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Sens. Richard Blumenthal (D-CT) and Sheldon Whitehouse (D-RI) responded to President Joe Biden’s calls for fairness and transparency in ticketing fees by introducing the Junk Fee Prevention Act on Wednesday (March 22). While the proposed legislation goes beyond live music, it would transform how concert tickets are sold and attempts to reduce fees that inflate tickets’ face values.
“Concealed surprise fees — nickel and diming Americans to distraction — must be stopped,” Blumenthal said in a statement.
“Consumers are charged hidden fees when purchasing everything from flights to concert tickets,” added Whitehouse. “Our Junk Fee Prevention Act would provide consumers with the transparency they deserve when making a purchase.”
Biden urged Congress to pass legislation addressing “junk fees” during his Feb. 7 State of the Union address, pledging to cap fees on concert tickets and make companies disclose all-in prices upfront. “Americans are tired of being played for suckers,” he said. “Pass the Junk Fee Prevention Act so companies stop ripping us off.”
Blumenthal and Whitehouse’s proposed legislation would at least improve transparency. Ticketing companies would be required to “clearly and conspicuously” display the total price of a ticket with all fees included “in each advertisement and when a price is first shown to a consumer.”
While the legislation targets concert ticket fees and some re-sale tactics, it’s more than a reaction to Taylor Swift’s botched Eras Tour presale that prompted a Senate hearing on Ticketmaster’s business practices. The Junk Fee Prevention Act seeks to prevent companies from applying or advertising “any mandatory fees that are excessive or deceptive” for any good or service. It also targets fees for airline tickets and short-term housing such as hotels and vacation rentals, and would require airlines to seat parents next to their young children.
Transparency is a key theme of the Junk Fee Prevention Act. It includes a requirement to disclose the total number of tickets being offered for a concert, theater event, sporting event or other events “at a place of public amusement of any kind.” Both lawmakers and consumers have long complained that many concert tickets are held back for fan clubs, commercial partners like credit card companies and VIP packages.
Many of the changes sought in the Junk Fee Prevention Act are also found in the FAIR Ticketing Reforms, a set of “common sense” measures introduced on March 8 by a group of leading music companies including Live Nation, Universal Music Group and Red Light Management. FAIR Ticketing Reforms also calls for an end to speculative selling on secondary markets and mandatory all-in pricing. Unlike the Junk Fee Prevention Act, FAIR Ticketing Reforms also calls for stricter measures against automated bots and policing and fining resale sites that serve as a safe haven for scalpers.
Any person who violates the Junk Fee Prevention Act would be subject to the penalties of the Federal Trade Commission Act. A state attorney general can also bring a civil action if a violation affects residents of that state. In determining whether a fee is excessive, the bill asks the Federal Trade Commission or court to consider whether the fee is “reasonable and proportional” to the cost of a ticket and the reason for the fee. The FTC or court can also consider “any other factors determined appropriate.”
A mandatory fee is defined as any fee required to purchase a ticket, is not “reasonably avoidable,” is not expected to be included by a “reasonable consumer” or “any other fee or surcharge determined appropriate” by the FTC. Within 180 days of the bill’s enactment, the FTC would commence a rule making proceeding to consider whether and how the Federal Communications Commission should require disclosure of mandatory fees or prohibit companies from charging mandatory fees.
French streaming service Deezer and Universal Music Group announced this month that they are partnering to develop and test new potential payment models that would more fairly reward artists, similar to a partnership UMG launched in January with Tidal.
While the streaming services and labels are still a long way off from implementing new streaming royalty payment models, Deezer’s chief executive Jeronimo Folgueira spoke with Billboard about some of the ideas being explored and the economic imperatives that are driving his company to push for a new way to pay rights holders.
Deezer has long advocated for changing payment systems. How have the company’s views evolved?
We were, I believe, the first to really embrace the concept of user-centric, which means that the artist gets a share of the payments that the user that listens to them pays, instead of a global pool. We could never do it unilaterally [because] we have not been able to get the majority of labels to agree to an initiative so far. To do it right, you really need a consensus from the industry and obviously, there are so many players involved that it’s difficult to get that. I do believe [an artist-centric] system is much better than the current system we have, but no system is absolutely perfect. There were some flaws, and that’s why there was so far resistance from some labels. I believe that there are a lot of elements in the artist-centric initiative that Universal is pursuing that make sense and could make something like [user-centric payment systems] even better.
You often mention the importance of “growing the pie.” What do you mean?
When the discussion is about sharing the same pie there are always winners and losers and it’s very difficult to get consensus. That’s why if you focus on growing the pie then you can have a discussion also about the distribution of that pie because some will win and some will win double. One of the things that I’m really excited about in this discussion is … also figuring out ways of monetizing fandom better. If we can find ways to increase the [average revenue per user] on the way, that would be a win for the artist, for the labels and for the platforms like us.
How does that fit into Deezer’s overall growth strategy?
Basically, today 100% of our revenues come from selling access to the catalog. So you pay $10.99 and you get access to the full catalog. But we don’t let users pay for anything else on the platform. We know that we have a lot of fans of artists on Deezer but we cannot monetize them in any other way. And the artist is struggling to monetize them in other ways because they don’t have direct access to the fans. We believe that working together with the label and the artists to figure out ways of helping the artist directly access their fanbase and monetize that fandom would benefit us and them as well.
What’s in it for you?
If we only change the compensation model there is nothing in it for Deezer except that we will be a platform where artists are remunerated better. It will give us a bit of differentiation but economically it will not really change anything.
If we find ways of monetizing better, let’s say, if we would allow fans to subscribe directly to artists, we would have an additional revenue source that we would share with labels and the artists, which will improve our growth and profitability profile. It is important to be more fair in terms of payout but to have a financial impact, we also care a lot about growing the pie. I fully share [Warner Music Group CEO Robert Kyncl‘s] view. Music is extremely undervalued. We are very keen on working with Universal, but we are also keen on working with all the other labels like Warner, Sony, Believe and all the indies to make the industry better by monetizing better and then sharing that pie in more fair ways.
Do you have to “grow the pie” in order to pay artists more?
There’s not enough money right now for us all. First of all, music is undervalued. We’re giving too much for too little. Second, with the current monetization model, there is really not enough money for everyone. The platforms like Deezer or Spotify, we’re not making enough profits. And many artists are struggling to make a living. So for the system to be viable we need to grow the pie. That has to be the number one focus.
At the risk of asking a naïve question, what if the share of the pie that has historically gone to the labels shrank? Is that just impossible?
So basically the artists get more, and the DSPs get more and the labels get less? The thing is that it is a fragile ecosystem with a lot of negotiation power in the hands of the labels. You [the DSPs] do need a full catalog. The labels are not going to hand their money to us or to the artists. Instead of having that fight — which is what we’ve been doing basically for the last 10 years — it is a far healthier discussion to be had working together to grow the pie especially because music now is extremely undervalued. The piracy days are long gone. This is the right time to have the discussion. One of the things that doesn’t help is that a lot of the distribution is in the hands of companies that don’t have music as a core business.
Who are you referring to?
I’m talking to the tech giants. Three key players here are tech giants, and their core business is not really music. Then you have two independents, one that is very big — Spotify — and then Deezer. We are truly music; it is our duty and necessity to work together with the labels to make the whole ecosystem better and bring the value of the music to where it should be.
Where does the initiative with UMG currently stand?
There is nothing that we are testing yet, and we don’t have a deadline. But we are starting to work on different models of compensation that we could eventually test that would solve a lot of the issues we see today.
During a recent earnings call, Universal Music Group chairman and CEO Lucian Grainge said he wanted a new model where “artists are rewarded for the fans they bring in [to subscribe to streaming services] and the engagement they drive [on those platforms].” How can you determine which artists drive subscriptions?
That is very difficult to know and quantify. This is one of the areas where we are working with Universal to figure out if there is a way to measure, quantify it and use it for payment or not. That’s part of the exercise. That is one of the most tricky ones. There are other areas [such as] if a user goes and searches for an artist and song, that has more value than if they just go and listen to that stream in a lean-back experience. A stream that is heard as part of a playlist is not as valuable as when you go proactively to a platform, look for a song and play that song. You as a fan care about that song more. We agree with that as a concept but the question is how do you apply that in a model that is easy to implement and explain? There needs to be transparency [so] everyone understands how things get calculated and how people get remunerated. It’s easier said than done. This is why we need to work with Universal but also with other labels to do that exercise. First, we have to agree with the principles. And then you have to find a pragmatic way of actually doing it.
Could you walk me through the different models you are exploring?
I cannot go into that level of detail right now because we are in a very exploratory phrase. We are looking at what is feasible, what impact does it have and, based on that, we will have a proposal to test. But it’s too early to explain these models.
Have you seen any examples of streaming services that have done a good job of encouraging active fan experience?
Video and music are very different so you cannot really draw comparisons between the two. I don’t think anybody has cracked it, and that’s why Universal is working with us. We would love to be the first ones to figure out the new model that makes sense. SoundCloud made an announcement with Warner Music around user-centric, but they haven’t disclosed anything. Since they are a private company, we do not know how that has worked or played out.
Where are the majority of Deezer’s users based? Could the results of the Deezer and UMG experiment be applied on a global scale, or would differences in listening behavior in different markets limit the wider applicability of the study?
We are a global company with a presence in 180 countries. We have a large user base in France — less than half of our subscribers — then we have a lot of subscribers … in Brazil and then a bit everywhere else. Our model will have a big impact on the French market because there we are a massive player, but the learnings can be applicable anywhere in the world.
However, Lucian has mentioned that he sees different models for different platforms at different stages of their development in different countries. I think there is some merit in that. Our Brazilian business is very different from our French business and American business. You might need different models as you go through different stages in a market. Right now, it’s one model that came up really quickly, built 15 years ago on the back of piracy, and that model fits all. I think in the future we need more flexibility.
Is there anything I didn’t ask that you wanted to highlight?
Something that is really important is that we are working really closely with UMG because they are the largest label in the world. And they are a very important player and you cannot change the system without having Universal on board. I’m really excited that Lucian is leading this discussion and trying to make the industry better for everyone.
But I want to make sure it is well understood, as well, that this should benefit all real artists, whether they are from Universal, any other label or independent. We want to reward real artists that create real music. This is not to benefit Universal alone in any way. This is not a Universal-centric payments system. We’re working together to make the industry better for everyone who creates high-quality content.
You said a better system will reward “real artists” and “high-quality content.” What is the opposite of that? And should it not be rewarded in this new system?
There is a whole discussion on what are we going to do when machine-generated music comes because it is going to happen. There is not that much yet, but I think it’s a matter of months before we start getting flooded by machine-generated content, and we need to think about how we’re going to handle it. The other thing is it’s not the same that an artist creates new music and creates a fan — is a real artist in a way — compared to, for example, people that do a cover…. Those streams are not as valuable to us as the original song from the original band. The same thing with sounds that get uploaded, for example, the sound of the washing machine for people who need that to sleep. The sound of rain is not as valuable as a proper album created by an artist recorded in a studio. The fact that the recording of rain gets more streams than Lady Gaga, I find that astounding. We have to do something about it. It is hurting the user experience. We cannot flood the catalog with poor-quality stuff.
What should be done, and is this part of artist-centric royalties or another initiative?
We are trying to address that problem as part of the artist-centric discussion. We believe there are things we can do with the artist-centric model that will create the right incentives and will solve part of that problem. Yes, there are other areas where we might be stricter about the rules of what can be uploaded to the platform or not. We will explore all the different options. Obviously taking a big part of the economic incentive [away] is a big part of the job.
Sony Music Entertainment has quietly been battling for more than two years against the creator of a popular TikTok song over allegations that he prominently sampled a 1986 track by Japanese composer Toshifumi Hinata without “paying a cent.”
In a lawsuit first filed in December and refiled this week, Sony claims that Trefuego (real name Dantreal Daevon Clark-Rainbolt) made “flagrant” use of Hinata’s “Reflections” in his own song “90mh” — a track that’s allegedly been featured in 155,000 videos on TikTok and been streamed 100 million times on Spotify since it was released in 2019.
“In copying the ‘Reflections’ musical composition and sound recording, Trefuego brazenly sought to ride the coattails of Hinata’s creativity and popularity without regard to the United States copyright laws or the rights of Plaintiffs,” the label’s attorneys wrote.
Sony says it first took action back in January 2021, notifying Trefuego of the “infringing nature” of his song. After he allegedly refused to remove the song himself, the company filed takedown requests in August 2022 to get it pulled from TikTok, YouTube and Spotify. The company first sued Trefuego in December in Arizona federal court but refiled the case on Monday (March 20) in Texas federal court.
A manager for Trefuego did not immediately return a request for comment on Wednesday.
An instrumental featuring strings and piano, “Reflections” was released on a 1986 album but has made recent appearances in Netflix’s 2020 film Tigertail and in popular ambient music playlists on Spotify. Amid a “surge” in interest in such music on TikTok and other platforms, Sony says it’s been “highly selective” about allowing the song to be used, granting licenses “only for those projects that Hinata himself might endorse.”
But Trefuego “simply stole” the sample, Sony says.
“Trefuego took a very different approach,” the company claims. “He used and copied plaintiffs’ work without so much as asking, or paying a cent to plaintiffs, and he continued to exploit that music despite plaintiffs’ demand that he stop.”
In terms of the specific music borrowed, Sony claims that Trefuego sampled a 15-note melodic strings sequence accompanied by a looping chord progression played on the piano. That clip is looped throughout the entirety of “90mh,” Sony says.
“Trefuego’s infringement is blatant,” the company wrote. “[His] use of ‘Reflections’ permeates the entirety of the infringing works, and for many listeners, is the only reason they listen to them.”
An attorney for Sony did not immediately return a request for additional comment on the dispute with Trefuego.
TikTok is ramping up a public relations campaign to fend off the possibility of a nationwide ban by the Biden administration, and it’s bringing some unconventional advocates to help: online influencers.
Dozens of TikTok creators — some with millions of followers on the video-sharing app — came to Capitol Hill on Wednesday to lobby in favor of the platform, one day before lawmakers are slated to grill the company’s chief executive about concerns over user data falling into the hands of the Chinese government.
Shou Zi Chew plans to tell Congress on Thursday that TikTok, which was founded by Chinese entrepreneurs, is committed to user safety, data protection and security, and keeping the platform free from Chinese government influence. He will also answer questions from U.S. lawmakers worried about the social media platform’s effects on its young user base.
At the heart of TikTok’s trouble is a Chinese national intelligence law that would compel Chinese companies to fork over data to the government for whatever purposes it deems to involve national security. There’s also concern Beijing might try to push pro-China narratives or misinformation through the platform.
At a media event coordinated by TikTok on Wednesday, some content creators acknowledged that concerns about data security are legitimate, but pointed to precautions the company is taking, such as a $1.5 billion plan — dubbed Project Texas — to route all U.S. data to domestic servers owned and maintained by the software giant Oracle.
TikTok has been attempting to sell that proposal to the Biden administration, but skeptics have argued it doesn’t go far enough. The administration is reportedly demanding the company’s Chinese owners sell their stakes or face a nationwide ban.
“I don’t know much about politics, but I know a lot about fashion, and I know a lot about people,” Ok said. “And just to be here and share my story is what TikTok has invited me to do.”
Tensions around TikTok have been building on Capitol Hill, reaching a boiling point late last year when a proposal to ban the app off of government phones passed with bipartisan support and was signed into law by President Joe Biden. House Republicans are pushing a bill that would give Biden the power to ban the app.
Other bills have also been introduced — some bipartisan — including a measure that would circumvent the challenges the administration would face in court if it moved forward with sanctions against the social media company.
The effort to target TikTok is part of a larger, tougher approach that Congress has taken in the past several months as China’s relationship with two U.S. adversaries — Russia and Iran — has come into focus. A recent incident with a spy balloon forced even some wary congressional Democrats to join Republicans in opposition, and there is now a strong bipartisan concern in Washington that Beijing would use legal and regulatory power to seize American user data or use the platform to push favorable narratives or misinformation.
TikTok’s response to the political pressure can be seen all around the nation’s Capitol, with the company putting up ads in area airports and metro stations that include promises of securing users data and privacy and creating a safe platform for its young users. Last year, the company spent more than $5.3 million on dispatching lobbyists to the Hill to make its case, according to Open Secrets, a nonprofit that tracks lobbying spending.
On Thursday, Chew will be sticking to a familiar script as he urges officials against pursuing an all-out ban on TikTok or for the company to be sold off to new owners. TikTok’s efforts to ensure the security of its users’ data go “above and beyond” what any of its rivals are doing, according to Chew’s prepared remarks released ahead of his appearance before the U.S. House Committee on Energy and Commerce.
Chew pushed back against fears that TikTok could become a tool of China’s ruling Communist Party because its parent company, ByteDance, was founded in Beijing and also operates from there.
“Let me state this unequivocally: ByteDance is not an agent of China or any other country,” Chew said.
He distanced TikTok from its Chinese roots and denied the “inaccurate” belief that TikTok’s corporate structure makes it “beholden to the Chinese government.” ByteDance has evolved into a privately held “global enterprise,” Chew said, with 60% owned by big institutional investors, 20% owned by the Chinese entrepreneurs who founded it and the rest by employees.
It’s “emphatically untrue” that TikTok sends data on its American users to Beijing, he said.
“TikTok has never shared, or received a request to share, U.S. user data with the Chinese government,” Chew said. “Nor would TikTok honor such a request if one were ever made.”
Whether those promises will alleviate concern is another matter. TikTok has come under fire in the U.S., Europe and Asia-Pacific, where a growing number of governments have banned the app from devices used for official business. India, Afghanistan and Indonesia have banned it nationwide.
Chew, a 40-year-old Singaporean who was appointed CEO in 2021, said in a TikTok video this week that the congressional hearing comes at a “pivotal moment” for the company, which now has 150 million American users.
Chew said TikTok’s data security project is the right answer, not a ban or a sale of the company.
“No other social media company, or entertainment platform like TikTok, provides this level of access and transparency,” he said.
The company started deleting the historical protected data of U.S. users from non-Oracle servers this month, Chew said. When that process is completed later this year, all U.S. data will be protected by American law and controlled by a U.S.-led security team.
“Under this structure, there is no way for the Chinese government to access it or compel access to it,” he said.
He said a TikTok ban would hurt the U.S. economy and small American businesses that use the app to sell their products, while reducing competition in an “increasingly concentrated market.” He added that a sale “would not impose any new restrictions on data flows or access.”
Downtown Music Holdings announced layoffs across the company’s CD Baby, Downtown Music Publishing, Songtrust, and Downtown Music Holdings (DMH) divisions on Wednesday (March 22).
Downtown Music Holdings chief executive Andrew Bergman emailed staff early Wednesday to share the news. Notably, many of the lay offs affect those working in publishing roles. Neither the email, which was obtained by Billboard, nor a company representative would confirm how many jobs were affected.
Bergman also noted in the email that there are also “a number of cost-saving measures… underway” already at Downtown apart from the reduction in team size. The Downtown rep also declined to explain what these measures were.
The email labels this downsizing as “reorganization” that “harmonizes the past several years of strategic investments and divestitures.” As detailed in a recent Billboard profile of the firm, Downtown pivoted from a traditional publishing firm with 145,000 songs in its catalog to selling off all intellectual property in favor of repositioning as a service-focused company instead.
To further bolster their service offerings, in the last few years Downtown acquired CD Baby, FUGA, AdRev, Soundrop and DashGo, and then last September announced the combination many of its B2B services under the name “Downtown Music.” Downtown Music now includes staff from FUGA, Downtown Neighbouring Rights, AdRev and Downtown Music Services artist, label services and publishing administration units.
In October, Billboard reported that Downtown’s CD Baby and Soundrop had laid off 28 employees, citing “economic conditions” and “uncertain times” in a company-wide email from chief people officer Love Whelchel.
“This reorganization harmonizes the past several years of strategic investments and divestitures, better positioning us for the future by aligning our talent, resources, technology and services to meet the evolving needs of the music community while at the same time taking into account this period of economic uncertainty,” said a Downtown rep in a statement.
Read the full email to Downtown Music Holdings’ staff below:
Team,
Today we’re sharing some difficult news with all of you. Downtown’s management team has made the decision to reduce the size of our team in certain areas of the organization, specifically CD Baby, Publishing, Songtrust and DMH. Later this morning, we will be meeting with those employees and informing them that their roles will be impacted.
Along with reducing our team size overall and a number of cost-saving measures we have underway, we hope to be able to offer and place some impacted members of our team in other positions within Downtown that will give them a chance to apply their skills and expertise in new ways.
This reorganization harmonizes the past several years of strategic investments and divestitures, better positioning us for the future by aligning our talent, resources, technology and services to meet the evolving needs of the music community while at the same time taking into account this period of economic uncertainty.
We are committed to continuing to communicate about our plans, our business performance, and the results of these changes and remain accountable to all of you for the improvements and the long-term health and strength of our work at Downtown.
Our management, people, operations, legal and communications teams have made every effort to manage this process with as much thoughtfulness, consideration and empathy as possible. We will be meeting with all of you in the coming days to share more directly, plans for each division and will be ready to answer any questions you may have.
Sincerely,
AB
Additional Reporting by Dan Rys
Self-styled “outsider” label Bad Habit has re-upped its joint venture deal with Atlantic Records as it expands its management activities and prepares an entry into the live music space.
The growing business has signed Bay Area rapper G-Eazy to its management arm, Billboard has learned, joining a Bad Habit roster that includes The Neighbourhood, Bakar and Dora Jar.
Additionally, Bad Habit is helming The Vigil, a two-day event taking place April 4-5 in Los Angeles at Masonic Lodge at Hollywood Forever Cemetery, and featuring headline performances from Jesse of The Neighbourhood (night one) and G-Eazy (night two). The Vigil bill also includes Yeek, EKKSTACY, Goody Grace, Fade Em All, Sam Austins and DJ Quinn.
Bad Habit was co-founded in 2015 by New Zealand-born industry veteran Kirk Harding and Nigerian-American producer and creative director Matthew “Baus” Adesuyan. “Following two back-to-back sold-out shows at the Hollywood Bowl in 2021,” with The Neighbourhood and Burna Boy, notes Adesuyan, “we felt inspired to create a platform for our artists to showcase their live sets and to kick-off festival season. We’ve started this year setting up some amazing projects on our management side with G-Eazy, Jesse, and Bakar, and we want to celebrate what’s to come.”
The Atlantic Records alliance is an extension of an arrangement initially struck in 2018. Soon after, the label’s frontline artist Burna Boy went on a tear.
The Nigeria-born Afrobeats artist (real name Damini Ogulu) is a superstar in the U.K., where he’s set to become the first African artist to headline a stadium concert, with a June 3 date at the 60,000-capacity London Stadium. He’s bagged nine top 40 hits in the U.K., including a No. 1 for 2019’s “Own It,” with Stormzy and Ed Sheeran. His sixth and latest studio album, Love, Damini, peaked at No. 2 on the Official U.K. Chart in July.
Career highlights include a Grammy Award for 2020’s Twice as Tall (best global music album), a headline show at New York’s Madison Square Garden in April, and sold-out dates at London’s Wembley Arena in November 2019 and at The O2 Arena in August 2021.
“Julie [Greenwald], Craig [Kallman], and the entire Atlantic team have been incredible partners in helping us bring artists to global stages,” comments Harding. “We greatly admire their shared passion for nurturing amazing talent and developing new voices. We look forward to continuing to grow our label roster with Atlantic”.
Nick Lachey will avoid any charges in connection with a paparazzi run-in last March in which the 98 Degrees singer confronted a photographer after she took a picture of him. People magazine reported that Lachey, 49, has been ordered to attend anger management classes and Alcoholics Anonymous meetings as part of a prefiling diversion program, citing a spokesperson for the Los Angeles County District Attorney’s Office.
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“Mr. Lachey has not been charged with misdemeanor assault and battery. Instead he is participating in LADA’s Prefiling Diversion program,” the LA DA’s office said in a statement. “As part of these conditions he must participate in anger management classes and attend Alcoholics Anonymous meetings. Successful completion of the Prefiling Diversion Program will result in no criminal charges being filed.”
At press time a spokesperson for Lachey had not returned Billboard‘s request for comment. According to reports at the time, Lachey reached into the photog’s car in March 2022 and attempted to grab her phone after he noticed her taking his picture. Writing on Twitter shortly after, Lachey said he’s been “harassed” while walking back to his hotel after dinner with wife Vanessa Lachey and their friend.
“Last night, after enjoying a great dinner with my wife and our dear friend, the paparazzi harassed us as we walked back to our hotel,” he wrote. “I clearly overreacted. I’ve been in this game long enough to know that their antics are sadly part of the deal. Stupid of me. Done.”
In a follow-up tweet, Lachey denied getting violent. “However, for TMZ or anyone else to say that I was violent or that I ‘got physical’ with someone is reckless and absolutely false.” TMZ posted video of the alleged incident at the time, in which Lachey walks toward the car and confronts a woman inside, asking, “is paparazzi still a thing?,” before appearing to reach into the car to take her phone and then turning around, sticking out his tongue and walking away.
Accounting and consulting firm Armanino is adding two veteran music industry organizations to its portfolio, beginning April 1: music business management company Blue Sky Group and rights and royalty auditing firm Royalty Compliance Organization. Terms of the deals were not disclosed.
Blue Sky Group, led by Harlan Hallet and Steven McMillan, and Royalty Compliance Organization, led by Wayne Coleman and Darla Crain, will give Armanino a pair of eight-person staffs steeped in business management experience, royalty compliance, valuation services and litigation support. Hallet began his career as a staff accountant at a business management firm in 1975. His Hallet and Associates was founded in 2004 and folded into Blue Sky Group in 2014. Coleman’s experience in music audits started in 1971 working with country legend Johnny Cash.
“I found Cash some cash,” says Coleman. “He paid me some cash. I thought this was a good business to be in.”
Armanino, one of the 20 largest accounting firm in the U.S., specializes in tax, audit and business management and has more than 2,000 employees in offices around the country. With the two acquisitions, Armanino has about 150 people in its business management group in New York and Los Angeles in addition to Nashville-based Blue Sky Group and St. Louis-based Royalty Compliance Organization, says Craig Manzino, partner, business management at Armanino.
To Manzino, the two new additions better situates Armanino for a music industry where artists can increasingly remain independent but need teams to navigate a complex business. “That idea of breaking away from the majors and doing things on your own as an artist requires a bigger team behind you,” he says. “For us to be able to fulfill that circle of needs around an artist was really important.”
Nashville was a desired location for expansion, according to Manzino. When Hallet moved to Nashville more than two decades ago, “it was just country music,” he says. Today, the genres have expanded beyond country music and many companies have expanded their back-office functions to Nashville from more costly markets. That led Blue Sky Group to get “an array of personnel here dealing with entertainment,” says Harlan, but it’s also made it harder for a smaller firm to lure employees. He believes that partnering with Armanino will help Blue Sky Group attract talent in the hot job market.
“If we think larger in terms of the entertainment industry, these people are becoming brands,” says Manzino. “They’re getting into fashion, not-for-profits, social impact, liquor brands, private donations. To be able to serve people at this level, you can’t be a one-trick pony. You need to provide a full suite of services.”
Generation Z is driving the industry, he says, and smaller firms “aren’t able to offer a lot of the things that this generation wants.” That includes musicians and athletes setting up private foundations to give money to the school districts in their home towns or creating a private foundation for a non-profit. “Being a B Corp” — a certification for a business that meets standards on performance, accountability and transparency on factors ranging from employee benefits to charitable giving — “I think we’re really appealing to our staff and our clients.”
UTA has officially set up shop in Atlanta.
Along with its partner company KLUTCH Sports Group, the agency opened its new Atlanta bureau Wednesday (March 22) to extend its ability to discover and serve artists, athletes, musicians and brands in the region. Steve Cohen, Rob Gibbs and Arthur Lewis will serve as co-heads of the new office.
“Atlanta is an entertainment and cultural hub, and planting our flag here gives us the ability to support clients with investments and opportunities across the city’s growing creative ecosystem,” said Cohen and Gibbs in a joint statement.
UTA will offer representation in Atlanta across its multitude of divisions, including music, sports, film, television, digital talent, marketing, gaming, fine arts and more. This includes advising top global brands based in the Southeast on a range of growth initiatives, including ways to partner with the creative community.
“Atlanta is a vibrant city for music, sports and arts, and there is a ripe opportunity to create another center of gravity for film and television,” said UTA CEO Jeremy Zimmer in a statement. “We are excited to bring our full range of services to the community of talented artists, athletes, musicians and creators who call the Southeast their home.”
The new office is located at 1401 Peachtree Street in Midtown Atlanta and occupies nearly 20,000 square feet across three floors. It was designed by the firm Hastings Architecture, which also designed UTA’s office in Nashville.
The Atlanta bureau will additionally feature a fine art gallery called The UTA Artist Space to showcase programming from the Atlanta art community and across UTA’s global fine arts roster. The inaugural show will feature Atlanta-based artist and musician Lonnie Holley in the first exhibition of his work in the city in over 10 years. Entitled “The Eyes Were Always on Us,” the exhibition will feature sculptures constructed from found materials in the tradition of African-American sculpture. The gallery is open to the public Tuesday through Friday from 10 a.m. to 5 p.m. and Saturday from 11 a.m. to 4 p.m.
UTA also boasts offices in Beverly Hills, Nashville, New York, Chicago and London.
LONDON — An eighth consecutive year of growth is undoubtedly great news for the music business — especially for anyone who worked in the industry during the near-decade of decline brought on by rampant piracy and falling CD sales. But this year’s IFPI “Global Music Report” also demonstrates a slowing rate of growth across all formats and in nearly all established markets.
Here are five takeaways from this year’s report:
Growth Slows Down
Total recorded music revenues climbed to $26.2 billion, up 9% in 2022, which, although impressive, is half of 2021’s growth, when revenues were up 18.5%. Paid-for streaming subscription revenue rose 10.3% to $12.7 billion in 2022, compared with a 21.9% year-on-year jump in 2021.
Total streaming (including paid subscription and advertising-supported) was up 11.5% to $17.5 billion, versus a rise of 24% the prior year.
Physical format revenue climbed 4%, compared to 16% in 2021, while music sales in the world’s three biggest markets — the United States, Japan and United Kingdom — all grew by around 5% last year, compared with double-digit gains for the U.S. and U.K. in 2021 (+22.6% and +13.2% respectively) and a rise of 9.3% in Japan.
IFPI attributed the slowing to 2021’s exceptional growth, which it said was partly fueled by a post-pandemic bounce back in music consumption, and execs at a London launch event Tuesday said they were confident the market was not about to plateau.
“I do think there are pockets of established markets where there is an opportunity to grow,” said Simon Robson, head of Warner Music Group’s international recorded music operations outside the U.S. and the U.K. He cited France as a major music market where streaming subscription penetration rates remain under 20%. “The challenge for today is how we better monetize other forms of music consumption,” he added, noting that “it would help if music subscription pricing could reflect the realities of inflation, which, as we’ve seen with video streaming services, have been putting up their prices quite significantly.”
When Robots Take Over
The future role that artificial intelligence (AI) will play in the record business was raised several times at the London launch event, with executives keen to highlight the technology’s potential for commercial growth, as well as some of the risks and challenges it brings. Some executives saw potential benefits in using AI to better analyze and understand fan engagement trends and artist discovery (something which platforms and music companies are already doing) and optimizing technical aspects of music production, including immersive sound.
On the flip side, execs issued a stark warning about human artistry being devalued at the expense of technology. AI developers, they said, could fail to respect the rights of creators by using artist recordings to generate new content without authorization – a threat that Michael Nash, executive vp, chief digital officer at Universal Music Group, said he placed “at the top” of industry issues that need to be addressed. “We need to work very hard to define new models so that we can enable generative AI without looking away from what is essentially going to be wholesale hijacking of the intellectual property of the entire creative community,” wrote Nash in IFPI’s “Global Music Report” document.
Streaming May Dominate, But Physical Is Far From Dead
Having enjoyed a post-pandemic renaissance in 2021 — when sales of CDs increased for the first time this millennium and overall physical sales grew 16.1% — physical format revenue continued to be surprisingly resilient last year, rising 4% to $4.6 billion. It was the second consecutive year of growth for the format, once considered dead. Almost half (49.8%) of those global revenues came from Asia, where the humble CD remains a popular music purchase, particularly in South Korea and Japan, the region’s largest music market and world’s second biggest behind the U.S.
Vinyl revenues’ upward trajectory also continued, rising 17.1% over 2021, and while global CD sales slipped 0.4% year-on-year (IFPI didn’t provide financial values for CD or vinyl income), physical revenues still accounted for 17.5% of the overall recorded music market last year. That’s just under what ad-supported streams generate for labels and rights holders (representing 18.7% of global sales) and more than the combined haul from sync, performance rights and digital downloads.
All Eyes Turn Towards Africa
Sub-Saharan Africa overtook the Middle East and North Africa as the fastest growing region in 2022, with music sales rising almost 35% year-over-year, reports IFPI. Driving that growth was South Africa’s thriving music industry, Africa’s biggest market, which climbed by more than 31% last year, compared to modest 2.4% growth in 2021.
Nevertheless, the challenge of converting users of ad-based music services to paid subscription remains a considerable one, said Temi Adeniji, president of Warner Music Africa, with South Africa having around 4 million paid subscribers out of a population of nearly 50 million people. Adeniji said the burgeoning global popularity of Amapiano, a genre which originated in South Africa, was already producing crossover hits in markets like Nigeria. She predicts “an infusion of Amapiano elements” into other international music scenes over the next few years to further drive the region’s development as a key music territory.
China Climbs to Become a Top-Five Music Power
For years, music executives have talked up China — the world’s most populous country, home to 1.4 billion people, according to China’s National Bureau of Statistics – as a huge music market in waiting. In 2022, that potential was finally realized with China usurping France (a long-time mainstay in the upper echelons of the world music market rankings) as the fifth-biggest music market worldwide with revenues of $1.2 billion, up 28.4% year-on-year, according to IFPI. That’s on the back of 30% growth in 2021, when China was the world’s sixth-biggest music market.
The dominance of local streaming services QQ Music, Kugou Music, Kuwo Music, which are all owned by China-based Tencent Music Entertainment (TME, which publishes Billboard China), means that Western and international acts rarely feature on China’s many of domestic charts, which includes some run by China’s state-owned broadcaster. But the popularity of domestic pop stars like Jay Chou, Yisa Yu, Mao Buyi, Zhou Shen and Jackson Wang is now rapidly driving subscription take up in a country rife with piracy on a decade ago. TME’s most recent company filings report 85.3 million paying music users as of the third quarter of 2022.