State Champ Radio Business
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When Nicole Avant and her brother Alex were growing up, they watched their late mother, Jacqueline, devote her time and efforts to various charities and underserved communities — especially focusing on children and the Watts/Willowbrook neighborhood in South Los Angeles.
“My mom would go back home to Beverly Hills and bring people from there to Watts,” recalls Nicole. “She’d say, ‘Listen, these are our neighbors. And we have a moral obligation as human beings to do the right thing in as many places as we can.’ That was her whole motto.”
That motto comes full circle with the formal dedication of The Jacqueline Avant Children and Family Center today (April 28). The opening of the brand-new facility — the first of its kind in South L.A. — comes nearly two years after the December 2021 murder of the philanthropist and wife of music industry legend and Rock and Roll Hall of Fame honoree Clarence Avant, aka the “Godfather of Black Music.”
Ahead of the ceremony, Nicole gave Billboard a tour of the center (1741 E. 120th Street, Willowbrook, Calif.). Working in association with the MLK Health and Wellness Community Development Corp., the three-floor center houses the MLK Pediatric Clinic. With its first floor already in operation, the center plans to serve 4,000 children and teens annually by providing medical and mental health evaluations for those who have been exposed to violence, and primary pediatric care for children in the foster care system. Enhanced outpatient clinical services for at-risk pediatric and adolescent patients and their families will also be provided.
Nicole Avant and Jacqueline Avant
Courtesy of the Avant family
Slated to open at the end of this year, the second floor will offer family-focused services including an autism wellness center run by the Special Needs Network and a clinic run by Saint John Well Child Center. The third floor, opening next year, will focus on youth mental health services.
The center’s cream-colored walls and warm accent colors, like blue-green, also play a role in creating a comforting and nurturing environment for patients. As do three vibrant paintings by L.A. artist Floyd Strickland, titled The Believers, The Teacher and The Dreamers. Commissioned by the Los Angeles County Department of Arts and Culture, the portraits and the wallpaper mural behind the artwork celebrate the rich culture and history of South L.A.’s Watts/Willowbrook community. Floyd collaborated with the neighborhood’s current residents, using family photos dating back to the 1940s as source material.
“It feels safe and healing,” says Nicole who also sits on the board of the after-foster care organization A Sense of Home. “My mom’s whole thing was about physical, emotional and spiritual healing; she really believed in the power of art. And the art here is full of joy with a sense of family and friendship, which is very good for children because that’s the first thing they should see.”
Prior to the dedication ceremony, Los Angeles County Supervisor Holly J. Mitchell, representing the Second District, noted in an email to Billboard, “I am honored to celebrate the unveiling of the Jacqueline Avant Children and Family Center. The center is a meaningful addition to our community and will provide hope and a multitude of health and mental health services to children and their families in South Los Angeles.”
Nicole credits longtime Avant family friend and Jacqueline’s fellow community outreach devotee Candace Bond McKeever for playing a key role in bringing the center to fruition. Prior to Jacqueline’s death, the two would drive and walk around the Watts/Willowbrook neighborhood — home also to the neighboring Martin Luther King, Jr. Outpatient Center and MLK Medical Campus — with Jacqueline visualizing that one day she would raise enough money to build a center to help children.
Jacqueline Avant Center
Greg Baker, the CBRE Facilities Director
“We’d begun raising money and were making progress,” says Nicole. “Then after my mom didn’t make it, people were asking where and what they could donate to honor her. I called Candace and said, ‘It’s got to be at MLK; that’s what she wanted. And Candace said let’s do it.’ It’s a crazy twist of fate, but here we are with exactly what mom visualized.”
At the time of this interview, her dad Clarence had only seen photos of his wife’s dream fulfilled. Asked his reaction, Nicole says, “It was emotional but he was also like ‘Wow, this is amazing. Finally, the world gets to see what Jackie’s been doing this whole time.’”
As for her mom’s reaction, Nicole says, ‘I can feel that she’s very happy. She wasn’t just a collector of art and other things. She was a collector of souls who wanted to make sure everyone got the chance to fly.”
Sony Music Entertainment notched one of its most profitable years on record in 2022, as strong growth in streaming subscriptions and a favorable exchange rate propelled the company’s revenue from chart-topping artists like SZA, Harry Styles and Miley Cyrus.
SME’s reported revenue rose by nearly 24% to 1.38 trillion yen ($10.16 billion) and operating income rose nearly 25% to 263 billion yen ($1.94 billion) for the fiscal year 2022, making it the most profitable of the six companies under Sony’s umbrella.
“We have steadily improved our ability to continuously create hits,” Sony chief financial officer Hiroki Totoki said on a webcast, calling out Cyrus’ Flowers release in January. “In Recorded Music, an average of 43 songs ranked in the Spotify weekly global top 100 songs in FY22, increasing our market share significantly year-on-year.”
For the most recent quarter, Sony reported that overall revenues rose 19% to 341.89 million yen ($2.5 billion). Recorded music streaming revenue grew by 23% to 148.9 billion ($1.093 billion) from a year ago. Publishing income rose by 22% to 65.96 million yen ($485 million). SME’s revenues also benefitted from an exchange rate during that period that favored its Japanese parent company’s accounting in yen.
“In recorded music and music publishing, we aim to continue to grow faster than the market and maintain a higher growth rate and profit margin than our competitors by strengthening relationships withinfluential artists, discovering and nurturing new talent, expanding our lineup through The Orchard and AWAL, and growing our business in emerging markets,” said Totoki, who also serves as Sony’s president and chief operating officer.
Executives said on Friday they expect revenues in Sony Music to grow by 2% overall to 1.41 trillion yen ($10.37 billion) for the fiscal year 2023.
LONDON — French music company Believe’s recent investments in Europe, Asia Pacific and Africa helped boost digital sales across its key markets and drive overall revenues up 22% from January through March, despite a slowdown in ad-funded streaming revenue.
The company reported Thursday (April 27) that revenues grew 22.2% to 198.6 million euros ($218.9 million) compared to the prior year’s quarter. The Paris-headquartered company’s premium solutions business — which includes label services, marketing, distribution, promotions and sync — rose 23% year-on-year to 186 million euros ($205 million), while its automated solutions, which includes the TuneCore distribution platform, increased 11.2% to 12.7 million euros ($14 million).
Digital revenue also grew by 22.2% during the quarter, with non-digital sales up 21.8%. Believe didn’t provide financial figures for either market segment, nor an indication of overall net profit or loss for the quarter. The company’s shares, traded on France’s Euronext, fell 2.41% on Thursday to close at 9.70 euros ($10.70).
The company said ad-funded streaming revenue slowed to single digit growth at the start of the year — in line with the challenging global advertising market — but didn’t report financial values or the percentage increase.
Non-digital revenue benefitted from merchandising, branding and live activities in France and India, as well as a film project in Turkey, which Believe said collectively offset the fall in physical sales, most notably in Germany.
Growth of Believe’s core digital business, which focuses on markets and music genres where artist promotion and marketing are predominantly online, was driven by the global rise in paid music steaming and the company’s expanding international portfolio of artists and labels, CEO and founder Denis Ladegaillerie said during Thursday’s earnings call.
Recent investments include partnerships with Filipino label Viva Music and Artists Group (VMAG), India-based imprints Think Music and Panorama Music, French pop label Structure and Germany-based Madizin Music. Last month, Believe acquired U.K.-based publisher Sentric from Switzerland-based Utopia Music in a €47 million ($51 million) deal that marks the French company’s first major entry into the publishing industry. (Sentric is expected to add about 3% to annual revenue growth, the company said Thursday.)
Notable Believe artist signings cited include Thai acts TimeThai and Reinizra, Belgian rapper Hamza and a new multi-album deal with French hip-hop star Jul.
Globally, revenue from Asia Pacific and Africa, which Believe groups together in its earnings report, grew 40% year-on-year to 56.1 million euros ($61.8 million), representing 28.2% of the company’s earnings, compared to 24.7% in the first quarter of 2022.
Within the Asia Pacific and Africa region, Believe said it recorded strong growth in India, Greater China and Southeast Asia, driven by its growing roster of local artists and labels, sustained investment in on-the-ground teams and the rollout of its full label and artist solutions offer in most markets.
Europe, excluding France and Germany, recorded a revenue increase of 21.1% to 54.4 million euros ($60 million), representing around 27% of total revenue.
Believe’s operations in the Americas rose 25.2% to 29.4 million euros ($32.4 million), representing 14.8% of all income, with the company saying that it had a particularly strong sales quarter in Latin America, most notably in Brazil.
The company’s two strongest individual markets, France and Germany, also grew by 13.2% to 32.1 million euros ($35.4 million) and 3.7% to 26.6 million euros ($29.3 million), respectively. France generates 16.2% of the company’s total revenue, while Believe said its performance in Germany was impacted by a “strong decline in physical sales linked to the lowered exposure to physical sales-heavy contracts.”
Over the past 12 months, Believe has made significant moves into the dance music sector with the launch of global label solutions brand b:electronic, which has signed deals with electronic music imprints Hospital Records and Rinse in the U.K.; Big Top Amsterdam, Blackout Music and Mixmash in the Netherlands; and Cercle and Roche Musique in France.
On Wednesday, the company announced that its TuneCore distribution platform had teamed up with Beatport, enabling TuneCore artists to distribute their songs on the world’s largest electronic music platform for working DJs.
“This great start to the year, marked by strong operational milestones and solid organic performance, shows that we are well on track to deliver another year of profitable growth,” Ladegaillerie says in a statement. Believe’s increasing global reach combined with a “successful investment strategy” was enabling “artists and labels to thrive in the digital ecosystem,” he says.
Ladegaillerie says the company is looking to make further acquisitions in the year ahead. Believe, which operates in more than 50 countries and has over 1,600 employees worldwide, says it expects to generate positive free cash flow for the full year and expects to record organic revenue growth of around 18% in 2023. The company says it will “monitor its investment pace and focus on improving efficiency” to reach an adjusted EBITDA (earnings before interest and taxes, depreciation and amortization) margin of 5% for fiscal year 2023.
Representatives from the Black Music Coalition (BMAC), the Recording Academy and SAG-AFTRA came together with Congressmen Hank Johnson (D-GA) and Jamaal Bowman (D-NY) on Capitol Hill Thursday (April 27) to reintroduce the Restoring Artistic Protection (RAP) Act, a bill that would limit the use of song lyrics in court — a practice that disproportionately affects Black artists working in rap and hip-hop.
“Since the 1990s, there are hundreds literally hundreds of documented cases where prosecutors use lyrics as criminal evidence in court and this practice disproportionately affects rap artists,” said Recording Academy CEO Harvey Mason jr. during a press conference announcing the bill’s reintroduction. “But this act is absolutely not just about hip-hop artists. Silencing creative expression is a violation against all artists and all forms of creative expression. The Restoring Artistic Protection Act affirms that every single artist, no matter the discipline, should be able to express themselves without fear of prosecution.”
SAG-AFTRA president Fran Drescher, who was also in attendance, advocated for the First Amendment rights of musicians. “Rap music actually is folk music, because folk music is the voice of the people,” she said. “I urge Congress to pass the RAP act to ensure fair and equitable treatment in the justice system.”
First introduced in July 2022, if passed, the RAP Act would be the first federal law to limit the use of lyrics in criminal cases.
Also participating in the press conference was 300 Elektra Entertainment CEO Kevin Liles, who urged bipartisan support for the bill: “For the first time in a long time, I have hope…in groups on the right and the left both saying that this is against the values of Americans.”
The revived interest in the issue of rap lyrics being used in court came about due to the May 2022 indictment against rappers Young Thug and Gunna along with dozens of others on RICO charges, with prosecutors claiming their group YSL was not really a record label called “Young Stoner Life” but a violent Atlanta street gang called “Young Slime Life.” The 88-page indictment cited lyrics and music videos as evidence, including quotes from Young Thug songs including, “I never killed anybody but got something to do with that body” and “I killed his man in front of his momma.”
Though Young Thug remains in custody ahead of trial, Gunna was released in December after pleading guilty to a gang-related charge.
On the state level, a similar bill in California known as the Decriminalizing Artistic Expression Act was signed into law by Governor Gavin Newsom in September. In New York, another bill known as “Rap Music on Trial” passed the state’s Senate in May but failed to secure a vote in the New York Assembly before the end of last year’s legislative session. Comparable bills are making their way through the sate legislatures in both Louisiana and Missouri.
“As a music creator myself, I know how important it is that we safeguard artists’ freedom to create at all costs, and to work to eradicate the biases that come with the unconstitutional practice of using lyrics as evidence, which disproportionately affects artists of color, and penalizes the creativity of Black and brown fields,” added songwriter-producer-artist Rico Love, who serves as chair of the Recording Academy’s Black Music Collective.
Love added, “Music makers are storytellers who have provided important insight into our country throughout history. We have the responsibility to protect them and their works of creative expression, which helped define American culture.”
The announcement of the RAP Act’s reintroduction followed the Recording Academy’s annual GRAMMYs on the Hill, a two-day event that honored Pharrell Williams, Senate Majority Leader Chuck Schumer and Senator Bill Cassidy and connected music creators with members of Congress to advocate for the RAP Act, the HITS Act, the American Music Fairness Act and reform in the live event ticketing space.
The board of Warner Music Group (WMG) announced Thursday (April 27) that it’s elected Val Blavatnik, son of WMG’s controlling shareholder Len Blavatnik, to a seat on the board of directors as well as the company’s executive committee.
Val Blavatnik replaces Len’s brother Alex Blavatnik, who’s served as a director on the WMG board since Access Industries acquired WMG in July 2011. Len Blavatnick currently serves as a director and vice chairman of WMG’s board.
Val Blavatnik has worked on the investment team at LionTree, covering the media and tech industries, since 2021. He has also been a production executive at the New York-based film and TV production company Eden Productions. He serves on the executive committee of Access Industries and previously worked in the music industry, primarily as an artist manager, according to a press release.
“We’re pleased to welcome Val to the WMG Board,” Michael Lynton, WMG’s board chairman, said in a statement. “His experience working with a variety of companies as well as directly with artists makes him well suited to his new post. He’ll also bring a fresh perspective as we chart the future of WMG. We’re incredibly grateful to Alex for his wisdom, guidance, and enthusiasm over the past 12 years, as the company has grown and thrived in the streaming era.”
“I’m excited to be joining the Board during this dynamic, transformational time at WMG, with so many innovative opportunities ahead for artists and songwriters,” Blavatnik said. “I’ve previously worked on artist projects with the senior team, and I’m looking forward to collaborating with the impressive group of leaders on the Board.”
Two new bills introduced to the Senate Wednesday aim to clean up the ticketing industry and address long-standing criticisms about Ticketmaster’s dominance over the primary ticketing market.
The TICKET ACT, introduced by Sens. Maria Cantwell (D-Wash.) and Ted Cruz (R-Texas) — chair and ranking member of Chair of the Senate Committee on Commerce, Science and Transportation, respectively — would ban hidden ticket fees, requiring vendors to display the total price of a ticket up front. These fees can sometimes increase the purchase price by as much as 60% or higher. For example, some tickets in the upper seating section for Luke Combs‘ current stadium tour being sold by Ticketmaster are marked up more than 100% when fees and taxes are added to the face value.
The bill would also attempt to reign in speculative ticket sales, a heavily criticized sales technique used by ticket scalpers to maximize profits. Speculative ticket selling is the practice of selling a ticket one does not own, often at the height of the market, and then waiting until the price drops to procure and deliver the ticket to the consumer. The TICKET ACT would require scalpers to display in a “clear and conspicuous manner” that the ticket seller does not actually possess the ticket at the time the ticket is listed for sale.
Recent ticketing legislation proposals by both Live Nation and the National Independent Talent Organization have called for a ban of speculative ticketing – with several prominent music industry executives comparing the practice to fraud.
The other bill, the Unlocking Ticketing Markets Act, was presented by longtime Ticketmaster critics Sens. Amy Klobuchar (D-Minn.) and Richard Blumenthal (D-Conn.), seeking to limit the use and scope of exclusive multi-year ticketing contracts in live entertainment. The legislation is aimed at Ticketmaster, which “by some estimates has locked up 70 to 80 percent market share and has used its dominance to pressure venues to agree to ticketing contracts that last up to ten years, insulating it from competition,” explains a press release from Klobuchar’s office announcing the legislation.
It follows a January Senate Judiciary Committee hearing probing the cause of the Ticketmaster Taylor Swift crash. During the hearing, Ticketmaster was regular criticized by the committee for the company’s dominate market share of the U.S. ticketing industry, with several senators accusing the company of acting like a monopoly.
The Unlocking Ticketing Markets Act would empower “the Federal Trade Commission to prevent the use of excessively long multi-year exclusive contracts that lock out competitors, decrease incentives to innovate new services, and increase costs for fans.”
The text of the Unlocking Ticketing Markets Acts has not yet been released to the public and it’s unclear how the bill would define excessively long contracts. In a press release announcing the legislation, Klobuchar’s office noted that some exclusive ticketing contracts last as long as ten years, but the average contract term in sports and live entertainment is typically five to seven years, according to multiple sources, including the often-cited Ticketmaster vs. Tickets.com lawsuit from 2003.
The music industry, like investment banking, is built largely on relationships, and Fred Davis and Joe Puthenveetil have built their careers on being relationship brokers to both worlds.
Partners at merchant bank The Raine Group, Davis — who is the son of music industry icon Clive Davis — and Puthenveetil are two of the most influential financial power brokers in the business. Since one of Raine’s earliest music deals advising Abu Dhabi, United Arab Emirates-based Mubadala Investment on its acquisition of EMI, it has advised on or invested in billions of dollars of transactions. In recent years, the pair managed the $230 million sale of CD Baby’s digital operation to Downtown Music Holdings, helped Antonio “L.A.” Reid and Charles Goldstuck raise $75 million to launch the HitCo label and led SoundCloud’s $170 million emergency investment round in 2017, which included recruiting Singapore state fund Temasek to invest alongside it. (Concord acquired Hitco’s entire sound recording catalog and certain additional releases but not the label or brand name in 2022.)
In the past year alone, Davis says the partners have had a hand in more than $1 billion in transactions, including advising Quality Control in its sale to HYBE America, advising private equity firm Francisco Partners in its acquisition of Kobalt and helping Larry Jackson raise $1 billion in capital for his new venture, gamma.
Raine remains an investor in SoundCloud and also helped create Firebird, a conglomerate of independent music labels, publishers and artist management groups that develop and advise artists and help them with business opportunities outside of music.
From left: A photo of Davis’
sons, a memento of Raine’s representation of Providence Equity in its deal with online music technology/instrument retailer Sweetwater, a family portrait with patriarch Clive Davis and a plaque commemorating Raine’s work with Downtown Music to sell its publishing company to Concord.
Paul Stuart
Puthenveetil, a graduate of Georgetown University’s Edmund A. Walsh School of Foreign Service, joined Raine in 2010 and was a driving force behind the CD Baby sale and HitCo fundraising, as well Raine’s investments in SoundCloud, concert/festival producer Blackbird Presents and promoter C3 Presents, which was sold to Live Nation. He sits on SoundCloud’s board of directors, with Davis, and on Blackbird’s board.
Fordham University School of Law-educated Davis (who launched his own law firm, Davis Shapiro & Lewit, before joining Raine) says one of the starkest trends shaping music today is that more money from more sources is flowing into the industry than ever before.
“When I was coming up as a music lawyer, there were maybe three, maybe four check writers,” he says. “The diversity of capital is so enormous in this industry right now. You have HYBE investing in Quality Control from South Korea. Eldridge Capital investing in gamma, along with Apple. Francisco Partners acquiring Kobalt. It’s strategic, private equity, high net worth, sovereign wealth.
“This is a new generation of capital investing in the music industry, “Davis adds. “We’ve never had an era like this ever.” Other investors that Raine has recently advised include pro wrestling giant WWE on its $21 billion combination with Endeavor, Japan’s Softbank Group and the crypto exchange Binance.
For those who aren’t familiar with The Raine Group, please provide some background on the firm and its network of investors.
Fred Davis Raine has nine offices around the world and is very global by its DNA. The network we have now in private equity, sovereign wealth, high net worth, family offices and strategic investors is so complementary to the network a traditional music lawyer has. We can collaborate and do what’s best for the client.
Part of a collection of Nike Air Jordans that Puthenveetil’s wife gifted him.
Paul Stuart
Describe what you do and how your services differ from, say, a music lawyer’s.
Joe Puthenveetil While Fred and I specialize in music, our firm specializes in everything around media and technology. For a lot of our clients, a big part of why they work with us is to access unconventional buyers and pools of capital. Being able to leverage that global expertise and global investors, we’ve got a pretty unique and broad set of relationships across the firm.
How did HYBE America’s acquisition of Quality Control happen?
Davis Last September, we took a trip to South Korea, set up a number of meetings with the best music companies in Korea and went there to uncover opportunities. From that trip, we made the connection between HYBE and our preexisting client Quality Control. We work best with the client’s music lawyer. Quality Control is represented by Damian Granderson, with whom we work extremely well.
A plaque commemorating Davis’ inclusion on Billboard’s 2022 Power List.
Paul Stuart
What does scaling Quality Control look like?
Puthenveetil Quality Control has taken its place in music and expanded it across culture to film and TV, sports, branding, and that’s how we think of the modern music industry. Talent is more than just their music. They are real brands and businesses. And the Quality Control team [COO Kevin “Coach K” Lee and CEO Pierre “P” Thomas] understands that better than anyone. Coach and P have been public about their ambitions to make Quality Control one of the biggest businesses in hip-hop and broader Black culture. Having a partner that can help them do that with capital and expertise, they may scale further into film, TV and video games.
Davis One of the visions that Coach and P have shared with us over the years is how they want to make Atlanta the home of hip-hop and street music the way Nashville is the home of country. HYBE will help them accomplish that vision.
Are Quality Control and gamma similar in that they are both trying to take artists beyond music? What are your views on that?
Puthenveetil One hundred percent. They both approach it in slightly different ways, but fundamentally, it’s driving at the same thesis and reality that artists build their careers through music, but build their brands and communities through everything else they do. That is where we see the industry going more and more. Thinking back to our trip to Korea last September, they have fundamentally understood that for a lot longer than we have in the U.S. On the investing side, we helped create a business called Firebird that has a similar belief and is partnering with the best labels, managers and publishing companies to help them expand beyond music and touring.
What is Firebird building?
Davis We invested in [as opposed to simply advising] Firebird. They are in the process of building a new-generation music company that will be a combination of managers and independent record labels as its core. They’ve done about a dozen transactions and are well on their path to building a great new music company.
How is Firebird different from gamma, which also calls itself a new music company?
Davis Gamma will not be in the management business the same way Firebird is. There will be some elements of crossover, but the essence of each company will be different.
What role did Raine play in the launch of Larry Jackson’s gamma?
Davis We’ve known Larry for many years. Larry approached us with an idea many years ago of what he wanted to build. Our role was to find the capital to invest in gamma. We negotiated the Apple investment, and we sourced the Eldridge investment and negotiated the terms of the deal. Raine represented Chelsea Football Club, which Todd Boehly and Eldridge acquired. Through our partner Joe Ravitch’s relationship with Eldridge, we introduced Eldridge to Larry. [Eldridge is an investor in Billboard.]
Puthenveetil We also helped [Jackson] translate his vision into a business plan and marketing materials and helped educate the investors on what this all means.
Paul Stuart
Why do you think investing in the music industry will be resilient even if market conditions worsen?
Davis Simple metrics of supply and demand. There is an incredible amount of capital that wants to get into music. There are not that many great companies. That market dynamic will keep valuations high and opportunities exciting.
Puthenveetil The reason everyone is excited about music is that, structurally, it is healthy. Companies are growing, they’re profitable. There are a lot of opportunities to invest, to acquire. When you look around at the broader landscape, sure, there are a lot of challenging sectors of the broader market. But everyone is still streaming music, everyone is still attending concerts. These companies are all still making record profits.
Historically, periods of economic downturn trigger a risk-off approach to alternative investment areas, which is what music is considered.
Puthenveetil Over the past six to nine months, we have gotten more calls from investors looking to enter this space than ever before.
Where do sovereign wealth funds want to invest in the music industry?
Puthenveetil Because of the growth of these funds, they have more people looking at spaces that might not have fallen in their purview before. That has resulted in GIC [in Singapore] investing in [Universal Music Group]. We brought Temasek into SoundCloud alongside us. We’ve seen sovereign funds in the Middle East looking at this space. In every process and transaction, we see more and more of that and expect it to continue. One of the early deals we did in the music space was advising Mubadala when they acquired EMI. At that time, very few people knew who Mubadala was, let alone expected them to buy that asset.
Globally, where do you see the opportunities?
Puthenveetil All of the developing markets. That’s where streaming growth is, and the audiences are younger. But it’s the innovation we see coming out of those markets that is exciting.
Are there any pockets of vulnerability in the music industry?
Davis From a major label’s perspective, the area of vulnerability is the incredible growth of regional music. The percentage of regional music that non-major labels represent around the world in multiple territories is at an all-time high, whether it’s K-pop in South Korea, Afrobeats in Africa or native music to France that’s not on major labels. This is a huge generational trend. From that perspective, it is a vulnerability for major labels.
SiriusXM CEO Jennifer Witz‘s predictions last year that the first two quarters of 2023 would be “softer” proved right, as the audio entertainment company reported that revenues and subscribers edged lower in Q1.
SiriusXM reported revenues of $2.14 billion for the quarter ending March 31, marking a 2% drop, as revenue from subscribers and advertisers both fell between 1% and 2% compared with a year ago.
Still, those modest moves downward were better than the company had predicted for the start of the year, and executives raised their full-year guidance for adjusted earnings before interest, taxes, debt and appreciation (EBITDA) to $2.75 billion from $2.7 billion. They also raised their free cash flow guidance to $1.1 billion from $1.05 billion for the year.
“We outperformed our initial financial expectations, putting us in a strong position to increase our full-year guidance,” Witz said on a call discussing earnings. “We intend to make prudent decisions to remain a very profitable business that continues to serve as a primary audio subscription service to certain audio segments while being complimentary to others.”
The company’s cost-cutting campaign — which has impacted its real estate footprint, workforce and marketing spend — helped allow for continued investment in tech improvements Witz says will improve future growth. Costs related to the new product launches, expected later this year, reached $68 million in the quarter, up 15% from a year ago.
However, the 17% reduction in sales and marketing spend, combined with lower numbers of customers starting trial subscriptions late last year, contributed to 347,000 fewer SiriusXM self-pay subscribers for the quarter. The company ended the quarter with 7.2 million trial users, compared to 6.9 million a year ago.
Self-pay subscribers of Pandora Plus and Premium tiers increased by 7,000 from the previous quarter, but the total number of subscribers edged 2% lower, to 6.2 million in the first quarter from a year ago.
“We are still expecting modestly negative [subscriber growth] for the year,” Witz said. “I would expect the second half to be positive, and that nets us out to the modestly negative.”
The company is in the process of updating the back-end technology and its SiriusXM app, tools Witz says will make it easier to find specific genres, make purchases in the car and elsewhere, and further personalize the experience. The hope is that this will enable the company to introduce new products to the app faster, a key part of its growth strategy.
“We are really focused on investing in this new platform and making sure that positions us for growth going forward,” Witz said on the earnings call.
Key SiriusXM Financial Highlights:
Overall
The company forecast it will generate approximately $9 billion in total revenue for 2023, along with $2.75 billion in adjusted EBITDA and $1.1 billion in free cash flow.
The company reported $2.14 billion in revenue, down 2% from the prior year.
Adjusted EBITDA was down 9% from the year-ago quarter at $625 million.
SiriusXM Segment
SiriusXM reported segment revenues of $1.7 billion, down 2% from the prior-year period, due to lower ad revenue and vehicle paid promotional revenue.
Average revenue per user (ARPU) fell $0.24 to $15.29.
Self-pay subscribers decreased by 347,000.
SiriusXM’s total cost of services rose 2% to $664 million in the quarter on higher programming and royalty costs.
SiriusXM’s gross margin of 61% slipped one percentage point from the prior year.
Pandora and Off-Platform Segment
The Pandora and off-platform segment generated $462 million in revenue, down a slight 1% from the year-ago quarter’s $467 million.
Advertising revenue in the segment held roughly flat from a year ago.
The segment’s gross margin was 24%, down 5 percentage points from the prior-year period.
During my first visit to New Orleans for Jazz Fest many years ago, I experienced a profound moment that changed everything for me. The best way to describe it would be the sensation of deja-vu; like I had been here before, or more specifically that I had returned “home.” That day, the city spoke to me, and thankfully I heeded the call.
Shortly after that auspicious Jazz Fest, New Orleans became my home, and I’ve worked in the music industry here since then — at WWOZ, at Tipitina’s, in the classrooms of Tulane and with so many of our city’s talented artists. This city has provided me with a sense of purpose, a feeling of belonging, and a community of like-minded folks who share the same passion for music. It’s also given me the foundation for a meaningful life.
But the same elements that spoke so deeply to me — our rich cultural heritage and vibrant music scene — often go hand-in-hand with the city’s reputation for partying. It’s a story with which the music industry, my industry, is all too familiar, and one that often leads to addiction.
Addiction is a particularly serious issue in the music world. A 2020 study by Tulane’s Graduate School of Social Work paints a staggering picture: 56% of music industry professionals cite problematic substance use, and 80% met the cut-off for serious or moderate mental health concerns — both far above any national average.
Bill Taylor
Singer-songwriter Anders Osbourne, my good friend who helped me find the path to sobriety after I bottomed out with drugs and alcohol, had an idea about how to tackle this within the music industry. Together, we created “Send Me A Friend,” a national network of sober individuals who were “on call” to support struggling musicians and industry professionals at their gigs.
The effort was an overnight success, with more people asking for help and wanting to volunteer than we could handle. Anders and I wondered what it would take to create a cultural shift so that sobriety was embraced, supported and celebrated on a larger scale?
Our vision is shared by The Phoenix, a national sober community that embraces connection through a shared, active lifestyle that enhances and helps maintain each other’s recovery journeys. During the pandemic, we joined forces with them with a mission of creating sober-supportive change in the music space.
Today, we’re blown away to see how this movement has progressed all the way to a New Orleans institution: JazzFest. This year, I’ll be there alongside The Phoenix and Stand Together Foundation at the 1 Million Strong Wellness Retreat, a sober-supportive wellness lounge where festival attendees can relax between sets, enjoy mocktail happy hours and meet up with people in recovery and others to catch performances together.
And this isn’t about making the festival sober. It’s about giving people an opportunity to bring their whole selves to the festival, free of shame and fear. Together, we can transform the way people think about addiction by supporting new ways for sober fans to enjoy shows, ensuring touring musicians and crews have access to resources on the road, and engaging in conversations about sobriety that are free from shame and stigma and full of possibilities.
I’m proud of how far we’ve come in changing the way we approach recovery and sobriety, turning it into a celebration of inclusivity and togetherness. At this year’s Jazz Fest, we’ll continue to change the landscape not only for those who work in the music industry, but also for our audience members who want a way to engage and enjoy all this beautiful city has to offer while feeling safe, supported, and connected.
Bill Taylor is the director of music programs and strategy at The Phoenix, where he leads music activations all over the country and works with the Stand Together team on the 1 Million Strong campaign.
Reach Music has acquired master and publishing rights to Judas Priest‘s first two records, Rocka Rolla and Sad Wings of Destiny from Gull Entertainments. As part of their new purchase, Reach will work alongside the British metal legends to release a 50th anniversary edition of Rocka Rolla in 2024 as well as other special projects. This deal builds upon Reach’s existing relationship with the band — in 2021, Reach acquired a 50% copyright interest and the administration rights to guitarist Glenn Tipton’s song catalog, beginning with songs released in 1977.
Reservoir has launched a joint venture with American Idol producer, 19 Entertainment, which is part of Sony Pictures Television and already partnered with BMG on the master side. Through their new jv, the two will jointly sign new publishing deals with some of Idol’s contestants, and Reservoir will aid in the young writers’ development.
Peermusic Australia has inked a worldwide publishing deal with Sydney-based hip-hop/rock crossover group Triple One. The agreement includes both Triple One’s full back catalog as well as future works.
Position Music has signed artist and songwriter Sam Tinnesz to a worldwide publishing deal. The deal includes some selected catalog cuts as well as all of Tinnesz future releases, including those made under his artist project and those made as a songwriter.
Prescription Songs has signed Nashville-based artist and writer Josie Dunne. As an artist she played alongside artists like Julia Michaels, COIN, Ben Rector, and Andy Grammer. As a writer, she’s create songs with Natalie Imbruglia, Corook, Spencer Sutherland, and more. She was brought into the roster by A&R Chris Martingnago.
Warner Chappell Music has signed a global publishing deal with country sibling trio Voth. The deal was signed just ahead of their next single “You Own It,” out April 28th.
