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Music streaming giant Spotify reported 195 million paid subscribers in the third quarter of 2022, up from 188 million paid or premium subscribers in the previous quarter and above expectations.
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The company had forecast it would hit 194 million premium subscribers this quarter.
Spotify also exceeded its monthly active user expectations, reaching 456 million monthly active users in the third quarter, above its forecast of 450 million. In the second quarter, monthly active users hit 433 million, up from 422 million in the previous quarter.
The company now says it has 4.7 million podcasts. At the end of June, Spotify had 4.4 million podcasts on the platform, up from 4.0 million at the end of March. New additions this quarter included the launch of Meghan Markle’s podcast, Archetypes.
Total revenue came in at €3.04 billion compared to a forecast of €3.0 billion.
Still, the continuing focus is on the company’s margins (which came in below expectations at 24.7 percent compared to the company’s estimate of 25.2 percent). The company said this was due in part to “slower than forecast advertising growth given the challenging macro environment,” as well as the expected renewal of a large publishing contract outside of the U.S. and currency fluctuations. Advertising was particularly impacted in Europe, according to the company. However, advertising only makes up a small segment of the company’s results.
While podcasting has been gaining traction and ad revenue, the $1 billion investment to get there has weighed down the company’s profitability. In June, the company said it expected podcast margins to turn positive after 2022 — this year marked the peak negative impact on the margins — with the segment becoming profitable in the next one to two years.
Speaking on the earnings call Tuesday, Spotify CEO Daniel Ek said the results are still in line with that pledge, as well as the theory that this is an investment year for the company.
“This is all playing out largely as we expected, despite the macro environment,” Ek said.
Asked whether Spotify would consider raising prices in the U.S., as Apple Music and other competitors have, Ek said “it is one of the things that we would like to do,” and that the company will be having conversations with its label partners on that.
In July, the company said it was preparing for an economic downturn — though it had not yet had much of an impact on its business — by slowing its pace of hiring by 25 percent.
“I do believe only the prepared survive, and we’re preparing as if things could get worse,” Ek said at the time.
On Tuesday, Spotify said it had not seen any “material impact” from the economic downturn, other than on its ad business.
However, moving forward, Ek said the company will be “more selective” with its “overall spending.” Future investments will be made only if they are accretive to the company’s margin over the investment period and if they strengthen the company’s value proposition to users. Ek also noted that there may be new opportunities in an economic downturn.
The company has also taken on other cost cutting measures. Earlier this month, Spotify canceled 10 original shows from its studios Parcast and Gimlet. This led to the layoff of 38 employees and pushback from their respective unions.
On Tuesday, Spotify did not address the cancellations directly, but said that the restructuring should lead to “improved productivity at select studios” and appear as a one-time charge in the fourth quarter.
At the same time, Spotify officially launched its audiobooks business in September, which it had been long promising as the next step in its business plan after its podcast push. The company chose an à la carte model at launch, in which users can check out individual books from a library of 300,000 titles. There are no ads yet for the audiobooks business, but the company has said it may explore that and other business models.
While management did not release numbers yet on the launch, executives said they had seen “good engagement” with the segment, even as the purchasing experience has been not been ideal for iOS users. Ahead of the earnings call, The New York Times reported that Apple had rejected the Spotify app three times.
The company has also been experimenting with selling tickets. In August, Spotify launched a ticket selling website for select artists. Paul Vogel, Spotify’s chief financial officer, has characterized it as a means of boosting average revenue per user on the platform, as well as increasing listening hours for those artists. The company would not disclose any numbers on that effort Tuesday.
This article originally appeared in THR.com.
AMSTERDAM — While dance music makes up a relatively slim portion of the global music industry — earning a $6 billion valuation in 2021 — the genre felt like the center of the universe last week in the Netherlands.
Or at least the center of Amsterdam’s fairytale Centrum district, with dance/electronic music taking over this canal-lined neighborhood and points beyond for the 26th edition of the Amsterdam Dance Event, or ADE, the world’s largest gathering of the global electronic industry.
Launched in 1996 and returning for its first full-fledged edition since 2019 — with 2020 and 2021 moved online and trimmed down dramatically due to the pandemic — the four-day conference drew an estimated 10,000 agents, managers, label owners, product developers, publicists, execs, data analysts, journalists, veteran and emerging artists, event producers and all other varieties of dance scene professionals from across global markets, with a heavy influx of European and U.S. attendees.
Think of it like the global electronic industry going on a field trip to the Dutch capital together, with one-on-one discussions, panels, product demonstrations, mixers, many stroopwafels and a lot of dancing all on the packed itinerary of the four-day ADE, which spanned Oct. 18-22.
ADE 2022 also featured more than 1,000 club and festival shows, which were geared towards both delegates and the roughly 450,000 fans who took part in the bacchanal.
A Pro portion of the conference — designed for established professionals, with scene newcomers taking part in ADE’s parallel Lab programming — featured more than 130 discussions in 10 meeting spaces located across two stately historic buildings over four days. They addressed a dizzying range of topics, with a few key themes emerging.
One was how a sound fostered by technology is itself keeping up with emerging tech. While other music industry conferences have made Web3 a focal point following the explosion of the sector, ADE programming didn’t linger on the topic, with just a handful of discussions on the metaverse, AI and NFTs. Even without the official spotlight, however, Web3 was a hot topic on the ground, with one representative from an electronic-forward NFT company noting that while non-fungible tokens may not be something every artist is especially passionate about, their company is seeing real evidence of NFT sales allowing for emerging and middle-tier artists to earn a living wage. For them, this revolution in earnings potential adds a very human, and thus widely compelling, dynamic to the sector. (And to a field, they also noted, which could use a diversity influx, given its current domination by “cis, white crypto bros.”)
Others observed that it will take Web3 coalescing into an umbrella company like Google or Apple for the possibilities that the technology presents to be adopted by the wider population. One person involved in signing up attendees of a major U.S. music festival with crypto wallets as part of the event, noted that months later, only a small fraction of the crowd is still using this tool.
Amsterdam Dance Event 2022
Kapa Photgraphy
On a more holistic level, several panel conversations touched on the FOMO-fueled rat race many artists and others in the scene are experiencing as a function of social media. “Perception is the new reality,” noted Jori Lowery of management agency Conflux during a Wednesday afternoon panel discussion, observing that many artists in the scene struggle when comparing their careers with other acts who appear to be busier.
During a Friday afternoon conversation between veteran producer Seth Troxler and journalist Joe Muggs, Troxler observed how the internet has fueled the dance scene’s growth during the last decade, but not always necessarily in a good way. “That switch from the club culture and the localization of culture to these really large events and this kind of FOMO culture, where it’s like, ‘I want to go to a big-ticket event, see everyone, get the picture,’” Troxler said.
“Maybe the party’s not even good,” the DJ continued, “but there’s loads of people there and no dancing, whereas you go to a small party with 100 people and it’s a great vibe, and that’s cool too. It doesn’t have to be this mega thing all the time, even though the mega thing is cool, or it’s accessible, at some point it grows our culture, but also kills our culture.”
A Wednesday afternoon conversation with Ultra Records founder Patrick Moxey — at ADE to speak on the launch of his new label Helix — emphasized that the real necessity for artists to be online, and particularly on TikTok and Instagram, is because both platforms can be powerful tools for fanbase development, even as these platforms present new challenges. One member in the audience observed that while many artists are reluctant to put themselves online, thinking that a heavy digital presence is uncool, it’s necessary for acts to “get over their egos” to gain real traction. The observation drew applause from the crowd.
The audience was quieter during a Thursday afternoon panel on doing business in conflict areas — both in the U.S. and around the world. Panelists discussed if and how artists and brands should work in U.S. states that have banned abortion and in regions with a records of human rights violations like Saudi Arabia. (Members of the team from MDLBEAST, the Riyadh electronic festival launched in 2019, were on the ground at ADE, with many delegates pondering if and how to do business with the fest, with some keen to participate and others remaining more reticent.) While some on the panel and in the audience expressed reasonable ethical qualms about hosting events and sending artists to play in such controversial regions, others argued that it’s unfair to advise on best practices in any area that one hasn’t personally traveled to.
If there was a consensus from this conversation, it was that it’s vital for each sector of the scene to first acknowledge and work on its own issues before engaging in finger-pointing, particularly with respect to the scene’s consistent allegations of sexual misconduct amongst DJs and others involved in nightlife culture and a pervasive lack of diversity. (“It’s still a systemic issue of most agents and managers being white men,” observed one delegate who spoke to Billboard on the condition of anonymity, in regards to why inclusivity isn’t happening more quickly.)
But while ADE demonstrated the scene’s varying challenges, it also highlighted the many people working to solve them. A variety of panels focused on fostering greater diversity in the scene and featured leaders in the dance music space, including Black Artist Database (B.A.D.) co-founder NIKS and BEAUTIFUL label founder SHERELLE, who spoke to how B.A.D., a crowd-sourced list of Black artists, producers and creators, is helping Black artists form community outside of traditional power structures. There was also a full day of ADE Lab programming designed by She.Said.So, an organization that works to connect and empower underrepresented communities in electronic music and beyond.
At a Friday night mixer hosted by Spotify – which ended with a drone show soundtracked by Tiësto — one longstanding ADE attendee noted that in terms of inclusivity, ADE 2022 felt like a legitimate shift. This attendee noted more diversity among attendees and lineups and how delegates also generally seemed more open and interested in chatting. “There’s been a temperate change in the event overall,” they said.
Amsterdam Dance Event 2022
Tom Doms
Meanwhile, a full day’s worth of programming about sustainability initiatives in the scene offered glimmers of hope in the face of climate change. One longstanding attendee noted that in this part of October the canals of Amsterdam used to be frozen over, while last week it was often possible to walk around without a jacket. (A weekend festival by Dutch festival producer DGTL, which has a strong sustainability program, demonstrated that even large-scale events can operate with reusable cups and meat-free food vendors.)
And of course, several conversations turned to Berlin’s iconic techno club Berghain, which has been rumored to be shuttering soon after the closure of both its in-house label and management agency. One source well-connected in the Berlin scene noted that the venue may be converted into residential lofts, and that given the potential revenue of this project, the building’s current owners “are struggling to reject the deal.”
Elsewhere during the week: Tomorrowland premiered its 25-minute after-movie of its 2022 festival at the elegant art deco Royal Theater Tuschinski. (The film’s lessons about the power of community and catharsis in the dance world elicited a few actual tears.) Eric Prydz blew peoples’ minds while performing his much-lauded HOLO shows — a few delegates called the performance the best they’d ever seen. Honey Dijon headlined a buzzy Back to Black showcase with a lineup including Kerri Chandler and TSHA. Claude VonStroke announced that EMPIRE had acquired his previously independent and much-beloved Dirtybird label and Diplo gave a keynote address about his career trajectory, noting that his musical history in Jamaica began when he was booked to play the seafaring Jam Cruise festival and just got off the boat on the island nation because he wasn’t enjoying himself onboard.
Delegates also buzzed about Pioneer DJ’s acquisition of DJ Monitor — the software that tracks what songs artists play during their sets will soon be integrated directly into Pioneer hardware, which many feel will be a big step forward for royalty collection. (ADE is itself sponsored by Dutch collection agency BUMA.)
Ultimately, after a long absence of togetherness, ADE 2022 functioned as an industry show and tell, a four-day reunion and the dance scene’s prevailing place to dissect, solve and celebrate the incredible number of issues, sounds and scenes that exist within it.
Kanye West‘s former record label and music publisher have joined a chorus of companies in denouncing antisemitic rhetoric following a rash of recent statements made by the rapper.
Though Universal Music Group (UMG) — which worked with West for many years via Def Jam and its merchandise company Bravado — and Sony Music Publishing (SMP), which administers West’s song catalog, no longer work with the rapper now known as Ye, both have taken a public stand against his recent antisemitic comments in statements sent to Billboard.
A spokesperson for UMG clarified that “Def Jam’s relationship with Ye as a recording artist, Def Jam’s partnership with the GOOD Music label venture and Ye’s merchandise agreement with Bravado all ended in 2021.” The company owns the copyright on his recordings up to 2016 and distributed his recordings until last year. The spokesperson continued, “There is no place for antisemitism in our society. We are deeply committed to combating antisemitism and every other form of prejudice.”
SMP has been the administrator for West’s extensive catalog of musical works for years but the rapper’s publishing administration deal expired in early 2022. In an internal memo to employees, Sony leadership assured their staff that “at Sony Music Group, commitment to tolerance, inclusion and equality for all are at the heart of who we are as a company. Consistent with these values, we denounce antisemitism. Through our partnership with the UJA Federation, we work to combat prejudice against the Jewish community.”
Pursuant to the old agreement, SMP will continue to administer West’s musical works for an undisclosed period of time. Because SMP’s dealings with West were purely administrative and did not include ownership, after this period ends the company will no longer have any interests in his catalog.
West’s former manager, Scooter Braun, who is Jewish, posted a graphic today on Instagram, seemingly in response to his former client’s recent statements. “First they came for the Socialists, and I did not speak out — because I was not a Socialist. Then they came for the Trade Unionists and I did not speak out — because I was not a trade Unionist. Then they came for the Jews, and I did not speak out — because I was not a Jew. Then they came for me — there was no one left to speak for me,” the post read.
These statements all follow West’s three-hour interview with MIT scientist Lex Fridman on Tuesday in which the rapper said, “It’s genocide and population control that Black people are in today in America, that is promoted by the music and the media that Black people make, that Jewish record labels get paid off of.”
Earlier on Tuesday, Adidas announced that it had ended its partnership with the Yeezy designer and rapper over his offensive remarks — a decision that the German sportswear brand said will affect its bottom line significantly — after celebrities and others on social media urged the brand to join the many other companies in fully cutting ties with West. As a result of being dropped from Adidas, West has lost his billionaire status, according to Forbes.
In a now-removed episode of the Drink Champs podcast, West told interviewer N.O.R.E., “the thing about it being Adidas is, like, I can literally say antisemitic s–t and they can’t drop me … I can say antisemitic things and Adidas can’t drop me. Now what?”
The hateful and discriminatory rhetoric West voiced on Drink Champs followed a number of other concerning statements from the rapper in recent weeks. On Oct. 3, the rapper wore a White Lives Matter shirt to his Yeezy Paris Fashion Week show. Just days later on the evening of Oct. 8, he sent out a tweet saying he wished to go “death con 3” on Jewish people, which was subsequently removed by Twitter. West is currently suspended from Twitter and Instagram for antisemitic posts that the social networks both said violated their policies.
Over the weekend, a group of demonstrators, inspired by West’s antisemitic remarks, unfurled a banner on a Los Angeles overpass that read “Kanye is right about the Jews.”
Other business partners of West’s have also dropped him in recent weeks, including Creative Artists Agency, MRC, Balenciaga and JPMorganChase, though the latter relationship was severed prior to the rapper’s antisemitic outbursts. On Tuesday, Gap said it was taking immediate action to remove all West-related products from shelves a month after the rapper severed his relationship with the retailer.
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: Cardi B avoids millions in damages by winning her trial over a sexually-explicit album cover, Jay-Z files a lawsuit to escape his Cognac partnership with Bacardi, Miley Cyrus quickly settles a case over an Instagram photo of herself, and much more.
THE BIG STORY: Cardi B Wins Trial Over ‘Raunchy’ Album Cover
It was all over pretty quick.After nearly five years of litigation, it took just four days of trial and 90 minutes of deliberation for a jury to clear Cardi B of wrongdoing in a lawsuit filed by Kevin Brophy, a California dad whose back tattoos were unwittingly photoshopped onto a “raunchy” Cardi album cover.Brophy sued in 2017 for millions in damages, claiming he was “devastated, humiliated and embarrassed” by the cover of her 2016 mixtape Gangsta Bitch Music Vol. 1. The image featured Cardi staring directly into the camera with her legs spread wide, holding a man’s head while he appears to perform oral sex on her.Here was the problem: While the actual man in the image was a model who had consented to the shoot, a giant tattoo on his back belonged to Brophy. Unbeknownst to Cardi, a freelance graphic designer had typed “back tattoos” into Google Image, found one that fit (Brophy’s), and photoshopped it onto the model’s body. It apparently didn’t occur to him that he would need anyone’s approval to do so.When the trial kicked off last week, Brophy testified that the image had been a “complete slap in the face” and had caused him “hurt and shame.” Then on Wednesday, Cardi herself took the stand — repeatedly sparring with Brophy’s attorney (A. Barry Cappello of Cappello & Noel LLP), demanding “receipts” to support the allegations, and accusing him and his lawyers of “harassing” her in hopes of scoring a settlement.In the end, jurors were clearly swayed by the arguments from Cardi’s lawyers (Peter Anderson of Davis Wright Tremaine LLP and Lisa F. Moore of Moore Pequignot LLC). Among other defenses they raised, their primary argument was pretty simple: That nobody would have recognized a relatively unknown man based merely on his back tattoo, and that he had little proof anyone did.After the verdict, Cardi took to Twitter to celebrate her legal victory: “I just won this lawsuit …Im soo emotional right now,” the superstar wrote. “I wanna kiss Gods feet right now …..IM BEYOND GRATEFUL!!!!”
Other top stories this week…
HOV WANTS OUT OF BOOZE BIZ — Jay-Z filed a lawsuit seeking to end his involvement with D’Usse Cognac, a brand he currently co-owns with spirits giant Bacardi. The rap mogul’s lawyers claimed that Bacardi is legally required to buy out his half of the business, but that the company is “lowballing” and “stonewalling” him to get a cheaper price. The lawsuit said Jay-Z’s move to exit D’Usse came amid “growing concern” about how Bacardi was running the company, including supply chain failures and an unwillingness to change prices.HEDLEY SINGER SENTENCED FOR SEX ASSAULT — Singer Jacob Hoggard, the former frontman for multi-platinum pop-rock band Hedley, was sentenced in Canada to five years in prison for the sexual assault of an Ottawa woman. The sentence came after a June verdict that found Hoggard guilty of sexual assault causing bodily harm of a woman known only as “JB” during a 2016 incident in an Ontario hotel room. Hoggard could have received as much as 14 years, but prosecutors sought only six to seven years. His defense attorneys asked for three to four years.ONE ASTROWORLD VICTIM SETTLES CASE — Attorneys for the family of Axel Acosta, a 21-year-old man who died at the last year’s Astroworld music festival in Houston, announced they had reached an agreement to resolve their legal case against Live Nation and Travis Scott, one of the first known settlements in the sprawling litigation over the disaster. But sources close to Scott quickly said he had not been involved in settlement talks, and no formal notice was filed on the court’s docket, leading to uncertainty about what had actually happened. Even if a deal is struck by Acosta’s family, thousands of other alleged victims are still seeking billions of dollars in damages from Live Nation, Scott and others, claiming they were legally negligent in how they planned and conducted the event.CHARGES DROPPED AGAINST LIL DURK — Prosecutors in Georgia told a judge that they would no longer pursue criminal charges against the Chicago rapper (real name Durk Derrick Banks) over a 2019 shooting in downtown Atlanta, citing “prosecutorial discretion.” Along with the late rapper King Von, Durk was arrested way back in May 2019 on accusations that he was involved in gunfire near the popular Atlanta restaurant The Varsity, which left a victim with a non-fatal gunshot wound to the thigh. More than three years later, prosecutors insisted “probable cause existed for the defendant’s arrest” but that “the decision of the District Attorney at this time is not to prosecute.”MILEY CYRUS ENDS INSTAGRAM CASE — Just a month after it was filed, Miley Cyrus settled a copyright lawsuit that accused the star of violating copyright law by posting a paparazzi photo of herself to Instagram. Such allegations are a bizarrely common legal problem for celebrities, and over the past few years Dua Lipa, Justin Bieber, Ariana Grande, Emily Ratajkowski, LeBron James, Katy Perry and others have all faced similar cases. Like Miley’s case, most of the lawsuits quickly settle. That’s because it’s actually a pretty cut-and-dried legal issue: Photographers own the copyrights to the images that they take, and using those photos without a license constitutes infringement. Unfair as it might seem, appearing in an image does not give a celebrity co-ownership of it, nor does it give them a right to repost it for free.MUSIC HACKER GETS TWO YEARS IN PRISON — A British computer hacker who stole unreleased songs from Ed Sheeran and Lil Uzi Vert was sentenced in the UK to 18 months in prison. Prosecutors said Adrian Kwiatkowski, 23, hacked the artists’ cloud-based accounts and sold their songs on the dark web in exchange for $147,000 in cryptocurrency. The case was actually sparked by the Manhattan District Attorney’s Office, which linked the crime to Kwiatkowski and then handed the case off to British authorities.
In the third quarter of 2022, Spotify revenue improved to 3.04 billion euros ($2.98 billion at the Sept. 30 exchange rate), marking an increase of 12% at constant currency and 21.4% as reported, the company reported Tuesday (Oct. 25). Subscription revenue grew 13% (22% as reported) to 2.5 billion euros ($2.46 billion) while subscribers improved 13.4% to 195 million — 1 million ahead of guidance. Led by podcasting, the company’s ad-supported revenue grew just 3% at constant currency (19% as reported) to 385 million euros ($378 million).
Spotify’s gross margin of 24.7% — which is 50 basis points below guidance — was slightly better than the 24.6% registered in the second quarter, but it was still two percentage points lower than 26.7% in the prior-year period. The company attributed the decline to its spending on non-music content and product enhancements, increased publishing rates and an adjustment to prior-period accruals. Those negative effects served to offset a favorable revenue shift to podcasting and continued growth in Marketplace, Spotify’s hub for artist services.
Spotify shares fell 6.7% to $90.54 in after-hours trading.
Financial metrics
Revenue: 3.04 billion euros ($2.98 billion), +21.4% y/y, +13% at constant currencyGross margin percentage: 24.7%, down from 26.7% in Q3 2021 Operating loss: 228 million euros ($223.8 million), down from 75 million euros operating income in Q3 2021 Average revenue per user: 4.63 euros ($4.55)
Listener metrics
Subscribers: 195 million, +13.4% y/y Ad-supported monthly active users: 273 million, +24.1% y/y Monthly active users: 456 million, +19.7% y/y
This is a developing story.
Kodak Black is headed for Capitol Records — he just has to fulfill his obligations to his current label, Atlantic Records, first. That’s according to sources familiar with the situation, who note that Black still has two releases left under his agreement with Atlantic.
The rapper’s eventual move follows last month’s announcement that Orlando Wharton — who previously signed Black to Atlantic — had joined Capitol as executive vp and president of the relaunched Priority Records. Wharton starts the new role early next year.
Representatives for Atlantic and Capitol declined to comment.
Black released his major-label debut album through Atlantic Records in 2017, and has scored 34 entries on the Billboard Hot 100 to date, including “Super Gremlin,” a solo cut that climbed to No. 3 last year. When he moves to Capitol, he will be one of the biggest active artists on the label’s roster.
While Black has enjoyed commercial success, he has also faced a series of charges for sexual assault, drugs, robbery and weapons. The rapper was sentenced to 46 months in prison on federal weapons charges in 2019; former president Donald Trump later commuted that sentence on his last day in office. During a sexual misconduct case last year — Black was accused of sexually assaulting a high school student following a 2016 show — the rapper pleaded guilty to first-degree assault and battery.
While Black’s decision to eventually leave the label where he built his career is notable, entertainment attorneys say it’s not unusual for artists to start having conversations with potential new label partners once they enter into the final stretch of their current recording contract. Recording agreements are typically structured so that an artist is required to deliver a certain amount of music during an initial contract period. Labels can then usually choose to pick up an “option” (they have a set amount of months to mull over the decision), which triggers the release of another advance payment and recording budget for the artist to put towards the next project for that company. If the label decides not to pick up the option, it ends its relationship with the artist.
Historically, managers note, it was common for artists to sign longer-term deals — what the industry likes to call a “one plus four” or “one plus five,” meaning that the label was able to exercise four or five options and potentially keep the artist under contract for many years. Recently, in a world where acts are increasingly able to generate streams on their own without help from a label, the balance of power in some deals has shifted.
It’s more common now to hear about buzzing artists signing a “one plus one,” or even a deal for one album with no options attached, if an act has a lot of streaming momentum. Fewer options means that acts who are unhappy with their record company don’t need to stay with that partner for long if the relationship sours. Matt Buser, a music industry lawyer, says “it’s rough when an artist gets locked in with a team that has lost its appeal, or if the artist loses their champion in the building due to lateral movement or termination — that’s one reason why we try to keep the option number low in negotiations.”
When artists start to search for a new partner while still working with an old one, managers and lawyers alike say they usually try to keep these conversations discreet. If an artist still has music to deliver under his current agreement, but he’s flaunting the fact that he’s hunting for a fresh deal, “depending on the circumstances, it might undermine the enthusiasm of his current label to market and promote that last project,” according to Larry Katz, a veteran entertainment attorney.
There are other political reasons for an artist not to upset a record company before his or her contract is up. A label that feels spurned, for example, might decide to classify an artist’s project as a mixtape rather than an album, according to one manager. That seemingly small decision around nomenclature could mean that the act then has to turn in another entire project, depending on the terms of his or her contract, to fulfill recording obligations. (Debates over what constitutes an album and what constitutes a mixtape are more prevalent in hip-hop than in other genres.)
In addition, lawyers say that some artists make another mistake when they are gearing up to switch labels: They turn in the final album required by their contract and then immediately begin to record music in anticipation of a new deal elsewhere. But many exclusive recording agreements extend for nine to 12 months past the date that the last album was delivered or released — meaning songs that artists cut during this period still belong to their previous label partner. (Contract terms vary, of course, and stars have a lot of negotiating power, which gives them more latitude.)
“Artists may not be aware that in most record deals, the recording services remain exclusive during the entire term, and there’s often a period of time in between the release of the last project and the end of that exclusive term,” Katz says. “If you’re not careful, anything you record during that period is owned by the old label.”
Black released his fourth official album under his Atlantic deal, Back for Everything, in February. According to the rapper’s Instagram posts, he is now planning to release a follow-up, Kutthroat Bill: Vol 1, on Oct. 28.
Universal Music Group, Hipgnosis Songs Fund and other music stocks got a much-needed boost on Tuesday (Oct. 25) following news of Apple Music’s price hike, as investors bet it would trigger a wave of streaming subscription cost increases.
Universal Music Group’s stock closed 11.6% higher, Hipgnosis Songs Fund Ltd ended up 7.8% and Korean music companies SM Entertainment and HYBE finished the trading day 4.8% and 4.4% higher, respectfully, on Tuesday. On Monday, Apple announced that it was raising the standard U.S. and U.K. individual plan price to $10.99 from $9.99.
This 10% price hike — Apple’s first — comes amid high inflation and a darkening economic environment in many global markets. If Apple can raise prices at a time like this, that is a sign the music industry can charge more without turning off consumers, Wall Street analysts said.
“We see this as a further signal of the stickiness of music streaming subscriptions even in a weaker macro environment and believe the major markets will be able to absorb higher prices without leading to meaningfully higher churn,” Lisa Yang, Goldman Sachs’s head of European media & internet technology equity research, wrote in a note to investors on Tuesday.
“We believe that other major DSPs will likely follow suit with similar price increases in the near future, implying further potential upside to our music industry forecasts.”
Competitors Spotify and Amazon Music have already raised prices in some markets. Amazon Music raised the price of its unlimited individual plan for Prime members to $8.99 from $7.99 earlier this year.
Spotify, which will report earnings later Tuesday, raised the cost of its individual plans in the Nordics in 2021, although its standard plan for U.S. subscribers remains at $9.99.
“Despite positive management commentary around churn (with regards to recent price increases on certain plans/regions) as well as management’s views on pricing power over the long term, Spotify has highlighted the broader macro environment as a key consideration in terms of implementing price increases in the near term,” Yang wrote.
Apple’s price increase could also have positive impacts on the majors because companies like UMG and Warner Music Group typically get 65% of music-related revenues from streaming companies with a “high incremental margin,” Goldman estimates.
Music stocks have suffered in 2022 as the major U.S. market indices have fallen around 20% so far this year.
UMG’s share price of 21.10 EUR ($21.01 US) is down nearly 14% year to date, Hipngosis Songs Fund Ltd traded at 91.06 penny sterling ($1.03 US) and is down 28% so far this year. Meanwhile, Warner Music Group’s stock traded at $27.16 US, off almost 37% year to date.
Christine Farnon, the Recording Academy’s first full-time employee and one of its longest-serving, died on Monday Oct. 24 in the Los Angeles area of natural causes. She was 97.
Farnon started as an unpaid volunteer in May 1957 – when the Academy was just in its formative stages — and rose to become executive vice president. From 1957 through 1987, she worked alongside a succession of 18 elected, volunteer presidents. These men — and yes, they were all men — served their terms and moved on. Farnon provided continuity and stability. In early 1988, Michael Greene became the Academy’s first paid, permanent president. Farnon stayed on through 1992, to ensure a smooth transition.
Farnon received a trustees award from the Academy upon her retirement. An appreciation in that year’s Grammy program book was fittingly titled “The Recording Academy’s Guiding Light.”
In announcing the honor for Farnon earlier in 1992, Greene said, “The Recording Academy owes much of what it is today to the selfless, conscientious dedication that Christine has exhibited in her years of contributions to the Recording Academy. Chris is a vital member of our [Academy] family and is most deserving of the trustees award.”
The late musicologist George T. Simon, who wrote the aforementioned appreciation, noted, “Chris has always been an integral part of the organization – a seemingly impossible combination of guiding light and steady anchor. Deeply involved from the start in all the Academy’s activities, this warm, intelligent, soft-spoken, sensitive lady has helped tremendously, often leading the way, in chartering and steering the course of [the Academy].”
Simon’s piece quoted Farnon as saying “This has been a rare opportunity, to have one of the most challenging and rewarding careers anyone could wish for, and to work with and for some of the finest people in the recording field.”
Billboard included Farnon in a gallery of groundbreaking female executives that appeared in the Feb. 26, 2022 issue, noting “Decades before Deborah Dugan became the Recording Academy’s first female president/CEO in 2019, Farnon was the top executive at the organization — and while she never held the big title, there was no question of who was in charge.”
Farnon’s responsibilities at the Academy included maintaining contact with disc jockeys and radio personnel and development of annual mailers and special albums designed for radio stations highlighting Grammy nominees. Farnon was a talent coordinator for most of the seven Grammy-branded Best on Record TV shows that aired on NBC. From 1971, when the Grammy Awards became a live telecast, until 1992, when Farnon retired, she was an integral part of the Academy’s TV committee, which oversaw format development, contract negotiations and TV scripts. She eventually received on-screen credit in the crawl at the end of the telecast.
Folklorist and author Bill Ivey, the only person in Academy history to serve two, non-consecutive stints as chairman of the board of trustees (1981-83 and 1989-91), gave Farnon a great deal of credit in an interview with this writer a decade ago for a Grammy.com piece on the Academy’s early days.
“Chris Farnon was central to the Academy’s success,” he said. “She was quite ferocious in protecting the integrity of Grammy and the telecast. …In large part because she was so conservative and protective, Chris handed future leaders an asset of tremendous potential value that converted to earning power as sponsorships and TV revenues really took off in the ’90s.”
In an interview for that same piece, Farnon said that she was “gratified and delighted” to have played a role in the Academy’s growth, though, characteristically, she shared the credit. “The Academy’s present achievements are something that everyone, past and present, can be very proud of,” she said.
“The original vision of what the Academy was meant to be and do hasn’t changed,” Farnon added. “Many of its significant programs had their roots in the Academy’s original goals, although they operate on a much wider and grander scale today.”
Farnon was still able to tick off the Academy’s early goals. “In the early years its goals included the annual Grammy Awards on live TV, scholarships, university courses on the recording arts and sciences, open membership meetings where leading recording individuals explored developments in the recording field, and magazines and/or newsletters to members. Unfortunately, some years most of these programs didn’t come off because there wasn’t enough money or support staff to produce them.”
The Academy was able to realize more of its goals after it struck a better deal with CBS, the long-time network of the Grammy Awards. “By the time I ended my 35-year career at the Recording Academy, the increasing income made it possible for the Academy to be taken to another level,” Farnon said.
Farnon held various positions with the Recording Academy. In the early 1960’s she was named executive director of the Los Angeles chapter. In 1971, she was promoted to national executive director, and in 1986 was appointed executive vice president, a position she held until her retirement.
Farnon also belonged to the local chapter of the American Society of Association Executives (ASAE); the California Copyright Conference; and was a co-founder of the first Toastmistress Chapter in Hollywood – the very name of the latter organization is a sign of the times in which Farnon came up.
Farnon died three years after her ex-husband, Dennis Farnon, who had been the last surviving founder of the Recording Academy. Dennis Farnon died in May 2019 at age 95. Christine Farnon and Dennis Farnon were divorced in 1960.
Dennis Farnon co-founded the Academy in 1957 with Sonny Burke, who died in 1980; Lloyd W. Dunn, who died in 1991; Paul Weston, who died in 1996; and Jesse Kaye, whose date of death is unknown. All five founders were top executives at leading record companies of the period. Farnon was from RCA; Burke, from Decca; Dunn, from Capitol; Weston, from Columbia; and Kaye, from MGM.
Following her retirement, Farnon spent more than 20 years studying painting and was given three commissions of her paintings, plus recognition by the Chatsworth (Calif.) Fine Arts Council for her work.
Farnon is survived by one daughter, Joanna, as well as nieces, nephews and cousins.
A gathering of family and friends will be held at a future date. Condolences to her family may be sent to P.O. Box 150, Ripton VT 05766.
Christian music hitmaker Anne Wilson has inked a management deal with Matthew West‘s Story House Collective. The company has also brought in Crowd Surf, led by Jade Driver, as a strategic management partner.
During Friday’s (Oct. 21) GMA Dove Awards, Wilson won two trophies, including new artist of the year, while her hit “My Jesus” was named pop/contemporary recorded song of the year. Wilson wrote “My Jesus” with West and Jeff Pardo. The song proved to be a hit, and Wilson became the first female soloist to top Billboard’s Christian Airplay chart with a debut single since the chart’s launch in 2003.
“Our Story House team is thrilled for the opportunity to partner with an artist as remarkable as Anne,” West said via a statement. “I’ve been a believer in her since our very first writing session a few years ago. She’s the real deal. Her talent is undeniable, her story is powerful, and her mission is clear. We are honored to serve her artistic vision and beyond excited to help plot the course for even bigger and better things ahead for her.”
“I’m so excited to announce that I’ve signed with Story House Collective,” Wilson added. “I’ve been blown away by their expertise but also their love for Jesus. So grateful for their hard work and all that’s to come! God is good!”
West has served as a mentor for Wilson and is a co-writer alongside Wilson and Pardo on Wilson’s latest song, “Me on Your Mind.” They also released a duet version of the song earlier this year.
Billy McFarland, convicted felon and founder of the infamous 2017 Fyre Festival, is back with a new venture.
In a video released Monday (Oct. 24) to TikTok and YouTube Shorts, the disgraced entrepreneur — who was released from prison in March after serving four years behind bars — notes he’s “working on something new” that’s “a little crazier but a whole lot bigger than anything I’ve ever tried before.” He then flips a whiteboard to reveal a treasure map taped to the other side and says he’ll reveal the full scope of his plans in November. “This time, everybody’s invited,” he adds, before ripping the treasure map from the whiteboard to reveal a phone number.
Calling the number from a cell phone causes a text message reading “Welcome to the Treasure Hunt” to be automatically delivered to the number of the person calling, along with a link to an online form. After adding contact info to the form, a second text comes through that links to a cryptic 12-second YouTube video titled “RLTH Clue #1,” featuring underwater imagery of sharks, a glass bottle with a cork and what appears to be a tropical island. The video has since been removed from TikTok, though it remains available to watch on YouTube Shorts.
No additional information on the venture is known at this time, and representatives for McFarland declined to comment further.
In 2018, McFarland was sentenced to six years in prison after he admitted to defrauding investors in the Fyre Festival, which promised ticket holders a luxurious music event on Exuma island in the Bahamas with performances from acts including Pusha T, Blink-182, Major Lazer, Migos, Lil Yachty and Disclosure. But when attendees arrived on the island, they discovered the event was a sham. In addition to the Fyre Festival fraud, McFarland also pleaded guilty to charges in a subsequent ticket-selling scam.
McFarland lobbied for compassionate release in 2020 early in the coronavirus pandemic, claiming he was “totally vulnerable” to COVID-19, but his request was denied (he later confirmed he had contracted the virus). Following his release from Milan Federal Correctional Institution in Milan, Michigan, his attorney Jason Russo confirmed to Billboard that he was moved to a halfway house in New York, with a release set for Aug. 30.
In addition to his prison sentence, McFarland was ordered to pay roughly $26 million in restitution for his crimes. In May, Russo told Billboard that McFarland was focused on finding “the best way to generate income to pay this restitution back and make amends,” adding, “Any new projects that he does become involved in will be done solely for the purpose of generating the restitution for paying back his victims.”
In addition to his criminal victims, McFarland also owes nearly $11 million to the creditors of Fyre Festival LLC as part of a default judgement won by the trustee of the festival, Gregory Messer. A separate $3.4 million judgement is owed to the state by the now defunct Fyre Media Inc.
Owing victims of a federal crime restitution money is one of the most onerous debts to have, says Curtis Briggs, a California criminal attorney. Briggs notes that the federal government’s reach into the financial system, coupled with rules that allow collection from retirement accounts and supersede state and federal bankruptcy protections, makes the feds a “super creditor” with the “most intrusive methods” available to it for collecting debt.
“Anything he legitimately declares as income” will be subject to collection by the government to repay his victims, says Briggs, who successfully defended one of two Oakland men prosecuted in the Ghost Ship fire and currently represents Black Lives Matter activist Tianna Arata.
Without any tangible assets to seize or a salary to garnish, collecting a judgement will likely mean scrutinizing McFarland’s annual tax return and monitoring his bank accounts. McFarland will be granted a modest court-monitored income and if he is operating a business, he will be allowed to write off certain expenses, but “his finances will be closely scrutinized by attorneys for the families of the victims” and FBI agents assigned to him, says Briggs.