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RIO DE JANEIRO — In 2020, the pandemic knocked down Brazil’s show business, causing the number of music-related events to plummet by 80% to about 15,000, from over 83,000 in 2019, according to Brazil’s office for collection and distribution of music copyrights (ECAD).
While many artists pivoted to livestreams during the shutdown, Bete Dezembro and a group of fellow promoters and artist managers seized the moment to try to remake Brazil’s concert business — betting that once artists returned to the stage, concerts would be in much higher demand. “We had to reinvent ourselves,” Dezembro, owner of Fábrica de Eventos, an events promoter focused on Brazil’s northern music market, tells Billboard.
In March of 2021, Dezembro — along with Augusto Castro, Léo Góes, Celso Almeida and Fernando Almeida — launched 4Even, Brazil’s first investment fund designed to turn music shows into a financial asset class. The gig-driven fund generates profit from buying shows from music artists and reselling them to private clients for higher prices.
The idea was risky. At the time, it was unclear when live concerts would return or even when COVID-19 vaccines would be available in Brazil. “The financial market bought into this idea when it realized that the businesspeople who understand the music sector were the ones taking the risk,” says Dezembro.
With 100 million reais ($18.8 million) of their own money, the five partners inaugurated 4Even’s portfolio by acquiring 192 show dates of Gusttavo Lima, a popular sertanejo act — which valued his shows at just under $100,000 apiece. (Sertanejo is Brazil’s version of American country music.) A year and a half later, 4Even is worth around $30.5 million, the fund managers say, with a portfolio of around 800 shows from at least nine Brazilian artists.
The diverse list includes pagode performer Sorriso Maroto, dance music DJ Vintage Culture and sertanejo duo Jorge & Mateus, 4Even’s most recent acquisition. (4Even only negotiates for shows in Brazil.)
Dezembro tells Billboard that five other Brazilian artists, who she would not name, are currently negotiating to sell shows to 4Even.
While the live sector is rebounding, ECAD says the number of music-related events in 2022 through September, at about 40,000, is still less than half of the 2019 full-year level. That hasn’t stopped the 4Even fund from inspiring other investors. In August of 2021, Opus Entretenimento, a concert promotion and artist management company, and brokerage company XP inaugurated a show-driven investment fund they say is worth around $52 million. Seu Jorge, Alexandre Pires, Bruno & Marrone and Vintage Culture are among the artists who have sold shows to the XP OPUS fund.
Nevertheless, some Brazilian music executives have reservations about the concert funds’ ability to be profitable.
“I’m afraid that some of these funds may be valuing their assets a bit above their actual market value,” says Marcelo Soares, the CEO of Som Livre, a label owned by Sony Music Entertainment. “Some of them will eventually face financial losses. But I like that investment funds are discovering the music market.”
Marcos Araújo, CEO of promoter Villa Mix, says high artist fees, which have been rising in Brazil for the biggest artists, could lead fund partners to squeeze consumers by raising ticket prices. “It’s a very difficult model,” says Araújo, who has managed Lima and other big acts like dance-music performer Alok. “The artist takes his money in advance and spends it on a jet, plane, ship, boat. His money runs out and he starts fighting with the fund. Because he wants more money.”
Araújo told Billboard in mid-2020 that he was working to create his own gig-driven concert fund. He ultimately stopped trying to land enough investment after souring on the idea as too risky. “I was afraid artists couldn’t fulfill their agreements,” he says.
Lima was the first to sell shows to 4Even, agreeing after fund partner Castro, who produces shows and manages artists from Central-Western Brazil, persuaded him that the fund could create financial security for artists. “The idea was that when the pandemic restrictions ended, there would be money in their account,” Castro tells Billboard.
While any 4Even investor can pitch new artists for the fund, acquisitions must be agreed upon by all the partners. Lima, who will soon become one of the fund’s shareholders, informally proposed 4Even invest in Vintage Culture, whose budding international career was making his Brazilian dates scarcer. “As he has started performing abroad more often, he has less availability to perform in Brazil,” says Dezembro. “His future show dates would become more expensive, which would eventually profit the fund.”
Vintage Culture performs live onstage during the second day of Lollapalooza Brazil Music Festival at Interlagos Racetrack on April 06, 2019 in Sao Paulo, Brazil.
Mauricio Santana/GI
According to João Fiuza, CEO of Brazilian fintech One7, which is responsible for the financial governance of 4Even, Lima is expected to become an official fund investor in November, entitling him to participate in all portfolio decisions. Until now, he has been informally advising on new assets. (Junior Marques, one of the artists who sold shows to 4Even, is managed by Balada Music, Lima’s music management company.)
The recent wave of investigations into publicly funded music shows in Brazil — officials in 70 cities are suspected of agreeing to pay inflated fees to lure artists — has placed Lima under a negative spotlight, as his name was mentioned in many of the contracts under scrutiny. Dezembro says no Lima show that belongs to the fund has been canceled or devalued in the market since the investigations became public.
The fund doesn’t resell shows to municipalities, which are the target of the ongoing “CPI do sertanejo” investigations — it sells to private clients, like rodeos, fairs and other events, she says. And all of Lima’s municipal shows were negotiated directly with his company, Balada Music, she says. (Fiuza says Lima’s 4Even-owned shows are selling at a higher price now than before the investigations.)
Even though the fund resells shows for higher prices than they pay the acts, 4Even has seen a growing number of artists vying to join the portfolio to invest in their careers. The fund can be particularly helpful to emerging artists, who can use money earned from selling shows in advance to record one of their concerts, for example, says Fiuza.
But most artists are signing with 4Even for the overall career-management opportunity. “If it were all about buying and reselling the shows, the fund wouldn’t be sustainable,” says Dezembro. “The stronger pillar of the fund is being able to place these artists in the biggest events of Brazil, on the best days, and at the most competitive [set times].”
Additional Reporting by Alexei Barrionuevo
Halsey has signed a global publishing deal with BMG. The deal includes administration of future songs as well as her recently released single “So Good” and the Calvin Harris-led collaboration “Stay With Me” (also featuring Justin Timberlake and Pharrell).
Previous to this announcement, both Halsey’s recorded music and publishing were handled by Universal Music Group’s Capitol Records and Universal Music Publishing Group (UMPG). Her compositions written prior to the new BMG deal, including the critically acclaimed If I Can’t Have Love, I Want Power (2021), will remain under UMPG’s care.
Halsey says of the deal, “I’m thrilled to announce this partnership with BMG. I was immediately drawn to their artist friendly, songwriter-first mentality and I’m looking forward to taking this journey with my new BMG family.”
One of the industry’s brightest stars today, Halsey, born Ashley Frangipane, became a cult-favorite with their debut album Badlands (2015), an alt-pop compilation that revealed their distinctive sound as both a singer and writer to her followers on Tumblr and to the world. From there, Halsey broke through to the mainstream as the top liner on Chainsmokers’ “Closer,” which reached No. 1 on the Hot 100 and stayed there for twelve weeks. The song eventually broke the record for most weeks in the Hot 100’s top five, with 26 weeks (or six months).
Halsey has remained a top-earning artist ever since, charting on Billboard’s U.S. Money Makers list for 2020, and the singer-songwriter bolstered that monetary success with the critical and artistic acclaim of Manic (2020) and If I Can’t Have Love, I Want Power (2021). Beyond the music, Halsey is also an accomplished author, activist, and entrepreneur. Their book I Would Leave Me If I Could: A Collection of Poetry debuted on the New York Times Best Seller list for 2020, and their makeup brand about-face beauty, an inclusive beauty line for all, is a top seller. Through her music and business pursuits, Halsey is known for drawing attention to important causes, including women’s rights, mental health, and LGBTQ+ rights.
Jason Aron and Anthony Li, Halsey’s co-managers at Anti-Pop, said, “BMG’s creative and refreshing approach to publishing is very exciting. Thomas and his team globally, have welcomed us with open arms. We appreciate their passion and dedication to putting artists first.”
Thomas Scherer, president of repertoire & marketing, Los Angeles and New York, said, “Halsey is an inspiration, a multi-faceted creator with a voice that hits you straight in the heart. We are prepared to present them everything we can offer, with our team’s full support around the world from Australia to Asia, Europe to LATAM, and all throughout North America. We welcome Halsey and their team to BMG and look forward to working alongside with them to elevate them to a whole new level.”
Kanye West is facing a copyright lawsuit over allegations that his “Life of the Party” illegally sampled a song by the pioneering rap group Boogie Down Productions – the latest in a string of such infringement case against the embattled rapper.
In a complaint filed Monday in New York federal court, Phase One Network (the group that owns Boogie Down’s copyrights) says Ye incorporated key aspects from the 1986 song “South Bronx” into “Life of the Party,” which was released in 2021 on West’s Stem Player streaming platform.
How do they know he did so? Phase One says West’s people reached out to clear the use of the Boogie Down song – and then released it anyway when a deal was never struck.
“The communications confirmed that ‘South Bronx’ had been incorporated into the infringing track even though West had yet to obtain such license,” Phase One’s lawyers wrote. “Despite the fact that final clearance for use of ‘South Bronx’ in the infringing track was never authorized, the infringing track wa nevertheless reproduced, sold, distributed, publicly performed and exploited.”
Amid his many, many other problems over the last year, West has been repeatedly sued for illegally sampling or interpolating in his tracks. In May, a Texas pastor named David P. Moten accused the rapper of sampling from his recorded sermon in “Come to Life.” In June he was sued again, that time for using a snippet of Marshall Jefferson’s 1986 house track “Move Your Body” in the song “Flowers.”
Though they’re coming at a faster clip in recent months, such lawsuits are nothing new for West. In 2019, he and Pusha T were sued for sampling George Jackson‘s “I Can’t Do Without You” on the track “Come Back Baby.” That same year, he was sued for allegedly using an audio snippet of a young girl praying in his 2016 song “Ultralight Beam.”
Further back, West was hit with similar cases over allegedly unlicensed samples used in “New Slaves,” “Bound 2,” “My Joy.” And thought he isn’t named in the case, Universal Music Group is currently facing a lawsuit that claims West used an initially-unlicensed sample of King Crimson’s 1969 “21st Century Schizoid Man” in his 2010 track “Power.”
In the new lawsuit, Phase One’s lawyers say West used an “exact reproduction” of “South Bronx,” featuring the song’s horn hits, a melodic figure and a drum fill. The company says it controls both the publishing and recording copyrights to the song, and accuses West of infringing both.
A spokesperson for West could not be located to comment on the new lawsuit. Multiple former press representatives for West have recently told Billboard that they no longer work with him.
Read the entire lawsuit here:
Madison Square Garden Entertainment’s quarterly revenues surged by 36% to $401.2 million, an increase of nearly $107 million over last year, thanks to a packed calendar for its performance venues that included Harry Styles‘ 15 sold-out concerts at the company’s namesake venue in New York City.
However, those revenues were not enough to offset a total operating loss of $44 million and a 73% decline in adjusted operating income to $2.8 million, as expenses related to the return of live events and increased construction costs for MSG Sphere caused company-wide operating expenses to climb $88.1 million.
On a call with analysts on Wednesday, executives were optimistic saying that the company is moving into the lucrative holiday season– a boom time for MSG performances like Radio City Christmas Spectacular.
“This is expected to be the first full year of events at our venues since fiscal 2019,” James Dolan, executive chairman and chief executive, said. “The best months are coming up for our events business.”
Revenues from the company’s entertainment business quadrupled to $147.1 million in the first fiscal quarter of 2023, which ended Sept. 30. That is compared to $34.2 million last year.
Investors were not swayed by executives comments that the company hosted a record 1 million guests at events over the quarter. Madison Square Garden Entertainment Corp’s stock was down 10.47% to $40.43 by 11 a.m. in New York.
Executives disclosed that the cost of building MSG Sphere, the state-of-the-art venue under construction in Las Vegas, rose again to $2.75 billion from $2 billion on higher costs from inflation and global supply chain issues. The project has rougly 8-9 months of construction remaining.
Dolan briefly commented on the proposed spin-off of the company’s live entertainment and MSG Networks business. If the plan is approved, he said, the venues and networks business would be named Madison Square Garden Entertainment Corp, while the business encompassing MSG Sphere and Tao Group Hospitality, owner of TAO, Hakkasan, LAVO and Beauty & Essex, would be named MSG Sphere Corp.
MSG Entertainment’s board approved the plan in August, and it now faces review by the U.S. Securities and Exchange Commission. Under the plan, the new, publicly traded company would house MSG Entertainment’s venues — including Madison Square Garden, Radio City Music Hall, the Beacon Theatre and The Chicago Theatre — and MSG Networks, which broadcasts five basketball and hockey teams on MSG Network and MSG+. Also in that new company would be MSG Entertainment’s sports and entertainment booking business, the Radio City Rockettes and the Christmas Spectacular production and arena license agreements with the NBA Knicks and NHL Rangers.
Executives and analysts have said the spin-off could provide investors with more clarity on the company’s many businesses and a clearer choice between the type of investment they want to make. The venues and networks businesses have long-term track records as stable revenue generators, while the Sphere and Tao Group businesses are more speculative but provide an opportunity for higher returns.
Below is a greater breakdown of the company’s earnings for the quarter.
Q1 fiscal 2023 earnings for Entertainment division:
Revenues of $147.1 million, up $112.9 million from last year
Event related revenues rose $80.6 million
Arena license agreements with MSG Sports revenues rose $18.3 million
Suite license fee revenues rose $8.4 million
Direct operating expenses rose $65.5 million to $101.8 million from last year driven by expenses from events and arena license agreements with MSG Sports.
Selling, general, administrative costs rose 11% to $103.4 million on higher employee compensation, benefits.
Operating losses totaled $75.3 million for the quarter, a 34% improvement from the year-ago period when operating losses totales $114.7 million. Adjusted operating losses totaled $44.4 million.
Q1 fiscal 2023 earnings for MSG Networks division:
Revenues fell 13% to $122.5 million from last year on $19-million-decrease in affiliation fee revenues.
Direct operating expenses rose 10% to $75.4 million, driven by $5.9 million increase in rights fees and $1.1 million increase in other programming and production costs.
Selling, general and administrative expenses fell by 63% from a year ago to $17.8 million.
Q1 fiscal 2023 earnings for Tao Group division:
Revenues rose 11% to $132.7 million, including $7.5 from new venue openings.
Direct operating expenses rose 25% to $76.6 million driven by a $7.9-million-increase in employee compensation and related benefits.
Food and bevereage costs rose $4.1 milion on inflation, new venue openings
Adidas on Wednesday lowered its earnings forecast for the year to account for losses from ending its partnership with the rapper formerly known as Kanye West over his antisemitic remarks.
The German shoe and sportswear maker cut its sales and profit outlook for the year as part of its third-quarter earnings statement, even as the company’s chief financial officer said the profitability of the Yeezy shoe collaboration with Ye had been “overstated.” The company would largely offset the impact of the breakup next year by no longer having to pay royalties and marketing fees for the brand, CFO Harm Ohlmeyer said.
The company halved its expectations for net profit from continuing operations to 250 million euros ($252 million) this year from 500 million euros. That matched its earlier statement that ending the partnership with Ye would cost it 250 million euros in profits.
Adidas also lowered its revenue forecast for the year to a low single-digit increase from a mid-single-digit increase.
The Oct. 25 split with Ye, with production of all Yeezy products halted and royalty payments ended, will leave Adidas searching for another star to help it compete with ever-larger rival Nike. Adidas also is facing internal upheaval, with its CEO Kasper Rorsted stepping down Friday. He was previously expected to hand over next year, but the company announced the quicker change on Tuesday as it named Puma CEO Bjørn Gulden as his replacement.
Adidas faced pressure to split with Ye as other brands did earlier over the rapper’s antisemitic comments in interviews and social media, including a Twitter post earlier this month that he would soon go “death con 3 on JEWISH PEOPLE,” an apparent reference to the U.S. defense readiness condition scale known as DEFCON. He was suspended from both Twitter and Instagram.
Adidas owns the rights to product designs except for the Yeezy name and is developing plans for what to do with existing inventory.
Ohlmeyer said on a conference call with reporters that the profitability of the Yeezy business had been overstated because its costs only included expenses directly related to the products and not central overhead costs borne by the company.
“In other words, it does not include any further central cost allocation for sourcing, digital, retail, or any other services that this part of our business has been benefitting from and that were essential for its success,” Ohlmeyer said.
“At the same time, we will save around 300 million euros related to royalties and marketing fees; in combination, this will help us to compensate the majority of the top and bottom line impact in 2023,” he said.
The Yeezy brand accounted for up to 15% of Adidas’ net income, Morningstar analyst David Swartz said in a note Oct. 26.
The company had already cut its full-year earnings forecasts five days before announcing its split with Ye. The earlier outlook revision cited slowing activity in China, where severe restrictions aimed at limiting the spread of COVID-19 have held back the economy, and clearance of elevated inventory levels.
Net income for the third quarter from continuing operations was 66 million euros, down from 479 million euros in the same quarter a year ago.
The decrease largely reflected 300 million euros in one-time costs, the majority of it from winding down the company’s business in Russia.
Facebook parent Meta is laying off 11,000 people, about 13% of its workforce, as it contends with faltering revenue and broader tech industry woes, CEO Mark Zuckerberg said in a letter to employees Wednesday.
The job cuts come just a week after widespread layoffs at Twitter under its new owner, billionaire Elon Musk. There have been numerous job cuts at other tech companies that hired rapidly during the pandemic.
Zuckerberg as well said that he had made the decision to hire aggressively, anticipating rapid growth even after the pandemic ended.
“Unfortunately, this did not play out the way I expected,” Zuckerberg said in a prepared statement. “Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.”
Meta, like other social media companies, enjoyed a financial boost during the pandemic lockdown era because more people stayed home and scrolled on their phones and computers. But as the lockdowns ended and people started going outside again, revenue growth began to falter.
Of particular concern to investors, Meta poured over $10 billion a year into the “metaverse” as it shifts its focus away from social media. Zuckerberg predicts the metaverse, an immersive digital universe, will eventually replace smartphones as the primary way people use technology.
Spooked investors have sent company shares tumbling more than 71% since the beginning of the year and the stock now trades at levels last seen in 2015.
An economic slowdown and a grim outlook for online advertising — by far Meta’s biggest revenue source — have contributed to Meta’s woes as well. This summer, Meta posted its first quarterly revenue decline in history, followed by another, bigger decline in the fall.
Some of the pain is company-specific, while some is tied to broader economic and technological forces.
Last week, Twitter laid off about half of its 7,500 employees, part of a chaotic overhaul as Musk took the helm. He tweeted that there was no choice but to cut the jobs “when the company is losing over $4M/day,” though did not provide details about the losses.
Meta and its advertisers are bracing for a potential recession. There’s also the challenge of Apple’s privacy tools, which make it more difficult for social media platforms like Facebook, Instagram and Snap to track people without their consent and target ads to them.
Competition from TikTok is also an a growing threat as younger people flock to the video sharing app over Instagram, which Meta also owns.
“We’ve cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint,” Zuckerberg said. ”We’re restructuring teams to increase our efficiency. But these measures alone won’t bring our expenses in line with our revenue growth, so I’ve also made the hard decision to let people go.”
A hiring freeze at the company will be extended through the first quarter of 2023, Zuckerberg said. The company has also slashed its real estate footprint and he said that with so many employees working outside of the office, the company will transition to desk sharing for those that remain.
More cost cuts at Meta will be rolled out in coming months, Zuckerberg said.
Zuckerberg told employees Wednesday that they will receive an email letting them know if they are among those being let go. Access to most company systems will be cut off for people losing their jobs, he said, due to the sensitive nature of that information.
“We’re keeping email addresses active throughout the day so everyone can say farewell,” Zuckerberg said.
Former employees will receive 16 weeks of base pay, plus two additional weeks for every year with the company, Zuckerberg said. Health insurance for those employees and their families will continue for six months.
Shares of Meta Platforms Inc. jumped almost 5% before the opening bell Wednesday.
This is The Legal Beat, a weekly newsletter about music law from Billboard Pro, offering you a one-stop cheat sheet of big new cases, important rulings, and all the fun stuff in between. This week: Drake is sued for using a fake Vogue cover story to promote his new album, the sprawling lawsuit over Astroworld passes the one-year mark with no quick end in sight, Mariah Carey beats a lawsuit over “All I Want For Christmas Is You” and much more.
THE BIG STORY: Vogue Isn’t Laughing About Drake’s PR Stunt
A publicity stunt is all fun and games until somebody gets sued.For the past week, Drake and 21 Savage have been on a media blitz to promote their new album Her Loss, which debuted Friday. The stars appeared on the cover of an issue of Vogue magazine, performed on Saturday Night Live, teased an appearance on NPR’s Tiny Desk and sat for an interview on The Howard Stern Show.Just one problem: All of those appearances were fake. The Vogue covers were photoshopped onto fake issues distributed around the country (Jennifer Lawrence was on the real October issue); the SNL performance was a spoof, with a high-profile assist from Michael B. Jordan as the fake “host”; NPR quickly confirmed the Tiny Desk show wasn’t happening; and the Stern appearance was an elaborate deepfake.The whole thing appears to be a publicity stunt, carried out by an artist who doesn’t really need to do promo for his album releases and hasn’t done so in recent years — but would be eagerly invited to actually appear on those outlets if he wanted to go that route.Case in point: NPR used the stunt as an opportunity to tell the star he was “welcome anytime” on the beloved concert series: “Let’s do it forreal tho.” And Stern laughed the whole thing off, jokingly quipping about the convincing deepfake version of himself: “Whenever I have to visit my mother, I wish I could do this.” No word from SNL, but a show famous for parody is unlikely to be offended.The same cannot be said for Vogue publisher Condé Nast, which filed a lawsuit against Drake and 21 in New York federal court this week that called the stunt a “flagrant infringement” of the company’s trademark rights, aimed at exploiting the “tremendous value that a cover feature in Vogue magazine carries” without actually securing that honor.The publisher seemed particularly miffed by Drake’s Instagram post teasing the fake cover story, in which he personally thanked famed Vogue editor Anna Wintour. The infamous magazine editor “had no involvement” with Drake’s album and has “not endorsed it in any way,” Condé’s lawyers wrote.If the case doesn’t immediately settle with Drake pulling down the images (a strong possibility in any trademark case) Condé’s lawsuit could lead to an interesting debate over parody. Is Drake’s stunt a commentary on the way media outlets like Vogue or SNL (or Billboard, for that matter) team up with celebrities to help them promote their latest offerings? Or is he just exploiting their names to pump sales of his album without actually doing the hard work of a press tour?
The Other Big Story: Astroworld Update
A year on from the deadly disaster at Travis Scott‘s Astroworld festival, Billboard took a deep dive into the status of the sprawling lawsuit that’s been filed by victims.More than 4,900 legal claims have been filed against Live Nation, Scott and other festival organizers, accusing them of being legally negligent in how they planned and conducted the event. Combined, the cases are seeking billions in damages over the disaster.With no quick ending in sight, we asked some of the country’s top experts in such cases: Where do things stand? What comes next? And how will it all end? Read the whole thing here.
Other top stories this week…
RECORD LABELS WIN BIG PIRACY VERDICT – A federal jury in Texas ordered internet service provider Grande Communications to pay more than $46 million in damages to the three major record labels and others over music illegally downloaded by the company’s subscribers. The case was one of several filed by music companies against ISPs, aimed at forcing them to take more proactive steps to eliminate piracy on their networks — the same kind of case that ended with a shocking $1 billion verdict against Cox Communications in 2019.OBSCURE RULE IS BIG WIN FOR SONGWRITERS – As first reported by Billboard last week, the U.S. Copyright Office is quietly proposing a new rule to make sure that songwriters who invoke their termination rights actually get paid their streaming royalties. The rule change would overturn a previous “erroneous” policy by the Mechanical Licensing Collective that critics worried could potentially have kept sending such money to former owners in perpetuity, even after a songwriter has reclaimed their rights. Groups like the Recording Academy and the Songwriters of North America, which lobbied for the rule change, praised it as a win for songwriters.MARIAH CAREY ‘CHRISTMAS’ ACCUSER DROPS CASE – Vince Vance, a songwriter who sued Mariah Carey over accusations that she stole her “All I Want for Christmas is You” from his earlier song of the same name, dropped his lawsuit over Carey’s 1994 holiday blockbuster. But he dismissed the case “without prejudice,” leaving open the possibility that he could refile the case at some point in the future. If you’re confused why Carey can be sued over a decades-old song, go read our explainer on the issue (spoiler: because the Supreme Court said so!) Though legally dubious, Vance’s case was a big deal simply because Carey’s song is a big deal: It has reached No. 1 on the Billboard Hot 100 during each of the past three holiday seasons.KESHA & DR. LUKE GET A TRIAL DATE – A New York judge scheduled a July trial for Dr. Luke’s defamation lawsuit against Kesha, setting the stage for a courtroom showdown nearly nine years after the case was first filed. A trial had previously been scheduled to start in February, but with key issues in the case still awaiting rulings by a state appeals court, both sides saw that plan as unworkable (and blamed the other for the delay). If you’ve forgotten: Dr. Luke is accusing Kesha of defaming him with a “false and shocking” allegation that he drugged and raped her after a 2005 party.
The best of the rest…
–Kanye West paid a settlement to a former employee who alleged having witnessed more than one incident in which the once-beloved rapper praised Hitler or Nazis in business meetings. In the settlement agreement, West denied the claims made by the former employee. (NBC News)-The U.S. Supreme Court said it wouldn’t hear music producer Gary “G-Money” Frisby’s copyright suit against Sony Music and rapper Bryson Tiller over beats on Tiller’s album Trapsoul. (Law360)–Trey Songz won the dismissal of a $20 million sexual assault lawsuit that had been filed, dismissed and then re-filed by a Jane Doe accuser. A judge ruled that the accuser missed a key deadline to respond to Songz’s defense that the statute of limitations on her allegations had expired. (Rolling Stone)
Reservoir Media reported higher quarterly profits and revenues on Tuesday (Nov. 8), as the acquisition of “Sing, Sing, Sing” legend Louis Prima’s catalog and Lebanese label Voice of Beirut helped boost the company’s full-year growth forecast.
From July to September, Reservoir’s net income rose 3% to $4.5 million, or $0.07 per share, while top-line revenues rose 10% to $33.3 million from the year-ago quarter. Executives said they now expect both revenue and adjusted EBITDA (earnings before interest, tax, depreciation and amortization) to rise by 11% for the full fiscal year of 2023. For revenue, that is a range of between $118 million and $122 million, and for adjusted EBITDA, a closely watched metric of profitability, that will range between $45 million and $47 million.
“While the broader economy is facing challenges, the music industry as a whole remains healthy,” Golnar Khosrowshahi, Reservoir founder and chief executive, said on a call with analysts.
Reservoir is mid-way through the fiscal year 2023, during which it aims to spend $100 million on strategic acquisitions. In addition to acquiring Prima’s publishing and recorded music catalogs and the Voice of Beirut, Reservoir signed publishing deals with Naughty By Nature’s KayGee, writer-producer Nick Lee and country singer-songwriter Brit Taylor.
“We are pleased by the quality and volume of deals that we have executed in the past few months,” Khosrowshahi said, adding they have a pipeline of around $2.1 billion of prospective deals “at various stages of development.”
Music publishing revenue rose 9% to $24.1 million for the quarter, driven by a 15% increase in digital revenues and a 6% increase in synchronization revenues.
Recorded music revenues rose 11% to $8.9 million, helped largely by assets under the Tommy Boy label as well as increased digital and synchronization revenues.
Within recorded music, digital revenues rose by 35% to $6.3 million, while synch revenues surged 224% to top $1 million. Physical revenues fell 66% to $900,000 as vinyl and CD sales fell on a lighter release schedule this quarter, executives said.
Operating income fell 15% to $6.6 million and OIBDA (operating income before depreciation and amortization) fell 5% to $12.0 million on higher expenses from employee compensation and running a public business.
“We are confident in our long-term ability to grow our top line at a faster past than our costs moving forward,” Jim Heindlmeyer, Reservoir’s CFO, said on the call.
LONDON — Deezer has always been the streaming service that charted its own path. After launching in 2007 — a year before Spotify debuted — the Paris-based company rapidly opened its service in over 180 countries; but, unlike Spotify, which focused on one or two markets at a time, Deezer avoided the biggest markets, like the United States and Japan, for many years. But now that the number of on-demand music subscription services has boomed, Deezer has struggled to keep up with its rivals.
New CEO Jeronimo Folgueira, who took over in June 2021, hopes to change that. Deezer is shifting from targeting small and emerging territories to renewing its focus on large and established music markets, where consumers are more willing to pay for subscriptions. In August, Folgueira forged a partnership with German broadcast giant RTL Deutschland to deliver music and video content in a single app — RTL+ Musik — putting Deezer in a stronger position to compete with Spotify, Apple Music, Amazon Music, China’s Tencent Music Entertainment (TME) and YouTube Music.
Folgueira calls the RTL tie-up a “transformative” deal that gives Deezer the scale it needs to break into Germany, the world’s fourth-biggest recorded-music market, with revenue of $1.6 billion in 2021, up 12.6% from 2020, according to IFPI. “In those markets where we have the right partner and the right distribution strategy, our product is second to none,” says Folgueira.
But in the increasingly crowded streaming business, Deezer, which counts Warner Music Group owner Access Industries among its biggest shareholders, is fighting an uphill battle to unseat Spotify. Deezer’s strategy seems more about becoming a “second-tier player that is strong where first-tier players are not,” says Mark Mulligan, analyst at MIDiA Research. While it was “once incumbent,” along with Rhapsody, “it is now challenger, and it has honed its strategy accordingly.”
Deezer is strongest in France, where it is partnered on bundle deals with telecom company Orange and has 4.4 million subscribers, and in Brazil, where it partnered with TIM Celular in 2016 and has 2.7 million subscribers, according to company filings. Worldwide, Deezer has 9.4 million subscribers compared with Spotify’s 195 million subscribers and 273 million free (ad-supported) users, while TME has 82.7 million paying subscribers, according to the companies’ latest earnings reports.
While Apple Music, Amazon Music and YouTube Music don’t regularly announce user numbers, last year Lyor Cohen, YouTube’s global head of music, said the service had surpassed 50 million paying subscribers worldwide. The last time Apple issued any data for its service was in 2019, when it said it had over 60 million subscribers worldwide; Amazon Music said it had more than 55 million subscribers globally in January 2020 but has not updated that figure since.
Rapidly growing TikTok dwarfs them all, with the social media app boasting over 1 billion active monthly users, many of whom use music in their videos. Streaming executives will watch closely what ByteDance, TikTok’s parent, does next. The Beijing-headquartered company is understood to be in talks with labels about expanding its subscription-based music streaming service Resso — currently available in India, Indonesia and Brazil — to more than a dozen new markets ahead of a global rollout. (Verified profiles with the username “TikTok Music” have appeared on social media platforms in recent months advertising “a new way to experience music.”)
For Deezer, strategic partners like RTL Deutschland, which says it reaches 99% of the German population through its 15 TV channels and numerous radio, print and digital outlets, are the key going forward, says Folgueira. “RTL has to compete with Netflix, Apple and Amazon,” he says. “We compete against Spotify, Apple and Amazon. Together, we can compete much better and have a proposition that is equal or better.” Deezer is seeking strategic partners in other big markets, he says, including the United States (where it launched in 2016), the United Kingdom, Spain and Italy.
Engineers at Deezer and RTL spent a year developing the RTL+ Musik app, which combines music streaming with film, TV and news content and costs 9.99 euros ($9.84) for the first six months, then rises to 12.99 euros ($12.80) per month. RTL, which is owned by BMG parent company Bertelsmann, says it has 3.4 million paying subscribers for its lower-priced, video-only RTL+ streaming service but believes it can quickly grow its premium subscriptions through music.
This year’s merger with I2PO, a special purpose acquisition corporation that raised 275 million euros ($282 million) in a 2021 initial public offering, gives Deezer the funding it needs to execute the plan, says Folgueira. Still, as it tries to make its strategic pivot, Deezer faces strong market headwinds and an uncertain investment environment for music streaming.
Since its rocky debut on the Euronext Paris exchange in July 2021, Deezer’s share price has plummeted almost 60% and now hovers around 3.5 euros (it closed at 3.42 euros on Nov. 8). Spotify shares have tumbled 74% over the past year, to $73.44 on Nov. 7, as investors soured on streaming following a pandemic-related boom. (Spotify’s all-time high closing share price was $364.59, set on set on Feb. 19, 2021.)
“There is a growing acceptance among investors that the boom period for streaming investments is drawing to a close,” says Mulligan. He predicts streaming services will continue to represent long-term value but “will be less interesting to certain kinds of investors, which may weaken overall demand and thus push down share prices.”
Folgueira points to Deezer’s midyear financial results — revenue grew 12.1% (up 9.9% at constant currency) from the prior-year period to 219 million euros ($218 million) — as evidence that the company is well positioned to survive and grow within the fast-changing music streaming market. (Since the interview, Deezer released its third quarter earnings on Oct. 27, showing revenue up 13.8% and 11.4% at constant currency.) “For the last 10 years, streaming companies have prioritized growth over profitability,” says Folgueira. “That will start shifting now, and we will all focus more on profitability going forward.”
Wasserman Media Group received an investment from private equity firm Providence Equity Partners that will provide capital for the talent agency’s growth initiatives and buy out two existing Wasserman investors, RedBird Capital Partners and Madrone Capital Partners. Financial terms of the deal were not disclosed.
Wasserman’s founder, chairman and CEO, Casey Wasserman, who continues to own a controlling ownership stake, said in a statement “there is no better partner to help us accelerate and scale this purpose-driven model than Providence. Their long relationship with our executive management group plus their extensive experience and established investment approach across the sports, media and entertainment sectors, and a shared commitment to culture will help accelerate the next phase of Wasserman’s expansion.”
Providence Equity Partners has experience in the music and entertainment space. In 2019, the firm created a $650 million investment platform — Tempo Music Investments — with Warner Music Group to invest in music publishing and recorded music catalogs. With interest rates rising in 2022, however, Providence is shopping its stake in Tempo and wants out of the music catalog market, according to reports.
Wasserman is a natural fit for Providence’s numerous investments in the live entertainment space. Providence has a portfolio of music festivals through its Superstruct Entertainment division, including International Concert Service, organizers of the Wacken Open Air metal festival, Dutch promoter ID&T, and Advanced Music SL, which operates Spanish music festival Sónar. Providence also owns majority stakes of U.S.-based music instrument retailer Sweetwater and U.K.-based Ambassador Theatre Group, which owns and operates 58 venues in the U.S. and Europe. Providence also owns a stake in Sofar Sounds through its investment in The Chernin Group.
Scott Marimow, managing director at Providence, complimented Wasserman’s “client-first approach” and influence in sports and music talent representation. “Wasserman is a natural fit with our firm, and we look forward to partnering with Casey and the entire Wasserman team to help fuel the Company’s next phase of growth and success,” he said in a statement.
“Wasserman has the potential to set the bar for the future of talent representation and brand and marketing consultancy,” said Davis Noell, senior managing director and co-head of North America at Providence, in a statement. “With our strong existing relationship, similar cultures and shared passion for media, sports, and entertainment, we are pleased to have reached this agreement to partner together.”
Wasserman became a powerhouse in music through its acquisitions of Paradigm’s North American live music roster in 2021 and U.K. live music business in April from Platinum Equity. Artists on the Wasserman roster include Coldplay, Kenny Chesney, Billie Eilish, Imagine Dragons, The Lumineers, Dave Matthews Band, Janelle Monáe, Kacey Musgraves, Old Dominion, Phish, Ed Sheeran, Lorde, Sturgill Simpson, Black Pumas, Brandi Carlile, Tyler Childers, Kaytranada, Normani, Run the Jewels, Tash Sultana, Diplo, DJ Snake, Flume, Jack Harlow, ODESZA and Skrillex.