommended directors are either tied to Lee, employed by HYBE or hurt shareholder value in their previous corporate tenures. To HYBE, SM’s proposals could result in a board controlled by Align Partners that lacks the experience to expand SM and reach the company’s lofty targets.
“[I]t is questionable whether the current management has a sufficient understanding on these circumstances,” writes HYBE’s Jung.
This is The Legal Beat, a weekly newsletter about music law from Billboard Pro, offering you a one-stop cheat sheet of big new cases, important rulings and all the fun stuff in between.
This week: A deep-dive into the messy – and litigious – situation inside the iconic 80s rock band Journey; an update on YNW Melly’s death-penalty case at the Florida Supreme Court; a sudden dismissal of a copyright lawsuit against Benny Blanco, Ed Sheeran and others; and much more.
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THE BIG STORY: Don’t Stop Litigatin’
If you read one thing this week, make it Steve Knopper’s long Billboard story about the simmering problems inside Journey — an epic tale of internal dysfunction among members of an iconic band that’s still printing money decades after its “Don’t Stop Believing” heyday.
The story has it all: dueling security guards in green rooms; a multi-million-dollar pay-per-view wedding; a trail of fired managers and staffers; and an absolute all-timer quote: “This is Neal. I am fucking your wife.” But above all else, it has lawsuits — ranging from divorce to defamation to intellectual property to assault.
Sure, there’s the current battle between lead guitarist Neal Schon and keyboardist Jonathan Cain over a disputed American Express card. But there’s also the lawsuit filed against Live Nation over an alleged assault on Schon’s wife, a case alleging a “coup” by former bandmates Steve Smith and bassist Ross Valory, a trademark dispute with former frontman Steve Perry and much more.
For the full breakdown of the crisis inside Journey, go read the entire story here.
Other top stories this week…
DEATH PENALTY DISPUTE – Prosecutors urged the Florida Supreme Court to reject an appeal by YNW Melly from a ruling last year that said he could face the death penalty if convicted at an upcoming murder trial. The rapper says the state forfeited the right to seek the death penalty by failing to give proper notice, but prosecutors say he “suffered no harm.”
MARILYN MANSON UPDATE – A week after one of Marilyn Manson’s sexual assault accusers recanted her allegations, a judge ruled that the sudden reversal couldn’t be used as evidence in Manson’s defamation lawsuit against his ex-fiance Evan Rachel Wood. The move came after Wood’s lawyers argued the “eleventh hour” revelation was just a “bad-faith” effort to save Manson’s case.
COPYRIGHT CASE CLOSED – Two songwriters who sued Benny Blanco, Halsey, Khalid and Ed Sheeran for copyright infringement over their 2018 hit “Eastside” suddenly dropped the lawsuit. The accusers told Billboard that they decided that continuing the case would have been “too costly, challenging, and risky for us”; but Blanco’s lawyer said the accusations were “baseless” and “never should have been made” in the first place.
PODCAST POT CLASH – Chris “Kit” Gray, the president and co-founder of PodcastOne, was hit with a lawsuit claiming he fired his executive assistant because she refused to ship cannabis products from California (where they’re legal) to his home in Florida (where they aren’t).
TRAVIS SCOTT’S NIGHTCLUB SCUFFLE – Police in New York sought to question rapper Travis Scott after he was accused of assaulting a sound engineer and causing $12,000 worth of damage to sound equipment at Manhattan nightclub Nebula. His reps called it “a misunderstanding being blown out of proportion” and stressed that no charges had been filed. Scott is expected to sit for questioning this week.
FORT LAUDERDALE, Fla. (AP) — A Florida prosecutor told jurors during closing arguments Tuesday (March 7) that three men on trial for the 2018 slaying of rapper XXXTentacion were “predators” who waited outside a motorcycle shop to rob and shoot the rising star, escaping with $50,000.
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Prosecutor Pascale Achille played cellphone videos the defendants allegedly took hours after the killing that showed them smiling and dancing as they flashed handfuls of $100 bills. Michael Boatwright, Dedrick Williams and Trayvon Newsome are all charged with first-degree murder and face mandatory life sentences if convicted.
“This is who they are. This is their real character. Killers that within 24 hours after shooting the victim dead and stealing $50,000 from him, this is what they do,” Achille told the jury as she played the video. “Look at how happy they look. Look at how excited they look.”
She also played surveillance video from the motorcycle shop and from where two of them allegedly stashed an SUV that she says link the men to the killing. And she recounted statements from a fourth man, Robert Allen, who pleaded guilty to second-degree murder last year and testified against his former friends.
George Reres, Newsome’s attorney, implored the jury not to convict his client based on Allen’s testimony or evidence implicating the other two defendants, saying, “He was not there.” He said that Allen, a 12-time convicted felon, should not be believed and that Newsome’s DNA was not found on any evidence.
He told jurors they should not believe Newsome is guilty simply because of the video showing him flashing money with the others, arguing he may not have even known where they got it.
“He did some stupid things — he posed with some money,” Reres said. “Guilt by association is not something the law permits.”
George Reres, Newsome’s attorney, implored the jury not to convict his client based on Allen’s testimony or evidence implicating the other two defendants – “he was not there.” He said Allen, a 12-time convicted felon, cannot be believed and that Newsome’s DNA is not found on any evidence.
He said they should not believe Newsome is guilty simply because there is a video showing him flashing money with the other defendants – he may not have even known where his friends got it.
“He did some stupid things – he posed with some money,” Reres said. “Guilt by association is not something the law permits.”
Mauricio Padilla, Williams’ attorney, called Allen a “liar.” He said the prosecution’s witnesses contradicted each other and Broward County sheriff’s detectives didn’t look at other possible suspects, including the Canadian star rapper Drake — he and XXXTentacion had an online feud. He said his client did tattooing and other work that paid him in cash, so the video of him flashing money means nothing.
Padilla also cast doubt on the value evidentiary value of the surveillance video, saying that while it may show his client in the store and walking back to the SUV, there are moments where the vehicle is blocked and Williams could have gotten out and left.
Boatwright’s attorney is to give his closing argument later Tuesday. The trial began a month ago.
XXXTentacion, whose real name was Jahseh Onfroy, had just left Riva Motorsports in suburban Fort Lauderdale on June 18, 2018, with a friend when his BMW was blocked by an SUV that swerved in front.
Surveillance video showed that two masked gunmen emerged and confronted the 20-year-old singer at the driver’s window, and one shot him repeatedly. They then grabbed a Louis Vuitton bag containing cash that XXXTentacion had just withdrawn from the bank, got back into the SUV and sped away. The friend was not harmed.
Boatwright, 28, is accused of being the shooter, while Newsome, 24, is accused of being the other gunman. Williams, 26, is accused of being the driver.
Prosecutors say the men, along with Allen, set out that day to commit robberies and went to the motorcycle shop to buy Williams a mask. There they spotted the rapper and decided to make him their target. Allen and Williams went inside the motorcycle shop to confirm it was him. They then went back to the SUV they had rented and waited for XXXTentacion to emerge and ambushed him, according to prosecutors.
The rapper, who pronounced his name “Ex ex ex ten-ta-see-YAWN,” was a platinum-selling rising star who tackled issues including prejudice and depression in his songs. He also drew criticism over bad behavior and multiple arrests, including charges that he severely beat and abused his girlfriend.