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LONDON — Russia’s invasion of Ukraine in February 2022 led to a rapid exodus of global music companies from Russia. All three major labels say they ceased operations there. So did touring giant Live Nation and streaming platforms Spotify, TikTok, Deezer and Amazon Music. Paris-headquartered Believe, however, publicly pursued a different path, and a year later is still operating in Russia — releasing, distributing and promoting new music by local artists and labels on Russian streaming platforms Yandex. Plus, VK Music and Zvuk.
Executives at rival music companies have privately expressed outrage, accusing Believe of exploiting the sudden breakup of Russia’s music market — the 13th largest in 2021, generating $328 million in revenue that year, according to IFPI — to gain market share in the absence of Western competitors.
Denis Ladegaillerie, Believe’s founder and CEO, denies that charge and says the major labels and platforms are being hypocritical for criticizing how the French company is operating in Russia. Believe’s ongoing presence in the country “is really not an economic decision,” he tells Billboard in a rare interview addressing the issue. “We are not looking at building or growing or extracting value [in Russia].”
Following the start of hostilities, Universal Music Group, Sony Music Entertainment and Warner Music Group said they stopped distributing and promoting new releases in Russia. If new titles are being made available on local streaming services, the majors say, it’s through piracy.
The Believe CEO is skeptical about those assertions and defends his company’s continued presence in the isolated nation. “What I see is that all global artists are still available on all local platforms [in Russia],” Ladegaillerie says, noting that YouTube and Apple Music are also still active in the market, albeit in a reduced capacity. “So, my question is: ‘You’ve pulled out of Russia? Really?’”
After Billboard discovered in December that Russian streaming service VK was allowing users to upload albums from major label artists like Taylor Swift (UMG’s Republic Records) and Red Hot Chili Peppers (Warner Music), all three major labels declined to comment; labels body IFPI did not condemn the apparent copyright violations, nor confirm if they or its label members had issued takedown orders to VK.
Ladegaillerie says Believe, for its part, has “very strictly” abided by all international sanctions placed against Russia since the start of the war — “both in law and spirit” — and has halted all new investments in the now-isolated country. “Our No. 1 priority, both in Russia and Ukraine, has been to protect our teams locally and support our artists,” he says.
Despite those claims, Believe’s revenue from Russia, where it retains just over 40 employees, has been growing. Combined revenue from Russia and Ukraine rose 9.9% to 57 million euros ($62.5 million) in 2022, according to the company’s year-end financial figures. (That was 7.5% of Believe’s overall revenue.)
While the economic sanctions against Russia were meant to starve the country of funds and further isolate it from the world financial system, they have been limited in scope and hundreds of Western companies continue to operate in the country. Global music companies have not completely extracted themselves from the country, either. Universal Music and Warner Music — which had the largest presence in Russia among the majors, with almost 100 employees — continue to pay their staff and maintain offices there, although they say those offices have been effectively closed since the war started.
In September, Sony Music announced it had decided “to exit the Russian marketplace completely” and was transferring its Sony Music entity there to a fully independent local company that would only represent locally signed artists. “As the war continues to have a devastating humanitarian impact in Ukraine, and sanctions on Russia continue to increase, we can no longer maintain a presence in Russia, effective immediately,” Sony Music said in a statement at the time.
YouTube continues to operate in Russia in compliance with U.S. sanctions but has suspended ads and monetization features (Russian creators can still make money from ads and other monetization products shown to users outside of the country). The Russian subsidiary of YouTube parent company Google filed for bankruptcy last year after authorities seized its bank account, making it impossible to pay employees, suppliers and vendors, a YouTube spokesperson tells Billboard.
Apple Music is still available in Russia, although there are fewer subscription payment options, as MasterCard and Visa cards issued by Russian banks can no longer be used to pay for subscriptions. Music from the major labels that left Russia is not available. (An Apple Music spokesperson did not reply to a request for comment.)
The French government of President Emmanuel Macron, for its part, has supported Believe’s decision to “maintain links” with Russia, Ladegaillerie says. That rings true for other French companies, which established deep ties with Russia in the wake of the Cold War. In March, French retailer Auchan said it planned to open a new store in Russia, doubling down on its brick-and-mortar presence in the market. And auto maker Renault, which is 15%-owned by the French state, has been scrambling to restart its assembly lines in Russia, where it owns the country’s biggest car maker, The Wall Street Journal reported.
In fact, French companies are among Russia’s biggest foreign employers, providing more than 150,000 jobs across a range of sectors that include energy, food products and wholesaling, according to figures from the French Economy Ministry.
The situation “is not black and white, it’s grey,” Ladegaillerie says. He identifies Believe’s humanitarian support for Ukraine — which includes donations and regularly publishing a playlist of Ukrainian artists — as part of the “difficult” balance his company is trying to maintain in Eastern Europe. “We realized that different countries have different perspectives on the situation but that’s really the line that we are trying to navigate.”
Additional Reporting By Vladimir Kozlov
The MTV EMAs will be held in Paris for the first time since 1995. The show will be broadcast live on MTV globally on Sunday, Nov. 5.
The last time the show was held in France, French President Emmanuel Macron was just 17. That 1995 show took place at the Le Zénith in Paris and was hosted by fashion designer Jean-Paul Gaultier.
“The MTV EMAs is one of the biggest nights in music globally, and this year we’ll continue its legacy of delivering iconic performances and recognizing music’s brightest stars,” Bruce Gillmer, president of music, music talent, programming & events, Paramount, and chief content officer, music, Paramount+, said in a statement. “Paris is a culture-rich city celebrated across the world for its incredible music, art and fashion, and at this year’s show we’ll unite massive talent from a local and global level reaching fans everywhere for a supercharged, music experience that only MTV can provide.”
Gillmer and Richard Godfrey are executive producers for the 2023 MTV EMAs. Debbie Phillips is producer.
Last year’s show was held at the PSD Bank Dome in Düsseldorf, Germany. Rita Ora and Oscar-winning filmmaker Taika Waititi served as co-hosts. Nicki Minaj’s “Super Freaky Girl” won best song. Taylor Swift’s “All Too Well: The Short Film” took best video.
The show has moved among 23 European cities since its inaugural broadcast in 1994. London is the only city to have hosted the show three times. Paris joins Berlin, Rotterdam, Milan and Frankfurt as cities that have hosted the show twice.
Host, venue and program details for this year’s show will be shared at a later date.
LIVERPOOL, U.K. — The Eurovision Song Contest 2023 kicked off Tuesday with a jubilant party of elaborate PVC costumes, soaring rock ballads and cheesy Euro pop, as contestants competed in the first of two semi-finals to determine which 20 acts would move on to Saturday’s Grand Final.
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The semi-final at the 11,000-capacity M&S Bank Arena, standing on Liverpool’s waterfront next to the River Mersey, marked the official start of the annual competition. The 10 acts moving on were Croatia, Moldova, Switzerland, Finland, Czechia, Israel, Portugal, Sweden, Serbia and Norway. That means the Netherlands, Malta, Latvia, Ireland and Azerbaijan were eliminated.
The United Kingdom is hosting this year’s Eurovision Song Contest – famous for introducing ABBA to the world – on behalf of war-torn Ukraine, which won last year’s competition with “Stefania” by Ukrainian rap-folk band Kalush Orchestra (the U.K. finished second through Sam Ryder’s “Space Man”).
It is the first time that the U.K. has held the contest in 25 years with Liverpool – whose illustrious music history includes The Beatles and Echo & the Bunnymen — fully embracing its role as host city.
Memorable highlights (although not always for the right reasons) included Croatia’s Let 3, who stripped down to their underwear as they wielded giant missile props for their song “Mama ŠČ!”, and Israel’s Noa Kirel with her marauding dance pop track “Unicorn.”
Some of the night’s biggest cheers went to two of this year’s favorites to take home the main prize: Sweden’s Loreen, who won the competition in 2012 and performed “Tattoo” on Tuesday; and Finnish rapper Käärijä, who sung his catchy song “Cha Cha Cha,” semi-topless, wearing only black spiky trousers and bright green Incredible Hulk-style sleeves.
In a mid-show interval of the two-and-a-half-hour show Rita Ora also performed a medley of her biggest hits, including singles “Anywhere,” “I Will Never Let You Down” and Praising You.”
Other non-competition performers included Liverpool singer Rebecca Ferguson and Ukraine’s Alyosha in a duet of Duran Duran’s “Ordinary World,” which they dedicated to refugees who had been forced to leave their country.
The semi-final was hosted by British TV personality and singer Alesha Dixon, “Ted Lasso” star Hannah Waddingham and Ukrainian singer Julia Sanina — who opened the show with her band The Hardkiss. It was broadcast live on television in the U.K. and throughout Europe.
In total, 37 countries are taking part in this year’s contest. Ukraine automatically qualifies for the final as 2022 winners, as do the so-called ‘big five’: the U.K., France, Germany, Italy and Spain, who all get a free pass to the main show because of their financial contributions to the event.
Viewers in participating countries vote to decide the winner, although people can’t vote for an act from their own country. The second semi-final takes place on Thursday when another 16 acts will perform.
In the runup to the competition, Liverpool has been transformed into a vibrant display of Eurovision banners and Ukrainian flags.
Ahead of Thursday’s semi-final, the English National Opera put on a free show at the purpose-built fan village on Liverpool’s Pier Head, where they were joined by a series of former Eurovision contestants, including singer Ruslana, who won for Ukraine in 2004, and international opera stars who performed classical arrangements of some of the contest’s past hits.
“I bring one message: Listen my sisters and brothers, we need to stop this bloody terrible war as soon as possible,” Ruslana said. “And I ask you, just help Ukraine to win. Because we are fighting for freedom. We are fighting for light. The light of human heart.”
LONDON — Mariah Carey, Lewis Capaldi and Sam Smith are among the recipients of the new BRIT Billion award, which recognizes artists who have surpassed one billion career streams in the United Kingdom.
U.K. labels trade body BPI, which also runs the Brit Awards, is naming the honorees, using the Official Charts Company to verify the data. Certification is based on tracks being streamed on music services like Spotify and video platforms such as YouTube where an artist has appeared either as the main performer or as a featured artist.
Around 140 acts have passed the one billion U.K. streams milestone to date, but BPI has only named 13 recipients of the award initially, a spokesperson tells Billboard. The other artists are ABBA, Coldplay, Whitney Houston, AJ Tracey, Headie One, Anne-Marie, Ellie Goulding, George Ezra, RAYE and Rita Ora.
BPI says the United Kingdom is the first country in the world in the streaming era to run a certifications scheme that recognizes an artist’s success across their entire career and multiple projects, as opposed to individual recordings.
Carey said in a statement that she was honored to be one of the first recipients of the BRIT Billion award and thanked her U.K. fans “for their endless and enduring support.”
Capaldi said in a statement that he was “buzzing,” adding that “never in a million years did I think any of this stuff would happen, but now [that] it is I will gladly accept each and every award.”
The new sales certification category recognizing one billion career plays reflects how streaming has completely upended the recorded music industry over the past decade.
Previously, the biggest sales awards issued in the U.K. were platinum, granted to albums that sell 300,000 chart equivalent units, and multi-platinum (multiples of 300,000 sales). Below that is gold (100,000 sales) and silver (60,000 sales). For singles, platinum recognizes 600,000 chart equivalent sales. Gold is 400,000 and silver is 200,000.
Those totals are, however, dwarfed by the huge number of streams that the world’s biggest artists increasingly generate with many acts racking up millions and, in some cases, hundreds of millions of streams every year. But artists must generate several multiples of more streams to make the same money they made per unit in the physical era.
In November, Capaldi’s “Someone You Loved” overtook Ed Sheeran‘s “Shape Of You” to become the most-streamed song of all time in the U.K. with over 600 million audio and video streams, according to the Official Charts Company. George Ezra’s “Shotgun” has been streamed just under 500 million times since its release in 2018, reports BPI, which first began certifying silver, gold and platinum-selling records in 1973.
The labels trade body says the number of audio music streams in the U.K. crossed 160 billion last year with streaming now accounting for more than 85% of all U.K. music consumption.
“For a recording artist, there can be few greater sources of pride than having a platinum or gold disc on their wall,” Sophie Jones, BPI chief strategy officer/interim chief executive, said in a statement. “But in an era when success in measured in the hundreds of millions and indeed billions of streams, it was clear that we needed a new and additional way to recognize and celebrate outstanding achievement in recorded music.”
Britain’s competition watchdog said Thursday that it’s opening a review of the artificial intelligence market, focusing on the technology underpinning chatbots like ChatGPT.
The Competition Markets Authority said it will look into the opportunities and risks of AI as well as the competition rules and consumer protections that may be needed.
AI’s ability to mimic human behavior has dazzled users but also drawn attention from regulators and experts around the world concerned about its dangers as its use mushrooms — affecting jobs, copyright, education, privacy and many other parts of life.
The CEOs of Google, Microsoft and ChatGPT-maker OpenAI will meet Thursday with U.S. Vice President Kamala Harris for talks on how to ease the risks of their technology. And European Union negotiators are putting the finishing touches on sweeping new AI rules.
The U.K. watchdog said the goal of the review is to help guide the development of AI to ensure open and competitive markets that don’t end up being unfairly dominated by a few big players.
Artificial intelligence “has the potential to transform the way businesses compete as well as drive substantial economic growth,” CMA Chief Executive Sarah Cardell said. “It’s crucial that the potential benefits of this transformative technology are readily accessible to U.K. businesses and consumers while people remain protected from issues like false or misleading information.”
The authority will examine competition and barriers to entry in the development of foundation models. Also known as large language models, they’re a sub-category of general purpose AI that includes systems like ChatGPT.
The algorithms these models use are trained on vast pools of online information like blog posts and digital books to generate text and images that resemble human work, but they still face limitations including a tendency to fabricate information.
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.
The annual IMS Ibiza dance music industry conference launches today (April 26), marking the opening weekend on the famed Spanish clubbing mecca.
IMS Ibiza 2023, the dance second largest conference after Amsterdam’s ADE, is expecting roughly 1,300 delegates from around the world at the luxe Destino Pacha Ibiza resort, which IMS is once again taking over for the three-day event. Co-hosted by dance world legend Pete Tong and BBC Radio 1 DJ and dance producer Jaguar, IMS 2023 is happening April 26-28 with a cavalcade of artists, agents, managers, journalists, managers, label owners and more, altogether representing a flurry of companies including YouTube, Tunecore, Deezer, BBC Radio 1, WME, Wasserman, Beatport, Ultra Music Publishing, the Association For Electronic Music and more.
The intensely robust IMS 2023 schedule — “An absolute monster in terms of curation and the level of speakers coming,” says IMS co-founder Ben Turner — features more than 130 keynotes, discussions, parties, workshops and networking events happening at Destino and satellite locations. Naturally, these include the island’s prestige clubs including Amnesia and Hï, along with the historic Dalt Villa, a UNESCO world heritage site that will once again become a rave during the IMS closing party.
But while the conference will span many topics, Turner anticipates the practicalities and legalities of artificial intelligence to be a major topic of conversation as the music industry at large grapples with how to not just profit from AI, but to understand its potential and sustainably contain its capabilities.
“Electronic music culture has been driven by independence from its roots,” Turner says, “and I think that’s still is a core component of why we’re different… I think our industry is in the best position to embrace AI, because of that independent spirit and that understanding of ownership of IP, and how ownership of masters and publishing gives you more freedom to experiment with this stuff — whereas the majors are just going to do what they always do, which is freak out and shut all the doors.”
IMS will also once again feature the presentation of its annual business report, which surveys the health of the dance music industry across sectors including streaming and live events, and which serves as an industry tool to determine growth sectors. For the first time this year, the report has been prepared by MIDiA Research, and will find new focuses in music publishing and the creator economy, “which around electronic music is obviously huge,” says Turner. This year’s report also reflects “a huge bounce back” of the industry following the pandemic, with this year’s report reflecting 2022 metrics.
IMS Ibiza 2022
Courtesy of IMS Ibiza
Also new this year is IMS’ partnership with Beatport, the digital download platform that acquired a 51% majority stake in IMS this past January. With conferences typically presenting slim margins and IMS’ 2022 partnership with Pollen falling through in the wake of that company’s collapse, the Beatport sale has allowed IMS to create a new level of financial solvency.
“Being really honest about it,” says Turner, “we nearly didn’t survive the pandemic. We had to do refunds, we didn’t have a show for three years, we had zero income coming in, we had to cut overhead, we had to cut our small but core team. There was a big question of, ‘Can we still do this? Can we afford to still do this? And can we afford to risk doing this?’”
Turner emphasizes that he and the other IMS founders are maintaining organizational and curatorial control the conference, that Beatport can help IMS grow and that the IMS team has “been really encouraged and feel extremely supported by them.”
But while the Beatport acquisition is presenting new opportunities, it also came with baggage due to a 2022 VICE article alleging sexism, racism and a toxic work culture within Beatport. Following Beatport’s acquisition of IMS, longstanding music industry diversity and inclusion advocacy group shesaid.so announced — after a seven year partnership with IMS — that it would be putting a “temporary pause” on its participation in IMS this year. (Read shesaid.so’s complete statement on the topic.)
So too did U.K. advocacy group Black Artist Database, which suspended its partnership with Beatport last August. The organization also recently released a statement that it would not be sending any members to IMS 2023. In an April 13 statement, IMS noted that the conference “understands and respects the need to make such decisions and will continue to remain strong supporters of both organizations and the values that they stand for. Our continued, long-term, widely-acknowledged commitment to diversity, inclusion and equality in all its intersections is demonstrated in our 2023 programming and it remains a core tenet of our ethos.”
“We understand why they needed to make their statements, Turner says. “Our door is always open, and we hope that we can work with both organizations in the future. I don’t see why that can’t happen. I think there needs to be dialogue between all of the parties, I don’t think this gets resolved any other way than people communicating and trying to understand each others perspective.”
“I’m on a mission is to help make dance music a more equal place that is representative of minorities, while supporting emerging artists,” IMS co-host Jaguar adds. “I’m really proud of the work we are doing alongside Ben and the IMS team to achieve this at the summit.” She adds that “It wouldn’t feel right to go into this week without extending my love, support and solidarity to Black Artist Database and shesaid.so, who will sadly not be present at IMS this year. What [they] both stand for is incredibly close to my heart and so important.”
While IMS delegates largely arrive from throughout Europe, Turner reports “a growing number of hardcore American attendees,” a demographic he attributes to the fact that “there isn’t a conference with a narrative left around the business of electronic music in America.” (IMS did host a one-day event in Los Angeles for five years, during the apex of the EDM boom.) He says if IMS is to add another event to its schedule, it will be in the U.S.
“I think we’re globally-minded in our output, but I do think America has its own set of issues, its own dialogue, its own need for its own Summit, no question. Because America is so big, and there’s an inward looking industry, quite a lot of people don’t think much beyond America in terms of their travel or their even in some cases, their ambitions. There’s a very strong home grown scene that deserves to have its own moment.”
For this week, though, the moment will once again be in Ibiza. Billboard will be reporting from the conference this week.
On April 3, Billboard broke the news that Jimin’s track “Like Crazy” reached No. 1 on the Billboard Hot 100 — a first for a solo Korean artist — while his album, FACE, debuted at No. 2 on the Billboard 200. Released by Big Hit Music, one of the labels under Korean entertainment company HYBE, “Like Crazy” currently marks the best performance by a member of K-pop supergroup BTS, whose hiatus announcement last year presented a significant challenge to HYBE’s ability to forge another chart success in the United States. “Like Crazy” reached only No. 11 in South Korea, although FACE topped album charts in South Korea and Japan.
Investors took note of Jimin’s U.S. accomplishments. The following day, HYBE’s share price on Korea Exchange rose as much as 11.4% to 212,500 won ($161) before ending the day at 205,000 won ($155), up 7.5% from the previous day (as of April 17, it had risen 40%). That was the highest closing price since June 10 of last year — three trading days before BTS confirmed it would take a hiatus, worrying investors and sending HYBE’s share price down 28% in a single day. For a company with grand ambitions to build off of the success of BTS, “Like Crazy” was an important validation.
The music industry should take note, too. HYBE did with Jimin what all South Korean music companies are attempting with increasing urgency: ride the wave of K-pop’s global success by expanding outside of Korea and build up operations in the United States, the world’s largest music market. “All the shareholders want to see the ability for them to diversify [their] portfolios,” says Sung Cho, CEO of Chartmetric and newly appointed board member of the pioneering K-pop agency SM Entertainment.
Exporting is what South Korea does best. “After the Korean War, the only way to survive was to export things,” says Cho. Over the last three decades, the success of companies such as Samsung, LG and Hyundai has turned the country of 52 million into a top 10 exporter, according to the World Bank. But in recent years, South Korea has become known not just for its exports of high-tech products and manufactured goods, but as a global entertainment dynamo as well. South Korea’s music business built its economic success into a trade surplus of about $3.1 billion for intellectual property of music and images in 2021, up from $800 million in 2020, according to the country’s Ministry of Culture, Sports and Tourism. The South Korean film Parasite won a 2020 Academy Award for best picture. A year later, Squid Game became the most watched series in Netflix history, a worldwide phenomenon that racked up 1.7 billion viewing hours in its first month.
South Korean music companies have become international powerhouses by drawing on hip-hop, R&B and pop music and selling the K-pop blend of these genres back to fervent fans in the United States, Japan and Europe. But to compete globally with larger companies, the South Korea approach to the music business, and not necessarily the music itself, could be the deciding factor. “We’re seeing not only the export of K-pop bands — the boy bands, the girl bands — we’re starting to see the export of the K-pop business model,” says Bernie Cho, president of DFSB Kollective, a Seoul-based artist and label services agency. SM Entertainment founder Lee Soo-man coined the term “cultural technology” in the ’90s for his system of producing K-pop and promoting it worldwide. Other K-pop companies have adopted a similarly disciplined, systematic approach to finding, developing and promoting musicians.
The widespread music-business anxiety about the death of artist development doesn’t apply to South Korea. Western labels fight bidding wars over viral artists with instantaneous popularity or favor proven artists and catalogs, leaving the task of building an audience to artists themselves or independent labels. In contrast, K-pop companies spend years recruiting and rehearsing talent, as well as giving artists instruction in a specific approach to the music business. “Combing through social media platforms like TikTok may give us a chance to sign artists who are technically proficient as music producers or performers, but we demand more from our artists,” says HYBE CEO Jiwon Park in an email to Billboard. That means trainees work with HYBE’s training and development department to “internalize the values of autonomy and responsibility” so they can navigate the expectations put on them.
To learn the U.S. market, South Korean companies have partnered with U.S. labels to distribute, market and promote their music. HYBE has a joint venture with Universal Music Group’s Geffen Records to create a U.S.-based girl pop group. JYP Entertainment has teamed with UMG’s Republic Records to form the global girl group America2Korea, or A2K. Additionally, Kakao Entertainment’s Starship Entertainment subsidiary has partnered with Sony Music Group’s Columbia Records to co-manage marketing and promotion of the six-member female group IVE in North America.
These U.S.-Korean partnerships have also given domestic labels a chance to learn the K-pop method of A&R. To Glenn Mendlinger, president of Imperial Music, a new division of Republic Records, the JYP partnership has provided insight into “what it is to build a fandom and foster it through immersive packaging and increasing the collectability of the products.” Mendlinger is impressed with JYP’s attention to detail and ability to build storylines for their artists. “That’s why they’re so successful,” he says in an email to Billboard. “The level of care is unparalleled and unrivaled in terms of its intimacy and diligence.”
But more and more, South Korean companies have boots on the ground and control of their destinies in the United States. HYBE is the furthest along in building out its stateside operations. In 2021, it acquired Scooter Braun’s Ithaca Holdings for $1.05 billion and named Braun the CEO of HYBE America, a genre-spanning collection of artist management and record labels that includes SB Projects, Nashville-based Big Machine Label Group and Atlanta hip-hop company Quality Control, which was acquired in February for $300 million. Those deals are “just the beginning,” HYBE chairman Bang Si-hyuk said in a speech in March. He believes building in the United States will give HYBE the “strong network and infrastructure” it needs to “minimize the cost of trial and error” and attain stronger bargaining power and distribution rates relative to local companies.
SM Entertainment, the company behind such groups as NCT 127 and aespa, and Kakao Entertainment have created a U.S. joint venture and plan to acquire a U.S.-based company to expand into hip-hop or R&B, according to SM’s road map made available to investors. Kakao now owns a 40% stake in SM Entertainment, having quelled HYBE’s attempt to buy a commanding stake and control its board of directors following a break with SM founder Lee.
South Korean music companies’ do-it-yourself nature extends to tech platforms, too. While most labels depend on the likes of Meta, Twitter and Fortnite to reach fans, HYBE owns its own social network, Weverse, and JYP and SM have a joint venture with tech company Naver called Beyond LIVE that streams live online concerts. SM also owns a social networking app, Bubble, and its artists will begin building fan communities at HYBE’s Weverse in September. It makes sense in one of the world’s most wired and wireless countries, says Cho of DFSB Kollective. In Korea, “youth culture, pop culture and digital culture are one and the same in many ways.”
For HYBE, Weverse not only diversifies its business but allows it to control how its artists communicate with their fans. With the addition of artists from North America and Japan, Weverse “will serve as a gateway to the fandom market in Asia, North America and the world,” says Park. With enhancements and new services, “Weverse will seek boundless expansion beyond K-pop.”
This story originally appeared in the April 22, 2023, issue of Billboard.
For Rimas Entertainment CEO Noah Assad, it was a night to celebrate. On Feb. 1, seven years after signing Bad Bunny, Assad, 32, took the stage to accept the Executive of the Year award at the annual Grammy-week Billboard Power 100 event to honor the most important executives in the business. In front of an audience that included Universal Music Group CEO Lucian Grainge, HYBE Chairman Bang Si-hyuk and music mogul Clive Davis, Assad, sporting white sneakers and a ponytail, accepted the award from fellow Puerto Rican Bad Bunny. Minutes later, manager and executive Scooter Braun told Assad from the stage: “You’re the best of us now.”
Bad Bunny’s fifth studio album, Un Verano Sin Ti, ended the year at No. 1 on the Billboard 200 — the first non-English album to do so — and his 81 concerts in 2022 grossed a record $434.9 million. Assad was the force behind a lot of this success, as the artist himself noted onstage. “There is no Bad Bunny superstar without Noah,” he said in halting English, then handed Assad the obelisk-shaped plaque. “Without [Bad Bunny],” Assad said as he accepted the award, “a lot of my dreams would have never become true.”
The same could be said of another figure, Rafael Ricardo Jiménez Dan, who founded Rimas nine years ago but has had no interaction with Bad Bunny or the company’s other stars. He went unmentioned in Assad’s acceptance speech, andfew of the executives in that room even knew that he existed. Jiménez says he was the sole owner of Rimas — which manages, records and publishes Bad Bunny — until 2018, when he says he made Assad a 40% owner, though a source close to Assad disputes that description of their initial deal. Before that, Jiménez had been a vice minister in authoritarian leader Hugo Chávez’s Venezuelan government; while in the regime he worked to modernize the country’s information systems and was charged with helping oversee the development of a national ID that Chávez wanted to deepen his control over the populace.
Also unknown to most of the Power 100 attendees, Assad had spent the last few months embroiled in negotiations, which were so intense they continued through the year-end holidays, that would buy Jiménez out of Rimas. After working to build Rimas together for nearly a decade, the relationship between the two men broke down, and for the past five years, multiple sources say, Assad has been pushing to get him out, for “business reasons,” says the source close to him. When Rimas was initially formed in March 2014, Assad believed Jiménez was simply an investor who owned restaurants and packaging companies.
After they started working together, Assad began to hear talk about Jiménez’s connections to the Chávez regime, but when Assad inquired on one occasion, Jiménez told him he had “nothing to hide,” according to the source close to Assad. Now, though, Jimenez may finally be on his way out.
Under the terms of Sony Music Group’s potential deal with Rimas, which is still under discussion, Sony would put up capital toward buying out the 60% stake owned by Jiménez and, through an ownership restructuring, assign a significant minority stake to its independent distribution subsidiary, The Orchard. Bad Bunny, who does not currently have a stake in Rimas, could get some equity and Assad could get a bigger stake in the company, which Billboard estimates could be valued at more than $300 million overall, not including publishing. Together, sources say, Assad and Bad Bunny would likely emerge from the deal controlling Rimas, although the agreement is still being discussed. A separate Rimas publishing arm, also believed to be 60% owned by Jiménez and 40% by Assad, which Billboard estimates is worth about $70 million, will likely be sold in a separate deal, sources say.
Jiménez, Assad and a spokesperson for Sony Music Entertainment declined to comment about any deal in the works.
The size of the potential deal speaks to the growing sway of Latin music and especially of Bad Bunny, who has helped grow the San Juan-based Rimas into a 100-person company that essentially functions as a label, publisher, manager and booking agency and also works with other Latin artists like Arcángel and Karol G.
In a series of email exchanges through his lawyer, Jiménez gave Billboard an unprecedented look at his unlikely journey from an army captain raised in Portuguesa, a rural part of Venezuela, to one of music’s most successful behind-the-scenes investors. The image that emerges is that of a savvy operator who positioned his business enterprises in ways that benefitted from his government connections in Venezuela — and who in both his five-year government career and his second life in the U.S. music business has remained out of public view while playing a role in the lives of prominent people, like an unseen gravitational force.
Jiménez, 56, who played violin in Venezuela’s youth orchestra system and got his first taste in the music industry managing a Venezuelan urban duo, formed at least a dozen companies from 2005 to 2013, in Venezuela and the Caribbean, and he also served as CEO of a cardboard and paper packaging firm that Chávez nationalized. He tells Billboard that the funding to start Rimas and his life in the United States came from a Miami restaurant and from a company that imported food products from Brazil and other countries.
Assad was always thought to be the co-founder of Rimas. Although he privately acknowledged the company had a silent partner, he previously told Billboard on the record that he co-founded the company with José “Junior” Carabaño, a 20-year-old Venezuelan graffiti artist. But Jiménez tells Billboard that after meeting a 22-year-old Assad in 2012, he formed Rimas in Puerto Rico in March 2014 and hired Assad as an employee — an arrangement that continued until 2018, when Assad became part-owner after he “agreed to assume more responsibilities.” A source close to Assad disputes that claim but wouldn’t provide more detail. Billboard was unable to obtain documentation of the initial deal terms.
Assad “demonstrated a great talent in the artist development side of the business and worked hard to scale up the growth of the company,” Jiménez says, adding that he brought Assad aboard as part of “a strong team of talented people were brought aboard to take over the day-to-day operations.”
Jiménez would not tell Billboard how much he initially invested in Rimas. A 2017 corporate filing for Risamar Business Group, the entity Jiménez used to hold his share of Rimas, shows $1.34 million in assets and $648,098 in liabilities. Property records show that, in 2014, while still living in Caracas, Venezuela, Jiménez also purchased a foreclosed property in an exclusive beachfront neighborhood in San Juan for $390,000 in cash to turn into Rimas’ first offices and recording studios.
Rimas Entertainment’s first office in San Juan, Puerto Rico.
Juan R. Costa
Assad served as the face of Rimas in the music business, but Jiménez says he led the company for four years before effectively handing the reins to Assad. Until then, Jiménez had to approve — and often vetoed — artist signings that would exceed the company’s budget, and he was also kept apprised of the label’s other big decisions, including the very important one to sign Bad Bunny. Jiménez was copied on the April 11, 2016, email from Rimas attorney Jessie Abad to Assad about the “360 deal and songwriter agreement” for Benito Martínez Ocasio (Bad Bunny), according to a copy of a partially redacted email in a civil case in San Juan and one person familiar with the matter.
From Army Captain to Vice Minister
Like many leaders in Venezuela, Jiménez’s career started at a military academy. He graduated in 1987, No. 3 in his class. He finished the same year as Diosdado Cabello and Jesse Chacón, he noted, both of whom participated in Chávez-directed coup attempts in 1992; Rodolfo Marco Torres was a class below them. All three went on to become high-level officials in the Chávez regime.
Venezuela’s legacy as one of the wealthiest and most-stable democracies in the region began to change on Feb. 4, 1992, when Chávez, then a disaffected army officer, led a failed coup attempt. Once out of prison, he rose to fame and was elected president in 1998 on an anti-establishment platform. A disciple of Cuban leader Fidel Castro, he later veered toward autocratic socialism by silencing opposition parties, packing the courts, harassing the media and nationalizing more than 1,000 businesses.
While Chávez’s “missions to save the people” initially helped stem poverty, his policies laid the foundation for the oil-rich country’s descent into full-blown dictatorship after his death in 2013. His legacy also included “an institutionalized kleptocracy the likes of which the world has never seen before,” Marshall Billingslea, former assistant secretary for the Office of Terrorist Financing and Financial Crimes in the U.S. Treasury Department, wrote in 2021. Over the past two decades, Chávez and Maduro, his successor, “and their cronies,” Billingslea wrote, “plundered at least $300 billion from state assets.”
President of Venezuela Hugo Chavez gives a speech during the closing session of the 4th PetroCaribe Summit in the Camilo Cienfuegos refinery Dec. 21, 2007 in Cienfuegos, Cuba.
Sven Creutzmann/Mambo photo/GI
Jiménez, who was commissioned as an army captain, retired from the military in 1999, by which time he had earned degrees in both law and systems engineering. Once Chávez took power in 1999, the new president initiated a sweeping modernization program, and Jiménez’s knowledge of telematics, which involves the long-distance transmission of computerized information, proved valuable. He joined the government in late 2002, serving initially in a management and technical unit that oversaw the operational side of the Judiciary, helping to digitize the country’s law enforcement and criminal and civil administration.
After he was briefly ousted from office in 2002, Chávez launched Misión Identidad (Mission Identity), a program that became a cornerstone of his “Bolivarian Missions,” or social programs, and a way for him to tighten his hold on power after the failed coup —at the expense of civil liberties. Its focus became developing a national ID card with biometric data embedded in a chip that would be modeled after China’s smart card, which Beijing uses to track social, economic and political behavior. Chávez launched his ID program in 2003, employing a Cuban company to help implement it, according to the Center for a Secure Free Society (SFS), a conservative national security think tank in Washington, D.C., that has testified in Congress about the dangers of the Venezuelan regime.
Mission Identity involved transitioning Venezuela’s passport and naturalization system from what was called ONIDEX to the higher capacity SAIME system. Beginning around 2003, Jiménez worked with a hand-picked team on the automation of the project, according to two people familiar with the matter. SAIME went online in 2009. President Nicolás Maduro, Chávez’s successor, finally rolled out the national ID, later called the carnet de la patria, or “fatherland ID,” in 2018. (Jiménez would not comment on whether he worked on the transition to SAIME.)
Jiménez’s government career peaked in March 2006 when Chacón appointed him vice minister of legal security in the Interior Ministry. That led to a seemingly plum assignment the following January when he became one of five directors of Mission Identity, according to a government document.
Chávez officials in 2007 allegedly used Mission Identity to provide false identities to Cuban agents to enter Venezuela, and to facilitate the travel of suspected Islamist terrorists, Colombian guerillas and drug traffickers, says the SFS.
Despite his official designation as a director, Jiménez says he “personally never worked with Mission Identity” and that the directorate had “no decision-making authority.” He resigned from the Interior Ministry after about a year and a half, “due to frustration with the government’s unwillingness to fairly and justly apply the rule of law.” (Jiménez provided a copy of his resignation letter signed on Oct. 11, 2007, by Pedro Carreño, the Interior Minister at the time.) He adds that he “sought to implement several projects aimed [at] improving legal certainty, to guarantee a better participation of the civil society and to increase the standards of transparency but these were obstructed and stopped by the minister (Carreño) above him.”
Jiménez overlapped in the Interior Ministry by about five months with Tareck El Aissami, a powerful member of the regime who served as a vice minister through September 2008, and then as Interior Minister from 2008 to 2012. The Trump administration sanctioned El Aissami in 2017 and the Justice Department indicted him in 2019 for alleged international narcotics trafficking and money laundering; U.S. Treasury officials have also been investigating his ties to the terrorist group Hezbollah. (El Aissami responded to the accusations in 2017 on Twitter, calling them “infamy and aggression; Maduro said he had “delivered the strongest blows against the heads of drug trafficking” in Venezuela.)
Venezuela’s Vice President Tareck El Aissami delivers a speech during a rally against the secretary general of the Organization of American States (OAS), Luis Almagro, in Caracas on March 28, 2017.
FEDERICO PARRA/AFP via GI
El Aissami was the chief architect of the national ID program, according to Joseph Humire, who heads the SFS, and who testified to Congress about the program in 2015. El Aissami also allegedly oversaw a multiyear program to sell hundreds, if not thousands, of legitimate Venezuelan passports for as much as $50,000 apiece to people from Middle Eastern countries, says Mauricio Claver-Carone, former senior director for Western Hemisphere Affairs at the National Security Council. (Delcy Rodríguez, then Venezuela’s foreign minister, told CNN in 2017 that allegations of selling passports and visas were “totally” false.)
Through his lawyer, Jiménez says he has “no knowledge” of the passport-selling program and “has never had any personal, business or political relationship with Mr. El Aissami.” Jiménez’ lawyer adds that “the presence of individuals like Mr. El Aissami was one of the factors that led Mr. Jiménez to resign.”
On the Money
Jiménez was initially reluctant to discuss his investment in Rimas, which he first told Billboard derived from “private business activity,” without offering more details. He later clarified that the funding came from a food import company and a restaurant in Miami, as well as a line of credit he said was from a bank in Florida, “which was secured by his assets in Florida.”
Risamar Business Group also controls a Florida-based food company of the same name. The company’s website says it specializes in “high-quality, ethically produced snack foods, canned fruits and vegetables, cleaning supplies and animal care products.”
In October 2006, at the peak of his career in the Chávez regime, Jiménez also started an import-export food company in Venezuela, Agropecuario Ravigg C.A. It imported food to Venezuela from Brazil, Argentina and other countries, generating a net profit of 8,897,246 bolívares ($1.4 million) in 2013, according to the Registry of National Contractors (RNC). Ravigg shipments from January to May of 2014 alone totaled $7.9 million in value, according to Venezuela’s National Center for Foreign Commerce (CENCOEX). The firm, which is 85% owned by Jiménez and still operates, did business as food shortages were beginning to mount in the country after the price of oil plummeted. Food imports became controversial in 2019 when the U.S. Treasury Department sanctioned a Colombian national and others for allegedly orchestrating a scheme that enabled Maduro and his regime to “significantly profit from food imports and distribution in Venezuela” as far back as 2016. (Ravigg was not named in the sanctions.)
When asked to clarify if Ravigg was the company he was talking about that helped him fund Rimas, Jiménez said it was not and that he had been referring to a third “international food-trading entity,” founded in 2008, which he declined to name.
Jiménez also handled a variety of Venezuelan government contracts through Rialfi Consulting C.A., a company he set up in August 2005, seven months before joining the Interior Ministry. By the following August, when he was a vice minister, Rialfi landed a contract with the Venezuelan Institute of Social Services (IVSS), which manages employee pension funds.
Between 2006 and 2018, Rialfi completed 17 contracts, 15 of which were with government-controlled companies or institutions, including the national oil company Petróleos de Venezuela, the Bank of the Treasury and Banco de Venezuela. (Jiménez was still listed as CEO in 2019; Rialfi is 100% owned by Consorcio Riso C.A., which Jiménez also controls.)
In an email, Jiménez says no funds from Rialfi were invested in Rimas and notes that with the “year-to-year devaluation of the bolívar, those proceeds would have had very little value if they were ever converted to dollars.” (A government document from 2019 shows Rialfi had total assets of 2.84 billion bolívares, worth $6,100 in December of that year, when the currency was cratering from hyperinflation of 9,586%.)
After Jiménez resigned from the Interior Ministry in October 2007, he didn’t stop doing business with the government. Since Jiménez left his post, Rialfi has executed at least 14 contracts with Chávez-controlled companies or institutions, according to the 2019 document. Jiménez says the contracts were granted “via a public bidding process.”
Jiménez, downplays his government service, describing himself as “an entrepreneur for over 20 years in different industries, including food and beverage, technology, packaging, hospitality and entertainment.” In April 2010, the board of Envases Internacionales S.A., a cardboard and paper packaging firm, named him CEO (and majority shareholder, he says); two months later, Chávez nationalized the company, in what became a common practice of appointing current or former military officers to lead companies the government had taken over.
Jiménez eventually controlled or ran at least 15 companies in Venezuela and Panama, and later in Barbados, Florida and Puerto Rico, according to corporate records.
He made his first foray into the music industry in Caracas in 2011, when he started managing and funding Kent & Tony, a newly formed urban act. The duo wanted to work with Puerto Rican producers Los de la Nazza, and in October 2012, Assad, their manager, flew with the producers to Caracas to work with the Venezuelans in the studio. Jiménez asked Assad to also manage Kent & Tony, and in January 2014, they signed a license agreement with Siente Music.
After that, Jiménez moved quickly, founding Rimas two months later in Puerto Rico, when he saw an opportunity “for a well-run full-service independent label focused on a genre that was growing exponentially.”
Helpful to the early interactions between Assad and Jiménez, say two people familiar with the matter, was Carabaño, the son of a Venezuelan folk singer from Barquisimeto popular with military veterans. Later, working with Assad at Rimas, Carabaño signed Venezuelan artists like rapper Big Soto. (Carabaño did not respond to requests for an interview.)
After Chávez died in 2013, Jiménez left Venezuela in November 2014, he says, and moved to the Miami area, where he had already bought a house in 2008 for $925,000 with his now wife Dayva Soto Vallenilla, a former Venezuelan judge, in Weston, a suburb known as Westonzuela for its popularity with Venezuelans. They purchased the home about six months after Jiménez left the Chávez government. They emigrated at a time when U.S. officials were allowing in few Venezuelans with high-level government backgrounds. Jiménez maintained his connection to his native country, traveling from Miami to Caracas 10 times between December 2014 and July 2018, according to Venezuelan passport records.
Rimas to Riches
“I’m from a place called Carolina, Puerto Rico,” Assad said to the audience of about 400 at the Billboard Power 100 event. Assad’s hometown, just outside of San Juan, is known as “Tierra de Gigantes” (Land of Giants), for 7-foot-11-inch resident Don Felipe Birriel González and for baseball star Roberto Clemente, the first Latin player named to the Hall of Fame.
By 2013, Assad was living in a small apartment in Carolina while organizing parties and booking performers in Colombia and other Latin American countries. By that time, he had already been managing future reggaetoón star Ozuna. Soon after, Assad created a YouTube business, striking the first direct partnership in Puerto Rico with the platform to more easily monetize content, says Mauricio Ojeda, YouTube’s manager of label partnerships, U.S. Latin. He says he first met Assad in San Juan in early 2014 — before Rimas existed — and decided to partner with him because of his connections to the underground Latin urban scene on the island. At the time, major labels and important markets like Mexico were not optimistic about the future of reggaetón and Latin trap music, and Ojeda says he was looking to recruit a partner in Puerto Rico, where the scene was heating up.
Jo-Ann Toro
“We spoke for hours, we hung out in Puerto Rico, he introduced me around,” says Ojeda, who says he also met Jiménez during that period. “[Assad] said he was going to come out with a ‘road map and a plan’ for becoming a YouTube partner,” says the YouTube executive.
YouTube signed a deal with Rimas in February 2015, Ojeda says, for a partnership that involved sharing revenue from video ads and other monetization features like channel memberships and merch sales. “This was providing the artists the opportunity to export their content and reach their audiences, during a time when nobody was really paying attention to them,” Ojeda says.
In 2016, with the YouTube partnership and Jiménez’s financing in place at Rimas, Puerto Rican rapper Eladio Carrión, an early Rimas signing, introduced Assad to Martínez, a then college student calling himself Bad Bunny, who was appearing at a Ponce show with Carrión. At the time, Bad Bunny was earning money for school by working as a bagger at the Econo supermarket near his home in Vega Baja. Martínez dropped out of the University of Puerto Rico at Arecibo, where he was studying audiovisual communication, and switched to a sound engineering program at the College of Cinematography, Arts and Television. (He chose his stage name after posting a picture of himself as a child wearing a bunny suit and a dour expression, then created a Twitter handle.)
After Bad Bunny uploaded some of his early music on SoundCloud, Assad in April 2016 signed him to the 360 deal with Rimas, collaborating on some early tracks with DJ Luian’s label Hear This Music.
Eventually, as Assad’s differences with Jiménez became increasingly apparent, Assad began seeking better opportunities for himself and his team, says a source close to Rimas. Days before Hurricane Maria hit Puerto Rico in September 2017, Assad met with manager Scooter Braun, whom he’d long admired, about a potential deal in which Braun would provide investment, making Jiménez aware of their discussions, according to multiple sources. The deal got close to the finish line but didn’t come to fruition.
Econo market in Vega Baja where Bad Bunny worked before Rimas signed him.
Alexei Barrionuevo
By mid-2020, with Bad Bunny’s success accelerating, Rimas had moved into newer offices in San Juan’s Miramar neighborhood on the top floor of a small office building. That November, Assad branched out, forming his own management agency, Habibi, which signed Karol G. The industry took notice: Even before Sony Music started negotiating a deal to help Assad buy out his majority partner, other companies were sniffing around Rimas, including HYBE, which has prioritized adding Latin companies to its portfolio.
This month, Bad Bunny and Rimas made history yet again when the Puerto Rican star performed at Coachella as the first Spanish-language headliner. The next night, Karol G, whose fourth studio album, Mañana Será Bonito (Tomorrow Will Be Beautiful) debuted at No. 1 on the Billboard 200 in March, performed on Saturday Night Live.
Behind the scenes, Sony and Rimas continue to work on the deal that could give both Assad and Jiménez — two driven hustlers from different generations and different worlds — keys to their futures. Assad would get the freedom to pursue his mogul dreams without an investor pulling at the purse strings, while Jiménez is expected to pocket what Billboard estimates could be more than $200 million for his stakes in the recording and publishing businesses he formed less than a decade ago.
Additional Reporting By Marcos David Valverde and Ed Christman
When Universal Music Group emailed Spotify, Apple Music and other streaming services in March asking them to stop artificial-intelligence companies from using its labels’ recordings to train their machine-learning software, it fired the first Howitzer shell of what’s shaping up as the next conflict between creators and computers. As Warner Music Group, HYBE, ByteDance, Spotify and other industry giants invest in AI development, along with a plethora of small startups, artists and songwriters are clamoring for protection against developers that use music created by professionals to train AI algorithms. Developers, meanwhile, are looking for safe havens where they can continue their work unfettered by government interference.
To someday generate music that rivals the work of human creators, AI models use a process of machine-learning to identify patterns in and mimic the characteristics that make a song irresistible, like that sticky verse-chorus structure of pop, the 808 drums that define the rhythm of hip-hop or that meteoric drop that defines electronic dance. These are distinctions human musicians have to learn during their lives either through osmosis or music education.
Machine-learning is exponentially faster, though; it’s usually achieved by feeding millions, even billions of so-called “inputs” into an AI model to build its musical vocabulary. Due to the sheer scale of data needed to train current systems that almost always includes the work of professionals, and to many copyright owners’ dismay, almost no one asks their permission to use it.
Countries around the world have various ways of regulating what’s allowed when it comes to what’s called the text and data mining of copyrighted material for AI training. And some territories are concluding that fewer rules will lead to more business.
China, Israel, Japan, South Korea and Singapore are among the countries that have largely positioned themselves as safe havens for AI companies in terms of industry-friendly regulation. In January, Israel’s Ministry of Justice defined its stance on the issue, saying that “lifting the copyright uncertainties that surround this issue [of training AI generators] can spur innovation and maximize the competitiveness of Israeli-based enterprises in both [machine-learning] and content creation.”
Singapore also “certainly strives to be a hub for AI,” says Bryan Tan, attorney and partner at Reed Smith, which has an office there. “It’s one of the most permissive places. But having said that, I think the world changes very quickly,” Tan says. He adds that even in countries where exceptions in copyright for text and data mining are established, there is a chance that developments in the fast-evolving AI sector could lead to change.
In the United States, Amir Ghavi, a partner at Fried Frank who is representing open-source text-to-image developer Stability AI in a number of upcoming landmark cases, says that though the United States has a “strong tradition of fair use … this is all playing out in real time” with decisions in upcoming cases like his setting significant precedents for AI and copyright law.
Many rights owners, including musicians like Helienne Lindevall, president of the European Composers and Songwriters Alliance, are hoping to establish consent as a basic practice. But, she asks, “How do you know when AI has used your work?”
AI companies tend to keep their training process secret, but Mat Dryhurst, a musician, podcast host and co-founder of music technology company Spawning, says many rely on just a few data sets, such as Laion 5B (as in 5 billion data points) and Common Crawl, a web-scraping tool used by Google. To help establish a compromise between copyright owners and AI developers, Spawning has created a website called HaveIBeenTrained.com, which helps creators determine whether their work is found in these common data sets and, free of charge, opt out of being used as fodder for training.
These requests are not backed by law, although Dryhurst says, “We think it’s in every AI organization’s best interest to respect our active opt-outs. One, because this is the right thing to do, and two, because the legality of this varies territory to territory. This is safer legally for AI companies, and we don’t charge them to partner with us. We do the work for them.”
The concept of opting out was first popularized by the European Union’s Copyright Directive, passed in 2019. Though Sophie Goossens, a partner at Reed Smith who works in Paris and London on entertainment, media and technology law, says the definition of “opt out” was initially vague, its inclusion makes the EU one of the most strict in terms of AI training.
There is a fear, however, that passing strict AI copyright regulations could result in a country missing the opportunity to establish itself as a next-generation Silicon Valley and reap the economic benefits that would follow. Russian President Vladimir Putin believes the stakes are even higher. In 2017, he stated that the nation that leads in AI “will be the ruler of the world.” The United Kingdom’s Intellectual Property Office seemed to be moving in that direction when it published a statement last summer recommending that text and data mining be exempt from opt-outs in hopes of becoming Europe’s haven for AI. In February, however, the British government put the brakes on the IPO’s proposal, leaving its future uncertain.
Lindevall and others in the music industry say they are fighting for even better standards. “We don’t want to opt out, we want to opt in,” she says. “Then we want a clear structure for remuneration.”
The lion’s share of U.S.-based music and entertainment organizations — more than 40, including ASCAP, BMI, RIAA, SESAC and the National Music Publisher’s Association — are in agreement and recently launched the Human Artistry Campaign, which established seven principles advocating AI’s best practices intended to protect creators’ copyrights. No. 4: “Governments should not create new copyright or other IP exemptions that allow AI developers to exploit creators without permission or compensation.”
Today, the idea that rights holders could one day license works for machine-learning still seems far off. Among the potential solutions for remuneration are blanket licenses something like the blank-tape levies used in parts of Europe. But given the patchwork of international law on this subject, and the complexities of tracking down and paying rights holders, some feel these fixes are not viable.
Dryhurst says he and the Spawning team are working on a concrete solution: an “opt in” tool. Stability AI has signed on as its first partner for this innovation, and Dryhurst says the newest version of its text-to-image AI software, Stable Diffusion 3, will not include any of the 78 million artworks that opted out prior to this advancement. “This is a win,” he says. “I am really hopeful others will follow suit.”