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Burt Goldstein, a colorful music industry character and executive who headed up two music retailing operations and three independent distribution companies across his more than three-decade career, died peacefully in his sleep at his home in Albuquerque, NM on Oct. 9. on, his birthday. He was 73.
Goldstein’s career spanned from the early 1970s, when he opened his first Musical Maze store in Manhattan, to the 1980s, when he served as the top music retail executive for the Crazy Eddie appliance retail chain. Later that decade, he pivoted to indie distribution — first with his own company Impact Distribution, opened in 1988; then by heading up Profile Records’ Landmark Distributors. He later started his own distribution company Big Daddy in 1996, which he sold in 2007 to Music Video Distributors (MVD). Along the way he mentored a number of executives who went on to music industry careers of their own.
While Goldstein could be a hard-nosed business executive and a tough negotiator — as the major label executives who had to deal with him during the 1980s when he oversaw the Crazy Eddie music department can attest — he was also known for having plenty of fun along the way, often in a tongue-in-cheek manner, former colleagues recall. In fact, when he became a distributor, he would often begin sales calls by performing a magic trick, testifies his Big Daddy partner Doug Bail, who also worked with him at Benel Distributors.
In fact, at one NARM convention (now called Music Biz), Goldstein cornered the keynote speaker —Google’s then-head of new business development Chris Sacca — and pointed out that Goldstein’s shoes had a multi-color weave containing all of Google’s corporate colors. He then proceeded to try and talk Sacca into buying thousands of pairs of shoes for all of Google’s employees. At another NARM convention, Goldstein got in trouble with the trade organization by breaking the rules and selling CDs on display at the Big Daddy’s trade booth. But Goldstein was donating all the sales to Bob Benjamin’s Light Of Day charity and wouldn’t be deterred. After they shut him down the first time, he continued to sell the CDs before being stopped once again.
Harry Spero, who nowadays heads up his own ad agency, Spero Media, recalls his days working alongside Goldstein at Crazy Eddie, where he experienced both sides of Goldstein — the hard-nosed businessman and his omnipresent joy-of-life attitude. “One week, he would have a war with CBS until he got what he wanted, then the next week he would have a war with WEA, followed the next week with PolyGram. He was always at war with one of the labels.”
Jay Rosenberg, who also worked at Crazy Eddie, echoes Spero, remembering that during his days at the chain, “We had epic battles with the labels.” Rich Masio, who worked at Big Daddy, quoted two Goldstein sayings that displayed the executive’s take no prisoner’s style — “You eat what you kill” and “Good luck to you, my friend and the horse you rode in on” — the latter of which would be inscribed on the Big Daddy company t-shirt. The first saying was to remind the sales team to keep selling, and the second was for when he was done with you, Masio explains.
Goldstein was born in 1949 and grew up in Brooklyn, graduating from Long Island University in 1971 with a B.S. in Sociology. But while going to school, he began working at the Uni Sonic record store across the street from the LIU Brooklyn campus. After graduating, he stayed on to manage the store, thus launching his music industry career. By 1973, he moved on and opened his first Musical Maze in the Gramercy Park area of Manhattan, around the corner from Baruch College and the School of Visual Arts. In 2006, Goldstein told MusicMorselsonline.com that by age 15 he knew he was going to open a record store.
The Musical Maze enterprise would soon grow to four stores and a pop-up store or two. Along the way, the original Musical Maze, located between 23rd Street and 22nd Street on Third Avenue, seemed to employ a who’s-who from the downtown New York music scene of Max’s Kansas City and CBGB’s. At one time or another, Musical Maze staffers included George Scott from James Chance and the Contortions, Peter Holsapple from The dB’s, Jimi “Quidd” Hatzidimitriou from the Dots, Ed Ryan from The Rudies and, very briefly, Lance Loud from the Mumps as well as Drew Wheeler, a New York Rocker contributor and future Billboard copy editor.
During his Musical Maze days, Goldstein married his girlfriend Jan DeGeer Goldstein, who worked with him at the small indie chain, on March 2, 1984, in Las Vegas, according to an item in Billboard‘s “Lifelines” column. In addition to being his partner in life, DeGeer Goldstein also worked with him during the Crazy Eddie days and later on at Big Daddy.
The local Musical Maze chain would continue on even as Goldstein began his next retailing adventure in 1979, running the music sections for the then-rapidly growing Crazy Eddie electronics chain, whose commercials were infamous for using a fast-talking DJ Jerry Carroll as the chain’s pitchman, touting the stores “insane prices.”
Goldstein actually worked for the Crazy Eddie chain’s sister company Benel Distributors — also known as the Record and Tape Asylum, an operation that supplied and operated the music presence in the chain’s 43 stores — at its peak. At Benel, Goldstein held the title of executive vp, and was the key person negotiating with the major record labels on marketing dollars and promotional campaigns for new releases.
While there, Goldstein hired Rosenberg as a buyer for the chain, and within a couple of years Rosenberg became head buyer. Rosenberg says Goldstein “helped shape my music industry career. I learned a lot from Burt on how to deal with labels and distribution.” In fact, Goldstein, in his own inimitable way, would often remind Rosenberg of that. As Rosenberg recalls — and posted on his Facebook page — “Burt used to tell people, ‘I taught Jay everything he knows, but not everything I know.’”
After Crazy Eddie imploded in the late 1980s due to financial trouble detailed in a recently issued book on the chain and its owner Eddie Antar, Goldstein’s career went in a different direction when he opened up an indie music distribution operation, Impact Distribution, in Chicago in 1988. That would launch the next phase of his career. Soon, he was also working with Landmark, the distribution arm owned by the Profile Records principals, first opening a branch in Los Angeles while maintaining the Impact branch in Chicago. In 1991, Impact was merged under the Landmark banner and, in the process, stood at the forefront of a trend that would sweep the indie music sector: the end of regional distribution networks for indie labels and the move to national distribution.
Still, Orchard senior vp of product development Alan Becker remembers Goldstein more for his retail days. “Burt was a very colorful guy and a throwback to the retail guys of a bygone era,” Becker says.
Landmark eventually blew up due to infighting between the two Profile principals, which indirectly evolved into an unsuccessful involuntary Chapter 11 filing against Landmark by three of its labels. That filing nevertheless spelled the end of Landmark, as it made the other Landmark-distributed labels and its retail account base skittish. In the aftermath, Goldstein started Big Daddy, his most successful distribution company. After merging Big Daddy into MVD in 2007, Goldstein retired from the music industry.
Larry Germack, who worked at Big Daddy, recalls his days on Goldstein’s staff. “He was a great record man; the headmaster of the old school record business, who pressed the flesh to the end, ” Germack says. “I am really saddened by his passing. Burt’s personality and verve were strong. He was an entertainer, had a good vibe about him; and he was one-of-a kind in the true sense of the word.”
On his last day, the Goldstein family and friends went out to dinner at a restaurant to celebrate his birthday. Some of his former staffers recalled that on his birthday, it was Goldstein’s way to encourage a roomful of strangers to sing “Happy Birthday” to him, leading them like a conductor. His friends wondered if that happened on his last night too.
In an e-mail informing friends of Goldstein’s passing, his wife Jan wrote that her husband “was happy…and often said he had such a great life.”
In addition to his wife, Goldstein is survived by his daughters, Ali and Jessie, and his brother Steve.
Inspired by his father-in-law’s example, Goldstein generously donated his body to the University of New Mexico School of Medicine. To make a charitable donation, visit UNMfund.org.
When Cardi B released her debut mixtape Gangsta Bitch Music Vol. 1 back in March 2016, she used an album cover that, ahem, grabbed plenty of attention.
The image featured the then-rising star taking a swig of a large beer, staring directly into the camera with her legs spread wide. Between them, she was holding a man’s head in her hands, while he appeared to perform oral sex on her.
The man in the image was a model who had consented to the photoshoot, but a massive tattoo on his back (a tiger battling a snake) wasn’t actually his. Unbeknownst to Cardi, a freelance graphic designer had typed “back tattoos” into Google Image, found one that fit, 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.
Six years later, Cardi will head to trial Tuesday in a civil lawsuit filed by Kevin Brophy, the California man whose tattoo was superimposed onto the Gangsta Bitch cover. The trial, expected to run about a week, will feature the star herself taking the witness stand. Fresh off winning a huge verdict against a blogger who told “disgusting lies” about her, Cardi will now find herself on the other side of the courtroom.
Seeking millions in damages, Brophy claims the superstar exploited his identity in a “humiliating and provocatively sexual way to launch her career.” But Cardi’s attorneys say those accusations are “sheer fantasy,” since nobody would have even been able to tell it was him. Brophy, they say, is “trying to cash in the legal equivalent of a lotto ticket.”
“Humiliated and Appalled”
In October 2017, Brophy filed a lawsuit in Los Angeles federal court against Cardi (real name Belcalis Almánzar), claiming that he had been “shocked, outraged, humiliated, and appalled” when friends notified him about the mixtape cover.
“He has had to face uncomfortable comments, questions, and ridicule, from community members and family,” Brophy’s lawyers wrote at the time. “His family dynamic has been adversely affected, and his work and professional life have been unalterably damaged by his having to explain this unconsented-to, offensive, and malicious use of his image.”
In technical terms, Brophy accused Cardi of two specific acts of wrongdoing: misappropriating his likeness for commercial benefit – violating what’s known as his “right of publicity” – and invasion of his privacy by casting him in a “false light” that was “highly offensive” to a reasonable person. The lawsuit asked for $5 million in damages.
In addition to naming Cardi herself as a defendant, the case also named her company, Washpoppin Inc., and KSR Group, the company owned by her former manager firm Klenord “Shaft” Raphael. The case notably did not name Timm Gooden, the designer who actually copy-and-pasted Brophy’s back tattoo onto the cover.
A “Transformative” Use?
Seeking to have the case tossed out without a trial, attorneys for Cardi argued (among other things) that the Gangsta Bitch cover made “transformative fair use” of Brophy’s likeness – a key defense that would have afforded them the protection of the First Amendment.
They claimed the designer used “only a very limited portion” of the original image as part of new, larger creative work, and had clearly not done so in any sort of effort to capitalize on Brophy’s identity.
But in December 2020, Judge Cormac J. Carney ruled that argument would need to be decided by a jury. He said there was no dispute that Gooden had made “some changes,” but also that “significant elements of plaintiff’s tattoo remain untouched in the final album cover.”
“A reasonable jury in this case could conclude that there are insufficient transformative or creative elements on the [album] cover to constitute a transformative use of Plaintiff’s tattoo,” the judge wrote at the time. “Most significantly, defining elements including the tiger and snake remain virtually unchanged.”
“It Is Not Him”
In addition to renewing that fair use argument, Cardi’s lawyers have plenty of other defenses they can try at the upcoming trial. Chief among them is that she and the other defendants simply did not use Brophy’s likeness at all, since nobody would have recognized a relatively unknown person based on a cropped image of his back tattoo.
“The tattoo design itself, as ‘priceless’ as it may be to plaintiff, subjectively speaking, was only used in an anonymous manner, as a single building block, one small peripheral element, in a complex picture and scenario in which Cardi B is the focus and central figure,” Cardi’s lawyers wrote in a brief earlier this year.
“No matter how much plaintiff may be obsessed with the notion, the fact remains that it is not ‘him,’ or a ‘likeness of him,’ or ‘his identity’ in the cover image,” they wrote. “It is simply a use of a small portion of a tattoo design, applied to the body of someone (young, Black, with hair) obviously not plaintiff (a middle-aged Caucasian with a shaved head).”
Lawyers for Brophy will try to counter that narrative. They plan to call witnesses, including both Brophy’s wife and the tattoo artist who inked him, to argue that the man was “immediately recognizable by the tattoo and that others recognized plaintiff’s likeness.” Brophy himself will take the witness stand to testify about discovering the image and the impact it had on him.
In addition to those witnesses and Cardi herself, other people taking the stand this week will likely include Gooden, the designer who created the image; Cardi’s former manager Klenord “Shaft” Raphael; and legal and business experts who can weigh in on the various issues in the case.
How Much Harm? The Money At Stake
If the jury holds Cardi and the other defendants liable on any of the claims they’re facing, jurors will then have choose how much to award Brophy in damages. His initial complaint asked for $5 million, but jurors will not simply award that; instead, they’ll wrangle with tough questions about how much he’s owed.
For starters, they’ll weigh how much emotional and reputational harm he’s suffered as a result of the wrongful use of his image. There’s no objective standard for such questions, and jurors can award what they believe is reasonable, leading to a wide range of potential outcomes based on how this week’s trial plays out.
On that front, Brophy says his “family life was negatively affected by stress and worry,” and that he was “devastated, humiliated and embarrassed” by his appearance on the cover. Cardi’s lawyers fire back such claims are “vastly overblown” and unsupported by any evidence, like proof that he or his family sought therapy or other treatment for their supposed mental injuries.
Jurors will also be tasked with trying to figure out how much profit from Gangsta Bitch Music Vol. 1 was directly linked to Brophy’s image, another source of potential damages. Earlier in the case, an expert witness provided by Brophy’s lawyers argued that all digital profits from Cardi’s mixtape (a total of $1.6 million) were fair game. But Judge Carney rejected that approach as “pure fantasy,” saying it did not appear that the image was the primary factor driving the mixtape’s revenue.
Separately, the jurors could also choose to award so-called punitive damages if they find the wrongdoing against Brophy to be particularly egregious, but that figure would be calculated in a future proceeding.
The Courtroom Fight Ahead
The trial, taking place at the U.S. federal courthouse in Santa Ana, will kick off with jury selection on Tuesday morning and is expected to run for four to five days. A verdict could be reached as early as Friday, but deliberations could stretch into next week.
Cardi and the other defendants will be represented by Jonathan Segal and other lawyers from the white-shoe firm Davis Wright Tremaine LLP, as well as by Lisa F. Moore of Moore Pequignot LLC, who represented Card in the defamation case in which she won the $4 million verdict earlier this year. For most of the case, Cardi was represented by attorney Alan G. Dowling, but Segal and Moore stepped in at the last minute when Dowling backed out of the case in August due to serious health problems.
Brophy will be represented by attorney A. Barry Cappello, Lawrence J. Conlan and Wendy Welkom from the law firm Cappello & Noel LLP.
Round Hill Music has signed a worldwide publishing administration agreement with Coheed and Cambria, the progressive rock band that has recorded 10 studio albums and generated 3.4 million album consumption units in the U.S., according to Luminate. The band, fronted by Claudio Sanchez, is signed to Round Hill Music via its Fund 3 Plus vehicle.
“We are pleased to welcome Claudio and the band to the Round Hill family,” the company’s head of creative services John Baldi said in a statement. “Our team is excited to explore creative outlets and opportunities for their music and provide support wherever we can on their current release, “Vaxis Act II.”
The latter album has generated 55,000 album consumption units worth of activity since its release in February this year.
“Our music is dramatic and cinematic,” Sanchez said in a statement. “We’ve been looking for a home that will facilitate getting Coheed and Cambria front and center in the sync world. The folks and Round Hill have a firm grasp of our vision and an added creativity that will help achieve or goals, and we couldn’t be more excited about taking this journey together.”
As real-life touring continues to be plagued by cancellations, Soulja Boy, Dillon Francis and Ozzy Osbourne are turning to virtual worlds. The Metaverse Music Festival returns on Nov. 10-13 for its second year in Decentraland — an immersive digital world built using blockchain technology and owned by its users — with more than 100 artists across 15 stages. The event will be free to attend and no crypto wallet is required to participate.
Set in a cyberpunk city of the future, Dillon Francis will open the festival with a “mega club” experience projected on several screens, while Soulja Boy will perform through a virtual avatar. The digital setting also allows for elaborate stage design. “The final [headline set] should look like a city from the future, abandoned for 100 years,” says Sam Hamilton, creative director at Decentraland Foundation.
Despite the metaverse backdrop, the team hopes to recreate a real-life festival experience, complete with atmospheric rain (every festival needs mud), custom dance moves called ‘emotes,’ pop-up nightclubs and even a virtual porta-potty experience.
“[We’re] trying to capture that chaos that happens at a real festival inside a digital world,” explains Hamilton.
The festival features a diverse lineup thanks to Decentraland’s global community picking many of the performers. “We’re curating the main stage,” says Iara Dias, head of the Metaverse Music Festival, “but we gave the rest of the stages to the community for curation.” As a result, the lineup also features Chinese idol group SNH48 and Japan’s J-pop group Atarashii Gakko!
“Rather than trying to be American-centric,” adds Hamilton, “We’re trying to give a cultural experience to everybody that they wouldn’t normally be able to have.”
More than 50,000 attendees logged into Decentraland to experience 2021’s inaugural event with performances from crypto-native artists including Deadmau5, 3LAU, RAC and Alison Wonderland. This year will also feature crypto favorites like CryptoPunk rapper Spottie Wifi and British DJ Akira the Don, but the foundation hopes that a roster of bigger names will expand the festival’s reach.
Virtual music performances have grown in popularity in recent years, partly due to COVID-19 lockdowns putting IRL concerts on hold. Travis Scott and Ariana Grande both played virtual concerts in Fortnite’s virtual gaming world, while MTV launched a Best Metaverse Performance category.
Decentraland, however, is different from corporate metaverses like Fortnite as it is owned and operated by its users through crypto technology. The land inside the world can be bought and traded by the community who then choose what to build. Wearables and digital items can be traded on the platform’s native marketplace.
“The big difference is philosophy,” says Hamilton. “We believe that the user should not be the product, but should own and direct the product.”
Decentraland’s community also helps make decisions through a decentralized autonomous organization (DAO).
Despite last year’s metaverse hype, however, these virtual crypto worlds are not as popular as Fortnite, Roblox and others. As the tide goes out on the metaverse mania, Decentraland has approximately 60,000 monthly active users according to data provided by the foundation; a small number compared to the tens of millions of daily users on gaming worlds like Roblox.
“We’re working hard to catch up with the hype,” admits Hamilton. “We needed longer to build out a better platform with more features but the hype [of 2021] came too quickly.”
Last year’s festival brought in Decentraland’s biggest numbers of the year, and Hamilton believes this year’s event will bring another wave of new users to the platform. “The metaverse is inevitable,” he concludes. Zooming out, he envisions a network of virtual worlds, some centralized and some decentralized, but not necessarily dominated by one company or platform. “This is definitely happening.”
HarbourView Equity Partners has acquired the music publishing catalog of Incubus, the genre-bending rock band that has generated 12.4 million U.S. album consumption units since forming in 1991, according to Luminate. When non-U.S. sales are added in, the group has sold more than 23 million records, according to the announcement.
Terms of the deal, which also encompasses the individual works of group member Mike Einzigerl, were not disclosed but it includes such songs from the band as “Drive,” “Love Hurts,” and “Megalomaniac,” as well as Einzinger’s share of the Avicii hit, “Wake Me Up,” which he co-wrote. Besides Avicii, Einiger has collaborated with Pharrell Williams, Skrillex, and Tyler the Creator, among others, either as a songwriter and or producer.
Other deals HarbourView have done since launching a year ago include Sum 41, Brad Paisley, Lady A, Hollywood Undead, Florida Georgia Line, Luis Fonsi and R&B songwriting and production duo Dre & Vidal.
During the course of their career, Incubus has released eight studio albums and recorded over 100 songs.
Fox Rothschild served as legal counsel to HarbourView in the transaction. Incubus and Mike Einziger were represented by Todd Cooper and Monica Zhang of Greenberg Traurig, LLP. Incubus management is Johnny Wright and Joe Lilak for Wright Entertainment Group. Incubus business management is Bill Vuylsteke, CPA and David Boyson of Provident Financial Management. Mike Einziger is managed by Martin Kierszenbaum for Cherrytree Management.
Kanye West is offering to buy right-wing friendly social network Parler shortly after being booted off Twitter and Instagram for antisemitic posts.
Parlement Technologies, which owns the platform, and West, legally known as Ye, said the acquisition should be completed in the fourth quarter, but details like price were not revealed. Parlement Technologies said the agreement includes the use of private cloud services via Parlement’s private cloud and data center infrastructure.
Ye, was locked out of Twitter and Instagram a week ago over antisemitic posts that the social networks said violated their policies. In one post on Twitter, Ye said he would soon go “death con 3 on JEWISH PEOPLE,” according to internet archive records, making an apparent reference to the U.S. defense readiness condition scale known as DEFCON.
Ye is no stranger to controversy, once suggesting slavery was a choice and calling the COVID-19 vaccine “the mark of the beast.” Earlier this month, he was criticized for wearing a “White Lives Matter” T-shirt to his collection at Paris Fashion Week.
The potential purchase of Parler would give Ye control of a social media platform and a new outlet for his opinions with no gatekeeper.
“In a world where conservative opinions are considered to be controversial we have to make sure we have the right to freely express ourselves,” Ye said in a prepared statement.
The acquisition could also breathe new life into Parler, which has struggled amid competition from other conservative-friendly platforms like Truth Social. Parler, which launched in August 2018, didn’t start picking up steam until 2020. But it was kicked offline following the Jan. 6, 2021 attack on the U.S. Capitol. A month after the attack, Parler announced a relaunch. It returned to Google Play last month.
“This deal will change the world, and change the way the world thinks about free speech,” Parlement Technologies CEO George Farmer said in a prepared statement.
Veteran Los Angeles concert promoters and talent buyers Brian Tarney and Liz Garo have joined forces to form Restless Presents, an indie promotion company that’s producing the upcoming Substance 2022 festival.
Previously produced by Tarney’s ticketing and marketing company Restless Nights and Live Nation, the annual celebration of dark rock, industrial, electronic post-punk will feature one of its strongest lineups to date, with performers including Jesus And Mary Chain, The Chameleons, Clock DVA, Cabaret Voltaire co-founder Steven Mallinder, electro-royalty ensemble Miss Kittin And The Hacker, Boy Harsher, Light Asylum, Youth Code, SEXTILE and Kontravoid. The festival is slated for Oct. 21 and 22 at the Los Angeles Theater.
Tarney and Garo have also launched a New York event called Flesh & Steel — a multi-venue, multi-date celebration taking place Dec. 1-3 and featuring Boy Harsher, A Split-Second, Psyche, Phase Fatale and more. Restless enlisted NYC artists David Castillo of Brooklyn venue Saint Vitus and DJ, promoter and journalist Andi Harriman of Synthicide to serve as creative directors for the New York event.
Tarney and Garo launched Restless Presents during the pandemic and have since booked shows for ADULT, Lingua Ignota, SEXTILE and Thee Sacred Souls. Substance is the company’s first festival, but both have produced the festival brand from its inception, going back to the launch of the Cloak and Dagger series for She Wants Revenge.
“I think one of the best things about these events is the broad, eclectic audience,” says Garo, who served as the lead talent buyer for Spaceland Presents for more than 20 years, booking the Echo and Regent Theater and concert series at the Getty Center, LA’s Natural History Museum and the Santa Monica Pier. (Spaceland was bought by Live Nation in 2019). Garo also co-founded and managed the long running Echo Park Rising series.
“There is such a broad age range at Substance. You’re definitely getting an older crowd that knows the classics but a young, healthy scene too that that’s pretty vibrant,” Garo adds. “People can come in and be who they want to be. It’s a very tight scene.”
The Los Angeles Theater in downtown LA’s Theater District was chosen as host venue because of its flexibility and eclectic layout, says Tarney, who hosted Substance at the venue in 2019 with headliner Gary Numan.
“It’s a blank slate and we built the whole thing from scratch. It’s got so many little weird rooms and nooks and crannies. We’re working really hard to activate all of them with buildouts including a marketplace and a record store,” says Tarney, a former booker at Spaceland and the creator of Restless Nites, an L.A. marketing agency and ticketing platform for independent promoters and venues. Tarney adds that Restless Presents was born from a need for more independent promoters in the live music industry and says his hope is to work closely with established and emerging acts to create unusual and forward-thinking live events.
“I think a lot of people are fed up with going to a small theater or small show and paying Ticketmaster fees or getting priced gouged on drinks when they’re there,” Tarney says. “People are looking for more than just big festivals, and many have trickled their way into some of the smaller venues. “That’s why we’re always looking for unique spaces. This is something that Liz is awesome at. She’s always finding cool, unique venues and places where we can come in and have more input.”
Tarney notes that Restless Presents has several new festival genre concepts in the works for 2023, including a roots roadhouse event and neo soul festival.
“Substance is the focal point this year, but there’s gonna be a lot more events and much more diverse sounds in the future,” he says.
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The 2004 documentary Super Size Me took a humorous look at the health consequences of fast-food restaurants’ practice of up-selling customers to higher-priced, larger-portioned items – a super-sized cup of Coca-Cola rather than a large, for example. To the customer, up-selling looked like a good deal: the additional soda or food cost only a few cents more. For restaurants, the tactic padded margins because the difference in price dwarfed the cost of goods.
Super Size Me comes to mind when looking at music subscription services and their quest to improve their margins. Those services have the equivalent of a super-sized option: the family plan, which generally costs 50% more than an individual subscription and includes up to six subscribers on a single plan. But unlike up-selling in the fast-food business, super-sizing a music subscription service doesn’t pay off in the short term. The family plan may help retention, which can improve subscribers’ lifetime value – that, not average revenue per user, is the key metric in the subscription business – but it does nothing to boost margins.
For years, high-fidelity audio was presumed to be music’s version of super-sized food portions: an up-sell product that carried a higher price without a commensurate increase in costs to the platform. But high-fidelity audio now appears to be a standard option for most streaming platforms, another carrot to entice people to sign up rather than a means to segment consumers based on willingness to pay. That means music licensed from record labels and distributors doesn’t provide a path to better margins. In fact, there’s only a small amount of upside left to wring out of licensors: Spotify expects it can get its music margins to 30% and eventually to 35%, up from the 28.1% margin it reported for 2021.
The future of the music streaming business looks more like gas stations than fast food. Gas stations have turned into convenience stores that sell junk food, beverages and household staples. Gas itself is almost a loss leader. Stations make their margins on everything else – a $3 bottle of Coca-Cola, a $2 candy bar or a $6 package of Ibuprofen pills. According to an examination of the economics of gas stations at The Hustle, stations earn a 1.4% profit margin on fuel compared to 200% on soda machines and 100% on lottery tickets.
We’re seeing more examples of streaming services looking for margin relief outside of their core products. On Sept. 20, Spotify, which acquired audiobook distributor Findaway in June, launched a la carte audiobook sales, putting it directly in competition with Amazon-owned Audible. Audiobook downloads provide better margins than Spotify can get from music. As the retailer, Spotify keeps 50% of the audiobook purchase sale proceeds. Findaway’s distributor fee is 20% of the author’s royalties – which works out to 10% of sale proceeds after Spotify takes its 50% cut. In aggregate, Spotify gets a 60% margin in audiobook sales on its platform – double the typical margin in both music streaming and music downloads and more than double Spotify’s gross margin on music last year.
One notable hiccup to Spotify’s foray into audiobooks is the buying process. Spotify sells audiobooks only at its website, not within the Spotify app. That allows it to keep its cushy margins without giving a significant portion to either Apple or Google for in-app purchase fees. Not offering audiobook sales within the app creates an extra step in the buying process, and even a small amount of friction can become a drag on purchase activity. But Spotify could also be a boost to the format, says Tony van Veen, CEO of DIY Media Group, which owns BookBaby, a distributor for independent book authors. “If Spotify offers it and lowers the barrier, will there be more adoption? Yeah, I think so,” he says. Spotify CEO Daniel Ek believes audibooks could eventually achieve 50% of book sales in mature markets compared to their current 6-7% share.
Spotify has already made a big push into podcasts in a search for better margins. Podcasts have been a money-loser with a –57% gross margin but have potential at scale. At a June 8 investor presentation, Spotify CFO Paul Vogel said podcast margins could reach 40% to 50% in the future. Tightening the belt could help get there: news broke on Oct. 7 that Spotify laid off “at least” 38 employees and will shutter 11 podcasts created by Gimlet and Parcast, two content studios Spotify acquired in 2019 for a combined $286 million.
Also searching for better margins, French music streamer Deezer is planning a new product called Zen by Deezer. Expected to debut in France in the first quarter of 2023, the product offers “exclusive music relaxation, sounds, expert tips and guided exercises,” according to the company’s Oct. 4 investor presentation. It’s a sensible product extension given the explosion of apps for meditation, yoga, sleeping and mental health. In the wake of COVID-19, McKinsey put the size of the global wellness industry at a staggering $1.5 trillion.
When Zen by Deezer is running at scale, Deezer believes, its content costs will run about 10% of revenue. That’s compared to roughly 70% for a standard on-demand streaming service that licenses music from record labels, music publishers and performance rights organizations. The difference, the presentation explains, is “one-off content production,” rather than music licensed at standard rates. Whether created in-house or acquired on a one-time, royalty-free basis, Zen by Deezer won’t pay most of its subscription fees to license music.
Elsewhere, music is increasingly a means to hook customers before giving them another product. Abu Dhabi-based Anghami is looking to diversify through podcasts, branded content and live concerts. In June, it purchased Spotlight Events, a concerts company based in the Middle East-North Africa region. Tencent Music Entertainment, China’s largest music streamer, also made a concerted push into spoken-word audio when it acquired audiobook distributor Lazy Audio in 2021. TME also has a growing podcast business.
Using a gas station metaphor for Spotify only goes so far – or does it? Consumers’ reliance on their automobiles makes them dependent on gas stations for transportation. Until electric cars see widespread adoption, most people will be regular customers at gas stations’ convenience stores. Music isn’t quite as entrenched as the automobile, but there’s a growing belief that a music subscription is a basic utility – like internet, gas or water – that most people will carry continuously. That gives streaming services on ongoing billing relationship with hundreds of millions of customers and an opportunity to make better margins on something other than music.
iHeartMedia Atlanta president Drew Lauter has departed the radio giant after video surfaced of the executive using racial and misogynistic slurs. The national radio conglomerate confirmed to Billboard on Friday (Oct. 14) that Lauter was no longer with the company, stating, “allegations of this nature go against our company values and our policies and we take them very seriously.”
The videos – provided to the local news station WSB-TV Atlanta, which first reported the news – shows Lauter repeatedly telling the driver, a fellow iHeartMedia executive, to “run over n—os” and using other racist language in front of two other iHeart employees, one of whom filmed the incident. According to attorneys Jason Castle and Roosevelt Jean, who are representing the client who filmed the incidents, the videos were recorded in August 2021 after a charity event.
In two videos, Lauter can be heard repeatedly using racial and sexist slurs and groping a male coworker while stating, “you better give me that t-tty.” Castle and Jean’s client – who is a top-ranking Black iHeart executive in the Atlanta region – claims to have reported the incident to his immediate supervisor at the time. He informed his attorneys that this was not the first instance of Lauter using racially insensitive language in front of employees.
In a statement provided to Billboard, an iHeart spokesperson said, “As soon as [the videos] were brought to our attention we acted quickly, retaining an outside investigator to conduct a thorough review, and when we received the outside investigator’s findings we immediately took decisive action.”
“From our client’s perspective, this isn’t about our client,” Castle tells Billboard. “It’s that this particular video is a representation of the hostile work environment and the discriminatory and racially insensitive, as well as sexually harassing environment that existed in the iHeart Atlanta offices.”
iHeart employees were reportedly informed of Lauter’s departure on Thursday, the same day the WSB-TV investigative report aired.
Castle says his client has not filed any legal action against iHeart or Lauter.
Ed Sheeran’s lawyers want a federal judge to rethink a recent decision that said the star must face a trial over whether “Thinking Out Loud” infringes Marvin Gaye‘s “Let’s Get It On,” warning that such rulings threaten to “strangle creation” by future songwriters.
Two weeks after Judge Louis Stanton refused to toss the case out, Sheeran’s attorneys respectfully told the judge Thursday (Oct. 13) that he was wrong – and that the only overlap between the two songs were simple musical elements that have “been used in music for centuries.”
“Affording copyright protection to a combination of only two unprotectable basic musical building blocks, such as the ones at issue here, would undermine a central purpose of copyright law – which is to encourage the creation of new works – and would instead strangle creation,” wrote Sheeran’s lead counsel Don Zakarin, an attorney at the firm Pryor Cashman.
In technical terms, Sheeran’s lawyers are asking the judge to reconsider his own ruling. If he does, it would be a rare step, typically only taken when it’s clear a judge has gotten something wrong. In the alternative, they’re asking for permission to file a fast-track appeal; if granted, it could delay any trial by at least a year.
Sheeran has long been dogged by questions of whether “Thinking Out Loud” (which spent 51 weeks on the Billboard Hot 100 after it was released in 2014) borrowed too much from “Let’s Get It On.” He did himself no favors in late 2014, when he was filmed on stage at a concert toggling between the two songs.
The singer was hit with the current lawsuit in 2018 – filed not by Gaye’s heirs but by an entity owned by industry executive David Pullman called Structured Asset Sales. That group owns a one-third stake in the copyrights of Ed Townsend, who co-wrote “Let’s Get It On” with Gaye.
Faced with the accusations, Sheeran’s lawyers argued that the elements he allegedly took from the Gaye’s song – a chord progression and the harmonic rhythm – were too commonplace to be the exclusive property of any one songwriter. They cited a number of other songs, including “Since I Lost My Baby” by The Temptations, that featured similar aspects.
For their part, Sheeran’s accusers admit that those elements, by themselves, are “commonplace and unprotectable.” But they say that when they were combined together in Gaye’s famous song, they became something more original and worthy of copyright protection.
In late September, Judge Stanton refused to side with either argument. He said there was “no bright-line rule” for deciding such questions, and that the pop star would need to make his arguments before a jury of his peers. The decision set the stage for a blockbuster trial at a Manhattan federal courthouse at some point in the future, though a date has not yet been set.
Thursday’s new motion, if granted, would avoid that trial entirely, or push it back if the judge approves the fast-track (“interlocutory”) appeal. In it, Sheeran’s attorneys argued that the court was correct about the lack of a “bright line,” but that the case against Sheeran still fell well short of the mark.
“No one can or should be able to claim the exclusive right to a chord progression and the unremarkable and unprotectable manner in which it is performed,” Sheeran’s lawyers wrote. “Defendants respectfully submit that the order overlooked these critically important legal considerations.”
The arguments from Sheeran’s lawyers sound quite a bit like comments the star himself has made about copyright litigation in the music industry. In April, after he defeated a similar case over “Shape of You,” Sheeran said “baseless” cases were taking a personal toll on him, and that he now films all of his recording sessions to disprove potential claims of infringement.
“It’s really damaging to the songwriting industry,” Sheeran said at the time. “There’s only so many notes and very few chords used in pop music. Coincidence is bound to happen if 60,000 songs are being released every day on Spotify.”