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The Ledger is a weekly newsletter about the economics of the music business sent to Billboard Pro subscribers. An abbreviated version of the newsletter is published online.
Most publicly traded companies have released earnings for the latest quarter (ended Sept. 30), and most of those results have shown encouraging signs for investors and the music industry alike. Earnings by Universal Music Group, Spotify, Live Nation, SiriusXM are in the books. Notable companies yet to announce include Warner Music Group (Nov. 22) and Tencent Music Entertainment (Nov. 15).
If there is one over-arching narrative, it’s that inflation and economic uncertainty haven’t ruined music’s post-pandemic recovery. Revenue growth is strong, aside from some softness related to a slowdown in advertising spending that impacts broadcast radio and ad-supported streaming. Consumer spending on everything from concerts to vinyl records is healthy – despite the around-the-clock warnings of an impending recession and the highest inflation rates in four decades eating into consumers’ wallets. When companies have raised prices for tickets and concessions at concerts, music fans, by and large, haven’t blinked. Even long-stagnant music subscription prices are on the rise, and nobody expects a consumer backlash.
Not that music companies’ stock prices reflect this optimism. Stocks in general have taken a beating in 2022. Music stocks have suffered, too, although stocks ended the week on a high note. The Billboard Global Music Index, a measure of 20 publicly traded music companies’ stocks, climbed 12.7% this week after markets rallied on Thursday and Friday on encouraging news about the slowing U.S. inflation rate.
Here are five quick takeaways from third-quarter earnings and the statements made by the companies’ management teams.
1. The subscription business model is insulating creators and rights holders from economic uncertainty. Music royalties are popular with investors in part because they are counter-cyclical, meaning their returns have little correlation with changes in the broader market. Put another way, when the economy sours, people are more likely to cut back on grocery spending or travel than cancel a Spotify subscription. Consumers might feel pinched in their pocketbooks, but Spotify and SiriusXM added 7 million and 187,000 subscribers, respectively, in the third quarter, and YouTube announced on Wednesday that it surpassed 80 million subscribers to YouTube Music and Premium, an increase of 30 million in about 14 months. Stock prices at companies more exposed to inflation pressures fared best on Thursday, as stocks surged on news that the annual change in the consumer price index in the U.S. fell to 7.7%. Shares of radio companies iHeartMedia and Audacy climbed 10.0% and 14.0%, respectively. Live entertainment companies also did well: MSG Entertainment was +5.6%, Live Nation was +5.1%, and ticketing companies Eventbrite and Vivid Seats were +8.3 and +9.2%, respectively.
2. Podcasts are a growing, stabilizing force. Spotify’s podcast business has rightly captured headlines as the company uses spoken-word content to build engagement, generate advertising revenue and improve on the gross margins of its core music business. The number of monthly users who consumed podcasts grew “in the substantial double-digits” year-over-year, the company said. But other companies’ podcast businesses get less attention despite their importance to their own futures. Radio companies – namely iHeartMedia, Cumulus Media and Audacy – have fast-growing podcast businesses. LiveOne, primarily a music streaming company, has a fast-growing podcast division, PodcastOne, that made $17.2 million of revenue in the last two quarters on the strength of such shows as The Adam Carolla Show, Cold Case Files and Uncut with Jay Cutler. The catch is that podcast growth has little direct impact on the music business outside of helping those platforms – digital and broadcast – that produce royalties for record labels and publishers. Music rights owners could better tap into this growing market if there were better systems for licensing music to podcast creators.
3. With share prices relatively low, companies are increasingly buying back shares to bolster shareholder value and help share prices. Among the companies currently engaged in stock repurchase programs are Spotify, MSG Entertainment, Cumulus Media, Audacy, SiriusXM, Townsquare Media and LiveOne. Spotify announced a $1 billion share buyback program in August 2021, and it spent $2 million and $24 million repurchasing shares in the second and third quarters, respectively. Cumulus Media has $21.1 million remaining in its $50 million share repurchase authorization announced in May. Last month, MSG Entertainment authorized $75 million for share buybacks on top of a $175 million, one-time dividend worth $7 per share paid on Oct. 31 to shareholders of record on Oct. 17. And LiveOne announced on Thursday that it will expand its share repurchase program, originally planned for 2 million shares (worth about $1.5 million at Friday’s closing price), by an additional $2 million. More buybacks could be on the way soon: Universal Music Group shareholders voted in May to give the company’s board the ability to repurchase up to 10% of the issued share capital.
4. Strong growth in “rest of world” markets. Believe’s revenue in Asia Pacific and Africa grew 61.1% to 52.3 million euros ($53.2 million), about the same as its European revenues excluding France and Germany. Spotify’s “rest of world” markets improved their share of monthly active users to 26% in the third quarter, up from 21% in the prior-year period. Also, “rest of world” and Latin America each gained a percentage point in shares of Spotify subscribers while North America and Europe both lost a percentage point of subscriber share. As Billboard’s Elizabeth Dilts Marshall reported last week, investors are increasingly eyeing companies in the Middle East and North Africa as streaming transforms those regions.
5. Spinoffs are going to separate high-growth, high-potential businesses. MSG Entertainment plans to spin off its MSG Sphere venue currently under construction in Las Vegas along with its Tao Hospitality Group. The remaining MSG Entertainment will retain the live entertainment business – namely the portfolio of venues such as Madison Square Garden and Radio City Music Hall – and MSG Networks, a sports broadcast network. Ryman Hospitality will spin off its Opry Entertainment Group – possibly within four years, based on its agreement with two new investors, Atairos and NBCUniversal. LiveOne plans to file an S-1 document with the SEC by Dec. 15 for a spin-off of its podcast division, PodcastOne, which accounted for about 37% of the company’s total revenues in the six-month period ended Sept. 30. LiveOne’s management and board believe the company’s share price undervalues the sum of its parts and spinning off PodcastOne would maximize shareholder value and better position the division for M&A and talent acquisition.
Today (Nov. 11), the highly-anticipated sequel to the 2018 blockbuster film Black Panther, called Black Panther: Wakanda Forever, reaches theaters in the United States. But already, its soundtrack — released today through Roc Nation/Def Jam/Hollywood Records — is making waves: its lead single, “Lift Me Up” by Rihanna, debuted at No. 2 on the Hot 100 this week, the elusive singer’s 32nd top 10 record and first since 2017, and became just the fourth song this century to debut in the top 10 of the all-format Radio Songs chart.
It’s a considerable success, not just for Rihanna but for the Wakanda soundtrack as a whole, which is full of artists from Nigeria, Mexico, the U.K. and the U.S. and blends local language music and artists with the cultural connectivity of the film — and helps Def Jam’s executive vp/chief creative officer and one of the producers of the project, Archie Davis, earn the title of Billboard’s Executive of the Week.
“There’s a spiritual connection with this song and the conviction in Rihanna’s delivery that engages listeners,” Davis says about “Lift Me Up.” “I think once audiences see the film, they’ll feel that energy even more.”
Here, Davis tells Billboard about putting the soundtrack together, the impact of Rihanna’s involvement, as well as that of filmmaker Ryan Coogler, composer and producer Ludwig Göransson, and late Black Panther actor Chadwick Boseman, and the strategies behind marketing soundtrack albums as opposed to an artist’s album. “A great soundtrack reminds you of a film, but a great album feels so vivid that you can almost see it play out in your head,” he says. “We try to do both.”
This week, the lead single from the Wakanda Forever soundtrack, Rihanna’s “Lift Me Up,” debuted at No. 2 on the Billboard Hot 100 and became just the fourth song this century to debut in the top 10 of the Radio Songs chart. What key decision did you make to help make that happen?
It was a team effort, one thousand percent. It was important we set up the release properly on such a short timeline. A key component was carrying this record on tour around the world to make sure the right people heard it before it was released. Shout out to our radio teams at both Def Jam and Roc Nation for working tirelessly, leaving no stone unturned. All the records that our radio teams broke helped pave the way for us to debut in the fashion we did. The music video was also an integral component, which we shot on the Monday of release week and had out by that Friday. It was a complete effort by everyone to help us debut “Lift Me Up” with real impact.
This is Rihanna’s first song as a lead artist since 2016. How did you get her involved in this project?
I give all credit to the filmmaker for connecting with her when she saw the film. I think that helped move her emotionally to even want to be part of this project. Kudos to Ryan Coogler and Ludwig Göransson, and a million praises to Tems, Rihanna, Tunji, Wale, Davies, Jay Brown, Omar Grant, Shari Bryant, and the whole Roc Nation team for pulling it together. I also think, in a way, a lot of this came from Chad.
What was it about this song that you felt resonated so well, not just for the film but also among music fans?
Its relatability. The lyrics “Lift me up / hold me down, keep me close / safe and sound.” There are so many people we wish we could say that to. Those are words we tell our children, wish our ancestors could say to us, maybe even pray at times. There’s a spiritual connection with this song and the conviction in Rihanna’s delivery that engages listeners. I think once audiences see the film, they’ll feel that energy even more.
What did you want to get across with this soundtrack?
We wanted this project to be an immersive audio experience. I see the music existing as an invisible character, an extension of Wakandan culture that can be heard sonically and felt emotionally. These songs are all tied to emotions in a way I’ve never seen done before in a film. There’s an intentionality behind all the music, and my hope is audiences will be equally submersed in the music as they are experiencing the film. The two entities work hand in hand. There are a few different languages on the soundtrack, but those willing to research will find easter eggs through the music.
This album features a slew of Nigerian and Mexican artists, as well as American and British hip-hop artists. How did you choose who was involved and how did you make sure that it all fit together?
I think we chose by prioritizing authenticity to the story and understanding the nature of our platform. For example, while exploring Mayan Mexican culture it was important to choose artists that could relay such a precious identity. However, that’s not to say we couldn’t hear an artist like Rema shine the way he does on “Pantera” alongside Aleman. This is where Ludwig’s genius presents itself. He was learning how to construct these sounds with producers from their respective cultures while simultaneously experimenting. Authenticity was paramount. We also wanted to make sure the voices of many, even some that are lesser known, were represented. To think this movie and music would only resonate in the U.S. would’ve been a disservice.
Soundtracks can be hit or miss on the charts — some come and go, but some become massive hits. What goes into making a great film soundtrack that also translates to chart success?
In my opinion I believe it’s a great story, amazing narrative, and a host of incredible artists that care about the art being created. None of this can be done without amazing artists. If everyone understands the weight of the message we’re trying to convey it helps tremendously. My job is to make sure I help that message resonate within culture and the world. A massive amount of research goes into these projects, and direction from the composer and director helps as well. We’re ultimately trying to create a world that’s portrayed visually with music and there’s a great level of care that goes into each project. Those are general pillars, but each project is different from the last. Being able to learn, adapt and react is important. Sometimes there’s momentum or energy that comes from the least expected places that you must follow. It may lead to a dead end, but there’s something to learn in that process. Being able to harness those experiences and channel it holistically with a clear vision in mind all combines to make a great soundtrack.
What goes into developing and marketing a soundtrack like this as opposed to an artist’s album?
Soundtracks are worked on by lots of people, with many influences and real deadlines. When it comes to marketing a soundtrack, I feel like you’re also marketing the community to ensure it’s surrounded by the culture being represented. I think a key difference with a soundtrack is I have a built-in story I’m moving off of, whereas an artist is a blank canvas. An artist’s album a lot of times is someone’s real life experience. It’s a different conversation when you have to put your face out there as an artist. With a soundtrack like this you get to play make believe, in a way. There’s more room for imagination and that’s where we can expound upon as much as possible for the audience. A great soundtrack reminds you of a film, but a great album feels so vivid that you can almost see it play out in your head. We try to do both.
Endeavor Group Holdings, the parent company of UFC, WME and IMG, posted revenue of $1.2 billion in its third quarter, as foreign exchange rate headwinds pushed it to a net loss of $12.5 million.
Despite the difficult macroeconomic environment being felt across the tech and media sectors, Endeavor remains bullish on its prospects, touting its exposure to sports and live music, which are still posting strong results.
“Our business performed well in the quarter despite a turbulent macroeconomic environment,” said Endeavor CEO Ari Emanuel, in a statement. “Given our unique positioning relative to a set of highly resilient secular industry trends across premium sports and entertainment content and live events, we remain confident in our ability to continue delivering on our long-term growth strategy while also being good stewards of capital.”
Emanuel elaborated on those comments on the earnings call, saying that the company simply isn’t seeing demand for live events and experiences slow down.
“Spending habits have shifted, but our company has a presence at every point on the purchase chain,” he said. “During COVID people were buying stuff, and post-COVID, they are more focused on experiences, and we are the benefit of that side of the equation.”
Endeavor also adjusted its full-year 2022 guidance, raising its guidance for adjusted EBITDA to between $1.145 billion to $1.175, and indicating that revenue will be between $5.235 billion and $5.325 billion, on the low end of its prior guidance.
During the earnings conference call, Emanuel reitrated the company’s position as a middleman, able to carve out pieces of the content and live sports business, and in its owned and operated segments, to take the entire slice.
“These leading tech companies go head to head with major streaming and media players, including Disney, Netflix, NBCUniversal, Warner Bros. Discovery and Paramount for the best video, podcasts gaming, and social content,” Emanuel said.
On the sports side, Emanuel said that “we’ve positioned ourselves on the supply side of this industry, working directly with rightsholders, and sportsbooks to deliver everything from official data, streaming feeds to betting and mobile apps.”
“In sports, the demand for premium talent-led content and shows no sign of slowing. In fact, opportunities for talent are expanding into new formats,” he added.
The company is also undergoing significant change in its structure, as it completed the acquisition of OpenBet (and prepares to launch a new sports betting division) and with the sale of 80 percent of Endeavor Content, which impacted revenues at the company’s representation unit.
In representation, revenue was $388.3 million, down 42 percent from the same quarter a year ago. That drop was almost entirely due to the loss of Endeavor Content, which was sold to CJ ENM. When excluding revenue tied to Endeavor Content, the company’s representation business was up 17 percent compared to last year, suggesting continued strength in the sector.
In sports, which is led by UFC and Professional Bull Riders, revenue was $402.3 million, up 39 percent, thanks to increased rights fees, an extra live pay-per-view event, and more live attendance at events.
And in Endeavor’s events, experiences and rights segment, revenues were $440.6 million, down 1 percent compared to last year, due to the timing of some events.
Endeavor says it also paid off some $250 million in debt in Q3, and plans to pay down the same amout in Q4.
This article was originally published by The Hollywood Reporter.
Deezer named Maria Garrido chief marketing officer. Based in Paris, Garrido will lead the company’s marketing team and help further the development of the Deezer brand. She will report directly to CEO Jeronimo.
Ron Savage was named vp and executive director of the Berklee College of Music, where he previously served as dean of the college’s professional performance division and chair of the ensemble department; he also attended Berklee as a student. Savage will be responsible for oversight and direction of all academic programs, facilities, operations and faculty and staff for the college’s three divisions. He will additionally join the core leadership team at Berklee and help devise a strategy for the organization as a whole. He reports to executive vp and provost Dr. David Bogen. Savage can be reached at rsavage@berklee.edu.
Universal Music Canada promoted Craig “Big C” Mannix to vp of Black music. In the role, Mannix will continue leading UMC’s commitment to Black music with “an integrated approach to marketing and A&R,” according to a press release. His expanded purview includes an A&R remit to discover, sign and support Black music created by Canadians while continuing to lead the teams responsible for domestic international Black music marketing. He reports to Universal Music Canada chairman & CEO Jeffrey Remedios. Mannix can be reached at craig.Mannix@umusic.com.
ASM Global named Gary Jacobus president of business development. He will oversee the company’s plans to grow its sales efforts and strategies for securing new accounts across the Americas while providing support to ASM Global’s European and APAC business development teams. Jacobus can be reached at gjacobus@asmglobal.com.
Sound Royalties is expanding its West Coast team, tapping Andrew Stess and David Blutenthal of StessCo Consulting Group as new representatives for the music financing company in the western U.S. Out of Los Angeles, the pair will help songwriters, artists, rights holders and other music creatives seek out funding solutions to support their careers. Stess can be reached at andrew@stess.co.
iHeartMedia Los Angeles named Doug Hall regional digital program director for the iHeartMedia radio clusters in Los Angeles and San Francisco that encompass 14 stations. In the role, Hall will handle strategy, audience growth and maximizing iHeartMedia’s digital platforms in those markets while reporting to John Peake, senior vp of programming for iHeartMedia in Los Angeles. He was previously senior digital director on the national iHeartRadio team out of Nashville.
UTA promoted a slew of staff members in its music department, including Brennan Duffy, Noah Friedlander, Alana Gift, Akhil Hegde and Lauren Holland to manager and Mackenzie Coberley, Alexis Lesko, Gabriella Librizzi, Lauren McClusky and Hope Murray to coordinator.
Bailey Sattler and Stephanie Marlow formed another/side, a new creative and public relations agency. The company “will focus on where the underground and mainstream culture collide,” according to a press release. Sattler comes from Grandstand Media and Marlow built her own brand independently before joining forces with Sattler. The roster at launch includes Blessed, Circle Jerks, Cold Cave, Drab Majesty, Emma Ruth Rundle, Have A Nice Life, High Vis, Knocked Loose, Narrow Head, Power Trip, The Spits and Trust Records. Sattler can be reached at bailey@another-side.net and Marlow can be reached at stephanie@another-side.net.
Vickie Nauman, founder & CEO of music and tech consulting company CrossBorderWorks, joined the board of directors for Evan Bogart‘s Seeker Music, which boasts a portfolio of music publishing, master recordings and ancillary rights as well as a roster of songwriters, producers and artists.
Jessica Bonner was named vp of publicity at Milestone Publicity, where she was previously an account executive. In addition to continuing to serve clients, she will be more involved in an internal leadership role at the firm. Bonner can be reached at jbonner@milestonepublicity.com.
DJ and music journalist Dani Deahl was named head of communications and creator insights at BandLab Technologies. She will serve as a cultural liaison, highlighting the company’s impact on the music industry and surveying industry changes.
Chris Rock is going where no comedian has gone before — live on Netflix.
The streaming giant said Thursday (Nov. 10) that Rock will be the first artist to perform on the company’s first-ever live, global streaming event. The comedy special is set to stream in early 2023, but few other details were revealed.
“Chris Rock is one of the most iconic and important comedic voices of our generation,” Robbie Praw, Netflix vice president of stand-up and comedy formats said in a statement. “We’re thrilled the entire world will be able to experience a live Chris Rock comedy event and be a part of Netflix history. This will be an unforgettable moment and we’re so honored that Chris is carrying this torch.”
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This will be the first significant test of live streaming on Netflix, potentially opening the door for other programs to get the live treatment. It will be Rock’s second Netflix stand-up special. His first, Chris Rock: Tamborine, debuted in February 2018; Rock also appeared on the streamer’s Netflix Is a Joke comedy festival earlier this year alongside friend Dave Chappelle.
The as-yet-unnamed special will be Rock’s seventh stand-up special to date. The comedian is currently on his Ego Death world tour, which will keep him on the road through a Nov. 20 date at the Dolby Theatre in Hollywood; he will then play a series of dates with Chappelle that kick off on Dec. 1 in San Diego and run through a Dec. 16 gig at Seattle’s Climate Pledge Arena.
Many music companies’ stocks soared on Thursday (Nov. 10) on news that U.S. inflation was less than expected in October. The Bureau of Labor Statistics revealed the consumer price index rose 0.4% last month, less than the 0.6% Dow Jones estimate. Although the annual inflation is still high at 7.7%, it had been as high as 9.1% in June and hadn’t been below 7.5% since January.
Spotify shares jumped 9.9% to $78.44. Universal Music Group shares rose 3.3% to 20.81 euros. Sony shares spiked 6.6% to $44.15.
Live music companies fared especially well: U.S.-based Live Nation and MSG Entertainment improved 5.1% and 6.6%, respectively, while German promoter CTS Eventim climbed 3.8%. Ticketing companies Eventbrite and Vivid Seats rose 8.3% and 9.2%, respectively.
Radio company stocks, recently hurt by the softening advertising market, enjoyed the biggest gains as iHeartMedia was up 10.0% and Audacy rose 14.0%. Cumulus Media and Townsquare Media had smaller gains of 3.3% and 2.5%, respectively.
U.S. stocks had their biggest single days since 2020. The Dow Jones Industrial Average, a group of 30 prominent stocks, rose 3.7%. The S&P 500 improved 5.5% and the tech-heavy Nasdaq climbed 7.4%.
The good news quickly spread to Asia after U.S. markets closed. Shares of South Korean music companies HYBE and SM Entertainment were up 8.3% and 4.5%, respectively, early on Friday morning. Likewise, the Hang Seng Index, a selection of companies on the Hong Kong Exchange, was up 5.0% in early trading Friday.
Persistently high prices have had damaging effects to economies of the U.S. and other countries re-opening from COVID-19 restrictions. Businesses have encountered higher costs for labor, manufacturing and services, and often pass them along to consumers rather than absorb them. Everything from vinyl manufacturing costs to tour buses have soared. Some bands, such as Anthrax and Cold, pulled out of tours because of logistical issues and high costs. “There are tours being canceled left and right,” Jamie Streetman, operations manager for Nashville-based Coach Quarters, told Billboard in Sept.
To tame inflation, the U.S. Federal Reserve Bank, which targets 2% annual inflation, has raised the federal funds rate six times in 2022 to tame inflation. That has made borrowing more expensive for everyone from investors in music publishing catalogs to consumers with credit card bills.
The pairing of high interest-high inflation has wreaked havoc on stock prices, too. Year to date, the Dow index is down 7.2% and the S&P 500 is off 17.0%. Music companies that are otherwise having a solid year have seen their share prices sink, too. UMG shares are down 16.0% and Spotify shares are off 66.5% this year.
While investors celebrated the improvement in the CPI, inflation is still abnormally high and energy costs – a significant cost for touring musicians – were up 17.6% year-over-year in October. Presidents of the Federal Reserve indicated on Thursday that more rate hikes would probably be forthcoming, although at a slower pace.
The Warner Music Group has launched a new label, called OUT OF ORDER, that will highlight artists from emerging markets including Africa, India, the Middle East, Southeastern Europe and the Eastern Mediterranean, the company announced Thursday (Nov. 10). The new label will partner with Parlophone in the U.K. and Atlantic in the U.S., as well as the local WMG affiliates in respective markets, according to a press release; its tagline is “a diverse collection of sounds in no particular order.”
OUT OF ORDER plans to put a spotlight on several different types of creators in each region with a focus on “dance-leaning records,” with artwork created by local designers and a weekly radio show with hour-long DJ sets inspired by tracks from each of the albums, with the mixes hosted on Audiomack, SoundCloud and YouTube.
“I’m incredibly passionate about this initiative,” said Selina Chowdhury, Warner Music’s head of emerging markets, who will run OUT OF ORDER, in a statement. “There’s so much unique and inspired international music that often doesn’t have a global platform. We hope that OUT OF ORDER will take music fans on an adventure and introduce them to sounds and artists they might not otherwise have had the chance to hear.”
Selina Chowdhury
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The label’s first release, out Thursday, is called OOO: AFRO, which Warner says “features a mix of Afrobeats, Amapiano and House tracks from the likes of Da Capo, Makhadzi, Moelogo, Oscar Mbo, P-Priime and Rouge,” with artwork by Ghanaian designer Nyahan Tachie-Menson, who said in a statement, “There’s so much going on with the music emerging from individuals on the continent; something we can all relate to is the vibrancy of the music, and that’s what I captured here.”
“Africa is a continent rich with various sounds, which have for the longest time influenced popular culture, but is only now really being spotlighted for its contributions,” Warner Music Africa’s creative lead Garth Brown said in a statement about the release. “This album showcases some of the music from across the continent. It’s an opportunity to give the world a peek of what Africa sounds like.”
OUT OF ORDER’s next release, set for early next year, will be in partnership with Warner Music India.
3LAU is facing a new lawsuit that claims the DJ refused to properly share the earnings from an $11 million NFT auction with a musical collaborator who co-authored one of the songs involved.
In a complaint filed Wednesday (Nov. 9) in New York federal court, Luna Aura (real name Angela Anne Flores) says she has a 50% royalty stake in the song “Walk Away” from his album Ultraviolet — but that 3LAU (real name Justin Blau) offered her just $25,000 from the much-publicized NFT auction tied to the record.
“Despite this financial windfall, defendants only offered Luna Aura a flat one-time payment of twenty-five thousand dollars as compensation in connection with the sale of Ultraviolet and ‘Walk Away’ NFTs,” her lawyers wrote.
Even during last year’s fever-dream craze for NFTs (non-fungible tokens), 3LAU’s Feb. 2021 auction stood out as notable. By selling 33 collectible tokens linked to his 3-year-old album Ultraviolet — the NFTs gave the buyers access to vinyl copies, unreleased music and other special experiences — the DJ-producer raked in $11.7 million. “It was one of those moments in my life where I was like, ‘Holy s—,’” 3LAU told Billboard at the time. “‘I think we just changed everything.’”
But according to Aura’s new lawsuit, he didn’t share those profits with a key person who helped create the album. She says the auction was done without any notice to her, and that the sale breached her 2017 agreement with Blau, which guaranteed her a 50 percent publishing royalty on “Walk Away.”
“Luna Aura has not received any compensation from revenues generated from the NFT project, nor has Luna Aura [received] appropriate credit in connection with the ‘Walk Away’ and Ultraviolet NFTs,” her lawyers wrote. “Despite the commercial and financial success of the NFT auction, defendants only offered Luna Aura an after-the-fact, one-time payment.”
The lawsuit did not specify how much Aura believes is an appropriate cut from the Ultraviolet NFTs but demanded an accounting to determine how much is owed.
A representative for 3LAU did not immediately return a request for comment on Thursday.
U.S. radio companies aren’t exactly struggling through post-pandemic recoveries, but economic conditions are preventing a stronger comeback.
The earnings releases of four U.S.-based, publicly traded radio companies – iHeartMedia, Cumulus Media, Audacy and Townsquare Media – reveal an industry in flux. While the music streaming and satellite radio businesses enjoy some security from subscription-based models that can withstand economic upheaval, the radio industry depends on advertising dollars that can fluctuate greatly. Ongoing economic problems caused some advertisers to pull back in the third quarter and cloud radio’s future.
According to Cumulus Media CEO Mary Berner, “starting in late Q2, national advertisers reduced marketing to mitigate the headwinds they face from inflationary pressures, persistent supply chain issues, finance, market turmoil and overall recession risks,” she explained during the company’s Oct. 28 earnings call. Collectively, the macroeconomic pressures resulted in a decline in broadcast revenues of roughly 5% in the third quarter, said Berner, and was the “main driver” in the company’s 2% decline in total revenue to $233.5 million.
iHeartMedia CEO Bob Pittman lamented during the company’s Nov. 3 earnings call that the business “doesn’t have the robustness that we expected.” Still, iHeartMedia, the country’s largest radio company, landed at the high end of its revenue guidance with total revenue of $989 million, up 7% from the prior-year period. Revenue of its multi-platform group — which includes broadcast radio — was $659.0 million, up 0.1% year-over-year, with the help of political advertising. “This will be the best non-presidential political year that we’ve had,” said president, COO and CFO Rich Bressler.
Townsquare Media’s third-quarter revenue of $120.6 million came in at the low end of its guidance range — $120 million to $127 million — and its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $30.9 million hit the midpoint of its guidance range of $30 million to $32 million.
Audacy was hurt by advertisers’ pullback in the third quarter. Revenue dropped 3.8% to $317 million, and radio revenues dropped 6%, due to “a substantial deterioration of market conditions,” president and CEO David Field said on the company’s Tuesday (Nov. 8) earnings call. “This has obviously taken a toll on our EBITDA and [debt] leverage and has raised concerns.”
Digital remains radio companies’ growth engines. S&P Global Market Intelligence forecasts radio digital revenues to climb 4.8% next year. iHeartMedia’s digital audio segment, which includes its podcasting business, grew 23.4% year-over-year to $254 million in the third quarter. That accounted for 26% of the company’s consolidated revenue, up from 12% in the first quarter of 2020. Podcasting revenue alone accounted for $91.3 million, up 42.1% year-over-year. At Cumulus, digital revenue growth of 20% far outstripped overall revenue growth of 5% in the third quarter. Within its digital segment, podcasting revenue grew 27% year-over-year. Townsquare Media’s digital revenue increased 17%, accounting for half of total revenues, and helped the company set records for third-quarter net revenue and adjusted EBITDA.
Radio companies have taken measures to weather financial uncertainty that will extend into 2023. Cost-cutting remains popular after companies sharply reduced expenses in 2020. IHeartMedia saved about $250 million from 2020 to 2021 — a reduction of historical annualized cost base of about 10% — and targeted an additional $75 million of annual savings this year, said Bressler. Cumulus is “on track to be more than $75 million below the 2019 baseline” of fixed costs, said Berner. Audacy added to its cash reserves by selling real estate worth $56 million in the third quarter and has plans for additional sales.
S&P Global Market Intelligence expects radio local spot advertising to improve by 3% and national ad revenues to grow 1.5%, both down significantly from 2022 growth levels. Solomon Partners estimates 0.8% audio ad spending growth in 2023 based on major advertising agency forecasts from Dentsu, GroupM, Zenith and Magna.
Whatever happens in 2023, radio companies are better prepared than they were for the pandemic in 2020. That downturn “was probably the swiftest and worst downturn I’ve ever lived through,” said iHeartMedia’s Pittman. “And even in that year we had positive free cash flow.”
Still, economic pressures have weighed heavily on radio companies’ share prices. Barrington lowered its price target for iHeartMedia shares from $18 to $13 in an investor note issued Monday. iHeartMedia shares fell 15.1% over Tuesday and Wednesday, to $6.61. Year to date, iHeartMedia shares are down 68.6%.
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Ghazi believes some stories are “better told in rewind than forward.” How EMPIRE — the independent label, distributor and publisher that he established in 2010 — acquired Dirtybird is one of them.
On October 20, EMPIRE announced its acquisition of Claude VonStroke’s stalwart dance imprint, which has nurtured an inimitable, off-kilter brand of house and techno since its 2005 launch.
Under the agreement, EMPIRE obtains ownership of Dirtybird’s back catalog and all future releases, for which EMPIRE will now handle distribution and publishing. The deal — representing EMPIRE’s first stride into the dance/electronic space — includes Dirtybird’s clothing and Web3 assets, excluding only Dirtybird’s live events and festival brands. These rights are retained by Dirtybird CEO VonStroke, known by his given name Barclay Crenshaw, who will also continue to A&R Dirtybird and direct creative for its apparel line. (The rights to Dirtybird’s live events and festival brands were not a part of the negotiations. “I told Barclay early on, ‘We’re not an events company at this time — I think [the events are] better served to stay under your umbrella than under ours,’” Ghazi tells Billboard.)
Though negotiations between Ghazi and Crenshaw’s respective San Francisco-based multihyphenates started in October of 2021, Dirtybird’s appeal was apparent much earlier, according to Moody Jones, EMPIRE’s Senior Vice President of Digital & Creative, who will lead its dance/electronic department.
As the story goes, well before he accepted a role as EMPIRE’s Digital Marketing Director in 2018 — a move that propelled him from Canada to California’s Bay Area — Jones began producing his own music. In 2007, he went to a Toronto event where Crenshaw played an opening set as Barclay Crenshaw, his hip-hop-centric artist project that predated his launch of the Claude VonStroke moniker in 2006. There, Jones first met Crenshaw. Five years later in Montreal, Jones played the first-ever Dirtybird BBQ.
Over the years, one slot at a Dirtybird event begat another for Jones, who along the way formed a professional relationship with Crenshaw, his wife Aundy Caldwell Crenshaw (who serves as Dirtybird’s Chief Operating Officer) and the sprawling Dirtybird collective at large. A friend of the brand with an ear for Dirtybird’s idiosyncratic sound and an eye for business solutions, Jones assisted the Crenshaws with advising, consulting, marketing and artist promotion. Their early collaboration — coupled with Jones’ newfound proximity to Dirtybird HQ and his continued closeness with the Dirtybird crew — organically created the circumstances that would underscore the now-17-year-old brand as a complementary fit for EMPIRE and later aid its acquisition.
“I was very interested in their business model,” says Jones. “When we were out, I’d always ask questions and they’d always ask me for advice on how things are done on our end. The conversation started shifting from being about marketing to being about operating and scaling. I’d learned so much from being around Ghazi that a lot of the things I started saying [about EMPIRE] seemed like competitive advantages to Dirtybird. We [the Crenshaws] began talking about Dirtybird and what it would take to scale it.”
Thus, when Ghazi expressed interest in expanding EMPIRE’s hip-hop-concentrated scope to include dance/electronic, Dirtybird emerged as a natural fit.
Jones highlighted the similarities of the cultures within Dirtybird and EMPIRE, Ghazi’s own homegrown business — which has been responsible for several Billboard Hot 100 hits and key releases that have raised the profiles of hip-hop mainstays like Kendrick Lamar and Anderson .Paak. Armed with proprietary software that enables EMPIRE to distribute its music to digital streaming platforms, the hip-hop stronghold has increasingly expanded its sonic purview, venturing into Afropop and Afrobeats, country, Latin, R&B, and now, dance/electronic.
“He [Jones] jumped into my office and he said, ‘Hey, what do you think about buying Dirtybird?’ And I basically responded, ‘Why not? That would be a great acquisition for us, a San Francisco company,’” says Ghazi. “And he proceeded to tell me that there might be a synergy and a possibility for us to make the acquisition.”
“Aundy and I spoke to several companies in this process,” Crenshaw tells Billboard of the deal. “EMPIRE was always the best fit, simply because Ghazi understands the value of our brand name. We kept every single employee from top to bottom, and I still run the label with Deron Delgado and our killer team. I have also been friends with Moody Jones for years and years, so it was very reassuring that he was spearheading the dance division.”
“Tons of buyers just wanted to analyze the catalog and look at pure math,” Crenshaw continues. “I’ve never been a math guy; I’m a vibes guy. Dirtybird means something special to its fans, and that is why it’s one of maybe one or two U.S.A. house brands that everyone recognizes by name. Ghazi and Moody understand that, and I think we are going to have even more fun in our new home.”
Ghazi and Jones declined to disclose financial details of the acquisition to Billboard, but expounded on their motivations for bringing Dirtybird to roost at EMPIRE.
There are a number of independent dance labels that EMPIRE might have considered acquiring. Beyond the personal association, why Dirtybird?
Jones: I don’t know if Ghazi would’ve even considered Dirtybird [if not for my suggestion]. I was at Dirtybird Campout West Coast 2021 with Nima [Etminan, also of EMPIRE], and we saw the culture, the fanbase, the loyalty, the energy, and we knew it had a synergy. I saw them being hands-on with everything.
Our company is very culture-driven. Having an impact on culture is one of the pillars for us, and being a Bay Area company meant so much to us. We wanted to move into dancefloors a little bit stronger, and I can’t think of another company that would’ve complemented us the way Dirtybird does. There’s no other company that crossed every one of those boxes for us.
And when Ghazi sat down with Barclay and Aundy and got to meet her, knowing the people behind the company and how hard they work, it [was clear that it] really was their blood, sweat, and tears that put Dirtybird together. That meant a lot to us. Family is a big thing for us, and Dirtybird is literally their family business. Luckily, we [Barclay and Aundy] had built a relationship a long time ago — and honestly, life just came full circle.
Ghazi: It was a perfect fit. Our core DNA has always been hip-hop, and Barclay had a really strong affinity for hip-hop, so there were a lot of synergies between what Dirtybird was doing primarily as a dance company, and what we have historically done as a hip-hop company that’s moved into all these other verticals — like Afrobeat, Latin, R&B, and things of that nature.
I saw that there would be this holistic approach to music. You could just see it all blend together, merge into one, and be really impactful, because it makes all the sense in the world to have a dance department or a dance arm in a company like ours. We have tons of hit records that deserve to have dance remixes and dance mixes in general, and that goes beyond even just the core of what Dirtybird has already accomplished on their own.
So, for me, the initial thought process in the very beginning was like, “Oh cool, we could have a remix arm.” And then I got to spend time with Barclay and see the festivals, the culture, and everything else, and I was like, “Yo, this is a no-brainer. These guys, through and through, mean to the dance world what I think EMPIRE means to the hip-hop space.”
Naturally, it sounds like there will be an increase in the amount of hip-hop sound on Dirtybird given EMPIRE’s strength in this domain.
Jones: If you look at the sound that Dirtybird has embodied over the last three years, you’ll notice that it’s changed so much compared to the Dirtybird sound that we had early on. They’re moving into drum ‘n’ bass, they’re doing a lot more garage, and they’re doing a lot more experimental. And Barclay Crenshaw [the artist project] is more hip-hop-leaning than electronic, so I think Dirtybird will continue to be experimental. We’re going to continue to push the boundaries of electronic music, but I think now, we’re going to be able to equip Dirtybird with the ability to work with more hip-hop artists and work in different territories to push the sound to even more regions.
Outside of hip-hop, are there any other genres that you’d like to see Dirtybird work with to a greater degree?
Ghazi: Definitely a lot of the African music [Afropop/Afrobeats] that we’re doing at EMPIRE, 100%.
Given that Barclay will continue to A&R Dirtybird, you’ll be working together to advance these sounds. What do you hope this relationship will look like?
Ghazi: We’re hoping to continue letting Dirtybird do what they do best, but on top of that, increasing the volume and variety of releases that they’re doing, and giving them the tools and resources that they need to go even further. In the past, they did a few albums per year. We want to increase that number significantly, and we want to be able to give them more music videos — whatever types of tools and resources other genres have been accustomed to. We want to bring those to dance to give dance the same spotlight other genres have.
Looking ahead, what is the value of the Dirtybird catalog going forward?
Ghazi: Definitely in syncs, stems, derivative works, physical like vinyls and merch, and emerging territories where the music might not have even touched yet. I don’t know the whereabouts of the previous distributor’s reach, but we have a very far reach, so we’ll make sure that the music is in every nook and cranny in every part of the world.
Jones: It’s also in the re-releasing of a lot of products. I think a lot of the Dirtybird sound was ahead of its time, and I think a lot of these albums and singles can resurface again and be repackaged and delivered to an audience that is ready for it today that might not necessarily have been ready for it back then. Plus, there are a lot of [digital-only] releases that might have [worked well on] vinyl.
EMPIRE is a strong proponent of artist empowerment. What are some of the resources at EMPIRE that will help empower Dirtybird artists in ways that might not have been previously possible?
Ghazi: We have a huge facility in San Francisco where we do a lot of creative work. We just did a writing camp there a few months back for an African album we’re about to release. I would love to be able to do writing camps in the dance space, and I would love to increase the output of music videos with both our in-house video staff and the resources and the relationships that we have across the video sphere in the marketplace.
Additionally, more strategic marketing, more digital marketing, and greater transparency on analytics — because we are a supply chain distribution company by design, so I think empowering the artists with analytics and information is going to give them greater insight into how to market their music. We’re a very powerful marketing company, and there could be a momentous shift onward and upward for the Dirtybird side of the company and for dance as a whole for EMPIRE.
Jones: One of the last things we’re working on — and I don’t want to give away too much too soon — [is changing the nature of label deals in dance music]. One of the things I’ve noticed is that a lot of genres [have changed] in terms of the deals that labels have with artists, and I feel dance is one of the very last ones to make that change and have more transparency in deals and give better splits.
With the aid of EMPIRE, I think we can help revolutionize the whole dance scene — not just Dirtybird — by bringing this sound onto all the digital streaming platforms, and giving artists more favorable deals. I think [the deals] are a reason why, in the past, a lot of artists haven’t been loyal to their labels. You know, when every release is with a different label. But I think we can help revolutionize that and build a proper dance culture with the artists as well.