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TikTok was dismissive Wednesday of reports that the Biden administration was calling for its Chinese owners to sell their stakes in the popular video-sharing app, saying such a move wouldn’t help protect national security.
The company was responding to a report in The Wall Street Journal that said the Committee on Foreign Investment in the U.S., part of the Treasury Department, was threatening a U.S. ban on the app unless its owners, Beijing-based ByteDance Ltd., divested.
“If protecting national security is the objective, divestment doesn’t solve the problem: a change in ownership would not impose any new restrictions on data flows or access,” TikTok spokesperson Maureen Shanahan said. “The best way to address concerns about national security is with the transparent, U.S.-based protection of U.S. user data and systems, with robust third-party monitoring, vetting, and verification, which we are already implementing.”
The Journal report cited anonymous “people familiar with the matter.” The Treasury Department and the White House’s National Security Council declined to comment.
Late last month, the White House gave all federal agencies 30 days to wipe TikTok off all government devices.
The Office of Management and Budget called the guidance a “critical step forward in addressing the risks presented by the app to sensitive government data.” Some agencies, including the Departments of Defense, Homeland Security and State, already have restrictions in place. The White House already does not allow TikTok on its devices.
Congress passed the “No TikTok on Government Devices Act” in December as part of a sweeping government funding package. The legislation does allow for TikTok use in certain cases, including for national security, law enforcement and research purposes.
Meanwhile, lawmakers in both the House and Senate have been moving forward with legislation that would give the Biden administration more power to clamp down on TikTok.
Rep. Mike McCaul, the chairman of the House Foreign Relations Committee, has been a vocal critic of the app, saying the Chinese Communist Party is using it to “manipulate and monitor its users while it gobbles up Americans’ data to be used for their malign activities.”
“Anyone with TikTok downloaded on their device has given the CCP a backdoor to all their personal information. It’s a spy balloon into your phone,” the Texas Republican said.
TikTok remains extremely popular and is used by two-thirds of teens in the U.S. But there is increasing concern that Beijing could obtain control of American user data that the app has obtained.
The company has been dismissive of the ban for federal devices and has noted that it is developing security and data privacy plans as part of the Biden administration’s ongoing national security review.
Bang Si-hyuk, HYBE label chairman, made an appearance on Wednesday (March 15) at the Gwanhun Forum, where he shared a speech and held a press Q&A, discussing the company’s plans to expand K-pop globally. He also touched on plans for BTS following their mandatory military enlist.
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Bang revealed that there is no set date for BTS’ comeback as a group, and requested respect for the band’s privacy regarding military service and their plans for their careers. In October, HYBE’s BIGHIT Music said all seven members would serve in the military and the group is expected to reconvene in 2025, though now that date is not confirmed.
Bang also revealed that BTS haven’t yet renewed their contract with HYBE, adding that the company “still has time left” until the boy band’s contracts expire, according to The K-Pop Herald. “We’ll discuss [contract renewal with the members] within the time, and I believe it will be right for us to speak about it after the discussion ends,” he explained.
Just days after the release of their anthology album Proof — released as a celebration of the septet’s ninth anniversary — RM, Jin, Suga, J-Hope, Jimin, V and Jung Kook shared in a video posted in June 2022 that they plan to take a break from group activities so they can all have time to work on personal and solo endeavors.
In January, 30-year-old Jin became the first member of the septet to begin his mandatory 18-month stint in the South Korean army. At press time it had not yet been announced when Jin’s bandmates will begin their service.
Additional reporting By Jeyup S. Kwaak.
Recorded-music revenue hit an all-time high in Spain last year, growing by double digits over 2021, reports Productores de Música de España (Promusicae), the association that represents 95% of the country’s recording industry.
In 2022, Spain’s recorded music market earned a total of 462 million euros ($494.5 million), marking an increase of 12.4% over the 411 million euros ($440 million) in revenue achieved the year prior, Promusicae reported Monday (March 13).
Eighty-seven percent of last year’s total revenue number — or 402 million euros ($429 million) — was generated by music sales, up 9.3% from 2021. The digital market accounted for nearly 86% of music consumed in Spain last year at 345 million euros ($370 million), 98% of which, or 340 million euros ($364 million), came from streaming. Meanwhile, physical sales, which generated 56 million euros ($60 million) in revenue, continued to decline despite growth in the vinyl market.
In the digital sphere, consumption of both audio and video music streams grew by 13% and 16%, respectively, compared to 2021. That translates to 17 million Spaniards using audio streaming platforms in 2022, with 5.2 million of those listeners holding premium subscriptions — up 18% over the previous year. Overall, nearly 36% of the Spanish population used audio streaming platforms in 2022.
Courtesy PROMUSICAE
The physical music market continued to shrink despite another strong year for vinyl, which grew 15% and generated 29 million euros ($31 million) in sales, compared to 26 million euros ($29 million) generated by CD sales. In units, more CDs are still being bought than vinyl (2.6 million units compared to 1.7 million vinyl records were shipped in 2022), even as more-expensive vinyl surpassed CDs in revenue terms. Rosalía‘s Motomami was Spain’s top seller on vinyl last year, though Promusicae did not provide sales numbers for the title.
The Promusicae report also notes that revenue from intellectual property rights has been booming for record labels, increasing by 42% last year to 56 million euros ($60 million). The report cautions, however, that the increase is distorted somewhat by a return to normal activity in sectors like hospitality and nightlife following pandemic-era restrictions.
Courtesy PROMUSICAE
Meanwhile, Spanish-language music further solidified its dominance in the country, with Bad Bunny, Rosalía and C. Tangana outpacing Anglo artists like Harry Styles and Taylor Swift in overall sales (see charts below).
“Closing 2022, maintaining a sustained growth in the last five years — despite the slowdown of the pandemic — is great news that rewards the effort, work and investment of the entire recording industry in our country,” Promusicae president Antonio Guisasola says in a statement. “It opens a window of hope to reach levels of the previous decade.”
Guisasola adds that other European countries, such as the United Kingdom or Italy, “are achieving great benefits that redound to the brand and culture of the country through music, and ours cannot be left behind in this highly competitive environment in which we have the strategic asset of the Spanish language.”
Courtesy PROMUSICAE
On the downside, piracy continues to be a problem in Spain. Promusicae notes that according to the IFPI Engaging With Music 2022 report, 32% of Spaniards use unauthorized or unlicensed methods to listen to or download music. The percentage is even higher for individuals between 16 and 24 years old, with 49% of that age demographic listening to pirated music.
Top 10 albums by revenue in 2022:
Bad Bunny, Un Verano Sin Ti
Rosalía, Motomami
C. Tangana, El Madrileño
Harry Styles, Harry’s House
Rauw Alejandro, Vice Versa
Sebastián Yatra, Dharma
Bad Bunny, YHLQMDLG
Manuel Carrasco, Corazón y Flecha
Taylor Swift, Midnights
Mora, Microdosis
Top 10 songs by revenue in 2022:
Bizarrap x Quevedo, “Quevedo: BZRP Music Sessions, Vol. 52”
Manuel Turizo, “La Bachata”
Rosalía, “Despecha”
Bad Bunny, “Tití Me Preguntó”
Sebastián Yatra, “Tacones Rojos
Bad Bunny, “Me Porto Bonito” feat. Chencho Corleone
Rauw Alejandro, “Desesperados” feat. Chencho Corleone
La Pantera, Quevedo Juseph, Cruz Cafune, Abhir Hathi “Cayó La Noche (Remix)”
Shakira, “Te Felicito” feat. Rauw Alejandro
Bizarrap x Tiago PZK, “Tiago PZK: BZRP Music Sessions, Vol. 48”
SEOUL — K-pop juggernaut HYBE has withdrawn its bid to control rival agency SM Entertainment and has instead decided to collaborate with SM as well as rival bidder Kakao, marking a sudden détente. Announced early Sunday, the resolution paves the way for K-pop agencies to not only bury the hatchet but also continue their push to monetize fandom with idol-related online content.
“Proceeding with a higher tender offer [to beat Kakao’s bid] may have in turn caused a negative impact on our shareholders and we also judged it may have further overheated the market,” HYBE said in a statement. The agency of boy band BTS had secured about 15% of SM, a former market leader, mostly by acquiring shares from SM founder Lee Soo-man, who was recently pushed out from the agency. A previous tender offer to increase HYBE’s stake in SM didn’t move the needle and a counteroffer by Kakao remains outstanding until March 26.
On Monday, the market reacted by dragging SM stock down more than 23% to 113,000 Korean won, making Kakao’s current offer at 150,000 won more attractive. A HYBE representative said Monday it has not decided whether to sell the SM shares. He added that it was studying possible avenues for collaboration with SM and/or Kakao but declined to comment further. HYBE and Kakao shares have jumped 3.21% and 4.65%, respectively.
SM, which has played a key role in K-pop’s popularity and overseas expansion, has resisted HYBE’s acquisition, slamming it as “anticompetitive.” The two agencies in recent years have dominated the charts, together accounting for nearly half of all albums sold in 2022, according to Korean chart company Circle Chart. But despite its success, shareholders have been calling for changes to the Lee-controlled single-pipeline structure, as rival agencies grew larger by delegating creative direction to mostly autonomous teams. Lee was also being paid millions of dollars a year in producer fees, though he held no managerial position there, an arrangement that shareholders have scrutinized in recent years.
In a drive for reform, SM’s management in February said it would issue new shares to be sold to Kakao as part of a wide-ranging partnership. Lee, then-the biggest shareholder, protested but management overrode him. Lee then offloaded most of his shares to HYBE, which in turn tried to up its stake with a tender offer. Lee successfully challenged the Kakao deal in court, prompting the latter to issue a higher counteroffer.
“Kakao vows to guarantee operational independence at SM, respecting its strongest asset and impetus, the employees, artists and fans,” said Kakao chief investment officer Bae Jae-hyun in a statement on Sunday. Bae added that Kakao and SM would “create new synergies, based on SM Entertainment’s global IP and production system as well as Kakao’s IT expertise and IP value-chain business capacity.”
HYBE, SM and other rivals have in recent years pushed proprietary platforms like Weverse and Beyond Live to foster online fan communities for all fan activities, free or for-pay. Kakao’s platform and search-engine rival Naver in 2017 also inked a deal with YG Entertainment, home to girl group Blackpink, to push YG artists’ content.
SM did not return calls for comment.
Kalush Orchestra, the Ukrainian act that captured the world’s attention last year when it won the Eurovision Song Contest as its country was being torn apart by war, wraps up a second North American tour on March 16 with a performance at SXSW in Austin.
The seven-member group’s song “Stefania” won Eurovision in Turin, Italy, with a record-setting 438 points from the public, reflecting the widespread pro-Ukraine sentiment at least year’s event three months after Russia launched its unprovoked invasion.
After the competition, Kalush Orchestra did an 18-show promotional tour, with performances in Poland, Spain, Italy, Germany, France and at Glastonbury Festival in the U.K., before embarking on a 13-city North American tour. The shows helped raise funds for the Ukrainian armed forces. The group also sold its Eurovision trophy for $900,000, with the proceeds earmarked for the purchase of combat drones for Ukraine’s military. (The band raised $1.6 million overall.)
The current five-city U.S. jog cements the group as one of the few Eurovision winners to turn a victory at the pan-European competition into global success, following in the footsteps of ABBA, which won with “Waterloo” in 1974, and Måneskin, which triumphed with “Zitti e Buoni” in 2021. Billboard talked to the Kalush Orchestra’s founder and leader, rapper Oleh Psiuk, via Zoom about returning to the U.S., the impact of Eurovision on the band’s career and the ongoing war with Russia, which is now in its second year.
BB: Who came up with the idea for this new tour?
First, we were invited to the big showcase festival SXSW in Austin. We considered it to be a very cool opportunity, so we decided we should show our creativity, our works and of course we decided that then we could visit several cities which we’ve never been to in the U.S. before. That’s how our new tour was born, even though the previous one was just five months ago.
What was that first tour like and what would you like to see this time?
We had 18 concerts during the previous tour, and they were daily, so unfortunately, we saw only airports and the venues where we had those concerts. But still, we had a little bit of time to see sunny Los Angeles. L.A. is my favorite because I’ve always been listening to the music and to the performers from that area. And this time I do hope we’ll have more time to see and enjoy your country.
What performers from the West Coast are your favorites?
I love the performers from the so-called Golden Era. Like N.W.A, Tupac Shakur, Snoop Dogg, Ice Cube and Dr. Dre. I listen to lots of music from the West Coast.
Last time you met Arnold Schwarzenegger, and he appeared in your video for ‘Generous Evening’ and spoke in Ukrainian. Are there any plans this time to meet any celebrities or government figures?
We don’t have any plans now, but honestly speaking we didn’t have any plans then as well. We wrote to Arnold that very day when we met and that was a lucky coincidence. So we do hope that this time we’ll also have such a day when we write to someone famous and we’ll have an opportunity to meet.
In the U.S., Eurovision is not that well known, though the Will Ferrell film (Eurovision Song Contest: The Story of Fire Saga) has helped increase awareness. How did American audiences find you on your first tour?
The bigger part of our audience was still Ukrainians who are living in the U.S. But there were other people who were coming to our concerts. The people who knew Eurovision, what it is, or people who just saw some announcement or billboard in the city and they decided to see us. They were just curious to get to know who we are, but after the concert, all kinds of people came up to us because they really loved it.
What are the main goals you want to accomplish for both the band and Ukraine?
First, we would like to show our music, for it to be known both in the U.S. and in Europe. Whatever city we visit, we’d like to perform and disseminate Ukrainian culture, for it to be well known anywhere. And, of course, we are raising money using the QR codes and the auctions. Last year, we raised 60 million hryvnia ($1.6 million) and we do hope to raise even more this time.
What does the money you raise support?
We send this money to some of the well-known foundations like United24 and the Sergey Prytula Foundation. And we buy armored vests and helmets and other important things for our war servicemen and military.
Kalush Orchestra
Katrin Oleynik
How do you feel when you’re out of your country? Does the trauma of the war continue?
Honestly speaking, it does not affect me. It does not influence me whether I’m in Ukraine or not, because there are lots of relatives and my parents and close friends, my good acquaintances who are now in Ukraine and I would say that I worry for them more than for myself. Because I don’t worry about myself that much. Obviously, I carry this burden with me everywhere and this kind of anxiety for them.
Let’s talk about what American audiences can expect on this current tour. Will you play new songs?
Yes. We have prepared a program which includes some of the new songs and some of the ones which have just been issued. For instance, we just issued a very new song which has the title “Changes.” It’s a very cool song with a cool video, which reflects all the changes which we are waiting for. We have a program which unites something authentic with some new styles.
Will an album be coming out soon?
So far, we plan to release singles. If we speak about the album coming out, it is planned closer to the end of the current year or maybe in the beginning of the next year. So far, we are issuing singles with cool videos in English.
It’s been not quite a year since you won Eurovision. How has your life changed, and the career trajectory of the band changed since?
We can now play a bigger role. We can have more impact on the bigger and vaster audience. We can disseminate our concert abroad and we can cover a broader audience with that. We can tell more about Ukrainian culture abroad.
That must have been an important reason for participating in Eurovision in the first place.
Yes, there were many reasons. Not only this one, but it was so important for us to win at this Eurovision, because victory is so important for Ukraine in every aspect. We made lots of people happy with this victory and we do hope it will go on like this.
Ukraine first won Eurovision in 2004 when Ruslana triumphed with “Wild Dances.” Where were you that year when she won? What did her victory mean to you and Ukraine?
I was only 10 years old then, so I don’t remember that much. But I do remember that it was a big noise, a big event in Ukraine. It had a huge resonance as an event. It was because Eurovision for Ukraine was always a very important competition.
What is next for the band after the American tour? Will there be any more touring in other countries?
Sure. We would like to get to as many of various festivals as possible to show our music and culture to the maximum. We would like to have as productive a year as the previous one was, to raise as much money and to disseminate information about us, about Ukraine.
The Kalush Orchestra’s 2023 U.S. tour dates:
March 9 — Cleveland, OH @ Cleveland Masonic
March 10 — Orlando, FL @ The Beacham
March 11 — Detroit, MI @ The Magic Stick
March 12 — Atlanta, GA @ District Atlanta
March 16 — Austin, TX @ SXSW
LONDON – Vinyl sales generated more money for record labels and artists than CDs for the first time in more than three decades in the United Kingdom last year, helping drive a 4.7% rise in overall music revenue, according to annual figures from labels trade body BPI published Thursday (March 9).
In 2022, sales of vinyl LPs climbed 3.1% year-on-year in the U.K. to £119.5 million ($142.4 million) and now account for over half (55%) of all trade revenues from physical sales. The last time vinyl revenues eclipsed CD sales in the United Kingdom, BPI says, was in 1987 when Michael Jackson’s Bad was the year’s best-selling album and Rick Astley had the best-selling single of the year with “Never Gonna Give You Up.”
In total, 5.5 million vinyl LPs were sold in the United Kingdom last year. That marks the highest level of vinyl purchases in the country since 1990, according to BPI figures released in January measuring music consumption. The best-selling vinyl titles in the U.K. in 2022 were Taylor Swift’s Midnights, Harry Styles’ Harry’s House and Arctic Monkeys’ The Car.
Despite the ongoing vinyl revival, overall revenue from physical formats was down 10.5% to £216 million ($258 million), with CD sales slipping 24% to £89 million ($107 million).
Offsetting that decline was 6.3% year-on-year growth in streaming revenues, which climbed to £885 million ($1 billion) and accounted for 67% of U.K. recorded music revenues in 2022 — up from 66.2% the 12 months prior. Vinyl sales made up 9% of the market in terms of annual trade revenues, while CDs accounted for 7%.
Breaking down streaming revenue, paid subscriptions generated £763 million ($910 million), up 4.8% on 2021, while ad-funded revenue grew by more than a fifth (22%) to £63 million ($75 million). Digital download sales fell 17.5% to £28 million ($33 million).
Synch revenues were up even more sharply, rising 39% year-on-year to £43 million ($51 million), while public performance income spiked 23% to £143 million ($170 million).
Total U.K. recorded music sales — comprising digital and physical revenues, public performance rights and synch — climbed 4.7% to £1.32 billion ($1.57 billion) in 2022. That marks a rise of 36% over the past five years, according to BPI, as well as the eighth-consecutive year of growth.
The United Kingdom is the world’s third biggest recorded music market behind the United States and Japan with sales of just over $1.8 billion in trade value, according to IFPI’s 2022 Global Music Report. (BPI’s year-end sales figures are based on pound sterling, rather than the far stronger U.S. dollar, hence the perceived decline in overall revenues when BPI’s figures are converted into dollars at a constant currency basis).
“2022 was another great year for British music, but we must guard against any complacency in the face of growing challenges and keep promoting and protecting the value of music,” BPI chief strategy officer and interim CEO Sophie Jones said in a statement. She also called upon the U.K. music community to work together to “create the impetus” for further growth and “futureproof the success of British music in an increasingly competitive global music market.”
As previously reported, British artists accounted for the top 10 biggest-selling singles in the U.K. last year (either as the lead or as a featured artist) for the first time since year-end charts were introduced more than 50 years ago. Leading the pack was Harry Styles’ “As It Was,” which topped the U.K. singles chart for 10 consecutive weeks (it also spent 15 weeks atop the Billboard Hot 100) and was streamed more than 180 million times in the country.
Joining Styles in the U.K. top 10 was Ed Sheeran, Cat Burns, Glass Animals, Lost Frequencies & Calum Scott, LF System, Sam Fender and Kate Bush, whose 1985 track “Running Up That Hill” spent three weeks at No. 1 following its high-profile Stranger Things synch; it was streamed 124 million times in her home country last year.
Styles also landed the year’s best-selling album with his third studio set, Harry’s House, making him the first artist to have both the United Kingdom’s top single and top album since Lewis Capaldi in 2019. Sheeran’s = (Equals) and Swift’s Midnights were the year’s second and third-best-selling albums.
SEOUL — The bitter battle for control of K-pop’s fabled agency SM Entertainment has spilled out publicly like an episode of HBO’s Succession. K-pop’s largest agency, HYBE — home to boy band BTS — is pitted against the management of SM, which for years was South Korea’s dominant K-pop company. But as SM’s Lee Soo-man sided with HYBE against the company he founded, a corporate shakeup has turned into a battle royale.
SM sought to maintain its independence through a partnership with Kakao, a South Korean internet giant that has acquired several entertainment agencies. In February, Kakao said it would buy a 9.05% stake in SM against the wishes of Lee, SM’s charismatic founder and rock singer-turned-mogul, whose equity in SM allowed him to challenge the purchase in court.
About a week later, Lee — a controversial figure who helped build the K-pop business over the last three decades but has been convicted of embezzlement in the past — privately approached HYBE founder and chairman Bang Si-hyuk, offering to sell about 80% of his SM shares to HYBE, with an option to sell the remaining chunk at a later date, according to a person with direct knowledge of the matter. As a result, HYBE now has a 15.8% stake in SM, making it the company’s largest shareholder.
Since then, the companies have traded almost daily salvos.
After a March 3 provisionary injunction upheld Lee’s court challenge to the Kakao acquisition, Kakao announced it had canceled its investment in SM and launched a tender offer seeking to buy 35% of SM from minority shareholders. HYBE is now appealing to SM shareholders to back its board nominees and vision for the company. SM sees the move as a hostile takeover and is asking shareholders to appoint independent directors. The clock is ticking before a March 31 annual shareholder meeting.
Both HYBE and SM have grand ambitions to expand K-pop and take on the major labels globally. HYBE increased its revenue 125% to 1.78 billion won ($1.41 billion) from 2020 to 2022, largely by acquiring Ithaca Holdings in 2021 for $1.05 billion and giving its founder, Scooter Braun, the reins to its U.S. operations, HYBE America. In February, HYBE America made its first major move, purchasing Atlanta-based hip-hop company Quality Control Music for $300 million.
SM hopes to more than double its 2022 revenue of 850 billion won ($644 million) to 1.8 trillion won ($1.36 billion) by 2025 through a mix of partnerships and acquisitions, which include acquiring a U.S. management company and, by the second half of 2024, launching its first U.S.-based artist. “Our plan is not limited to local activities of Korean artists,” co-CEO Tak Young-jun said in a Feb. 23 video.
The company plans to spend 350 billion won ($266 million) on a music publishing company and 300 billion won ($228 million) to acquire record labels, with two-thirds of that amount ($152 million) targeting U.S. companies “with a solid local network that can support Korean artists’ global expansion and have global production capabilities in genres complementary to SM,” Lee Sung-soo, SM’s chief creative officer and co-CEO, said in the same video.
But minus its powerful founder, SM doesn’t intend to take the world stage with HYBE’s help. It had envisioned Kakao as its preferred partner in a mission — dubbed “SM 3.0” — it has said it will still push forward with in order to expand outside of Korea and build outposts in Japan, Southeast Asia and the Americas.
A HYBE acquisition of a controlling interest in SM could potentially face regulatory scrutiny from South Korea’s Fair Trade Commission since it exceeds 15% of SM’s stock ownership. In 2022, HYBE was behind 26.8% of albums sold in Korea, while SM was behind 19.1%, according to Korea chart company Circle Chart.
As Lee Dominated, SM’s Luster Was Fading
Though few had predicted such a dramatic unraveling, SM was overdue for a transformation. Once the leading K-pop innovator, SM has debuted just one completely new act, Aespa, in the last five years. It continues to operate through a single pipeline with Lee at the helm of artist management and production, while rivals like HYBE and JYP Entertainment have diversified their portfolios, relying on multiple teams that produce more acts with more independence.
SM’s shares have been chronically undervalued, industry observers say, due to an arrangement where the company paid producing fees to a separate entity owned by Lee. SM paid Lee 24 billion won ($18.1 million) in 2021, equivalent to more than a quarter of SM’s operating profit that year. Even in years when SM produced a loss, Lee took home a sizable paycheck.
The board of directors, packed with Lee allies, allowed the practice to continue for years, until Align Partners Capital Management, a private equity firm, led a shareholder revolt last year. Lee, who now holds about 3% of SM shares, appears headed out the door. HYBE and SM say his role will be reduced if not completely phased out.
“It’s hard to put up a resistance in Korean culture,” Lee Changhwan, CEO of Align Partners, says about the difficulty in over-riding a founder and company’s biggest shareholder. “The governance structure has to go through fundamental changes.”
South Korean stocks are often undervalued, analysts say, since some companies can seem to be managed for the benefit of founders and families to the detriment of general shareholders. Still, in the HYBE-SM power struggle, SM shareholders appear to have won either way: The March 7 share price of 149,700 won ($113.84) is up over 116% since SM announced it would terminate Lee’s contract on Oct. 14.
A K-Pop Pioneer With A Criminal Past
The 70-year-old Lee, who founded SM in 1995, has been credited with making K-pop what it is today. Inspired by early MTV music videos and New Kids on the Block, which he watched during his master’s degree studies in California in the 1980s, he paved the way for K-pop to win overseas fans with a signature formula of visually striking performance and dance pop.
Lee crafted BoA, the female singer who SM scouted in 1998 when she was 11 years old, into the first K-pop artist to break through in the Japanese market; she went on to sell millions of singles and albums. Groups from TVXQ and Girls’ Generation to EXO and NCT have followed suit with international stardom. In 2000, SM became the first K-pop agency to list its shares publicly.
Even before PSY and BTS became global household names, Lee was lecturing publicly about K-pop conquering the world — and about a future when non-Korean singers would join the fray and be trained and managed by K-pop production teams.
Lee’s artistic vision and drive didn’t make up for the company’s corporate governance problems, however. Shareholders have in recent years slammed SM for losses from non-music businesses such as a winery and restaurants while Lee was still getting his producer’s fees. Several SM acts have seen members leave acrimoniously over what they called harsh training and “slave contracts,” resulting in government intervention, including shorter contracts for K-pop trainees and stars.
In 2002, Lee made headlines when he fled the country to escape prosecution while facing embezzlement allegations. After a brief stay on Interpol’s wanted list, he surrendered to Korean authorities and was convicted for siphoning off 1.15 billion won ($892,000 at the time) in company funds during a recapitalization round, which he used to buy shares in SM. (He served three years of probation, and in 2007 he received a presidential pardon — and then returned to the company.) SM has also paid fines for tax evasion, most recently in 2021.
In recent weeks, Lee Sung-soo, the co-CEO who is also nephew to founder Lee’s late wife, leveled a series of accusations at his uncle, which range from previously undisclosed tax evasion through a shell company based in Hong Kong to making “arbitrary” changes to SM bands’ musical direction to advance his own business interests.
While the elder Lee has not directly addressed the allegations, HYBE has responded that it was unaware of such an arrangement during the deal’s signing. In a statement to Billboard, HYBE says its SM acquisition was made “following research on the corporate fundamentals, including publicly disclosed information about SM.”
Global music piracy crept up in 2022, marking the second straight year it has increased after a period of steady decline, according to a report from MUSO, a U.K. technology company. MUSO, which tracks consumption across websites around the world to “to understand the true picture of digital piracy,” logged more than 15 billion visits to music piracy sites in 2022.
Piracy has been a thorn in the music industry’s side for more than two decades. In recent years, however, the widespread adoption of streaming has led to a steep drop in the types of peer-to-peer and file-sharing behavior that once threatened to bring the music business to its knees.
In a world driven by streaming, rather than downloads or CD sales, the industry is increasingly focused on a different set of issues. Key among them is streaming fraud, which is not driven by fan’s desire to have more music at their fingertips. Instead, this activity often involves bad actors siphoning money away from the music business — by running bot networks that play 31-second white-noise recordings nonstop on Spotify, for example.
Growth in streaming revenues shows signs of slowing, meaning that every dollar that leaks out of the music ecosystem is becoming more important to labels. And MUSO’s report shows that piracy, even if it has faded from headlines, isn’t negligible.
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For example, Justin Bieber‘s songs, albums, or “music bundles” — which could include an entire discography — were illegally downloaded over 1 million times across the peer-to-peer/torrent network in 2022, for example, with more than 40% of those downloads coming from the U.S. MUSO detected more than 950,000 illegal downloads of David Bowie‘s music, more than 780,000 across Bruce Springsteen’s catalog, and more than 750,000 involving Bob Dylan releases.
The U.S. accounts for 7% of all piracy traffic picked up by MUSO, third only behind Iran (15.05%) and India (10.29%). Despite the prevalence of streaming among U.S. listeners, their appetite for piracy far outpaces their peers in other major music markets like the U.K. (1.86% of piracy traffic) and Germany (1.92%). And more than half of all the piracy in the U.S. takes place via stream-ripping, which relies on programs to get around YouTube’s copyright protection and convert audio into MP3s.
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In 2019, the RIAA said it was monitoring more than 200 stream-ripping sites. Labels have taken legal measures to go after some of these: In December 2021, a U.S. judge ordered a pair of Russian sites to pay more than $80 million — $50,000 for each of the 1,618 copyrighted works infringed — in damages. The judge wrote that 1,618 was “likely on the low end of Defendant’s indeterminable number of violations.” Tofig Kurbanov, the owner of the sites, subsequently appealed the ruling.
RIAA chief legal officer Ken Doroshow said at the time that “this litigation sets out vital first principles that should chart a path for further enforcement against foreign stream-rippers and other forms of online piracy that undermine the legitimate market for music.” The ruling, he said, “is a major step forward to protect artists, songwriters, record labels, and consumers from one of the most pernicious forms of online piracy.”
Despite the judgement, MUSO’s data indicates that stream-ripping remains the most prevalent form of piracy in the U.S., accounting for more than half of piracy demand in the country (51.3%). This is well above the global average, which MUSO found to be 33.4%.
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Overall, music piracy has fallen by more than half since 2017, according to MUSO. But the company predicts another small rise in 2023.
“For the Film and TV sectors, MUSO’s data indicate that piracy demand will continue to increase across 2023, as inflationary and economic pressures result in subscriber losses for the various legal streaming services,” the company’s report notes. “This will drive users to illegally stream or download the content they want to watch via piracy sites. MUSO does anticipate seeing a similar uptick in music piracy across 2023,” but one that will be “less marked than [in] other industries.”
The release of Karol G’s Mañana Será Bonito, the fourth studio LP from the Latin music superstar, is already historic. The set earned 94,000 album equivalent units in the United States in the week ending March 2, according to Luminate, making it the Billboard 200 chart’s first all-Spanish language No. 1 by a female artist.
Globally, the set’s 17 songs drew 438.2 million official streams, with 13 of its tracks hitting the March 11-dated Billboard Global 200. Nine of those appear on the Billboard Global Excl. U.S. ranking, including four songs whose releases pre-date the album. All nine rank higher on the Global 200 than on Global Excl. U.S.
It’s rare to see a Colombian artist who performs exclusively in Spanish do better on the Global 200 than the Global Excl. U.S. chart, where the primarily English-language American market is the only difference in methodology.
But based on Karol G’s global chart history, and that of many other major hitmakers of the last few years, the balance between her ranking on Billboard’s global surveys may even out in the weeks to come. Over the 30 months since the global charts launched, a pattern has emerged where an album’s first-week streams will lean much heavier toward domestic activity, before steadying in the weeks that follow.
In the case of Karol G, the spike in U.S. activity is sharp. One week ago, three advance singles from Bonito were on both charts and averaged more than 80% of their streams from outside the U.S. in the week ending Feb. 23 (ahead of the album’s Feb. 24 release), all ranking higher on Global Excl. U.S. than the Global 200.
In the album’s debut week, her 13 new tracks averaged 66% non-U.S. streams, while a couple songs dipped as low as 59% and 57%. Even though her international stream total remains above 50%, the drop from 80% international to 66% in the album’s first week reflects a common listening pattern in America.
Based on streaming activity for practically all major global albums in the charts’ history, the U.S. versus non-U.S. splits will likely return to Karol G’s “normal.”
Drake, Billboard’s top artist of the 2010s, released his long-teased Certified Lover Boy in September 2021. All 21 songs debuted on both lists but averaged at No. 16 on the Global 200 and No. 44 on Global Excl. U.S. in the set’s debut week. Of its combined 1.1 billion streams, just 32% came from outside the U.S., less than half of that week’s average.
Three weeks later, the album’s international streams climbed — though barely — to 34%. Three months after that, they settled at 37%. These changes aren’t drastic, but similar patterns exist for recent hit albums by J. Cole, Future, and Kendrick Lamar.
Those higher-U.S. and lower-international splits are common for hip-hop albums, but their rising trajectory applies to pop artists as well. Taylor Swift’s Midnights averaged 53% of its 973 million first-week streams (for the set’s 13 standard-edition tracks) from outside the U.S. Three weeks later, that share bumped to 56%, and three months later, to 61%.
Even among artists from outside the U.S., first-week streams spike in America. Harry Styles’ Grammy-winning Harry’s House was released last year and scored 620 million streams in its first seven days. Of those, 60% came from outside the U.S., far lower than the 75% of his own years-old hit “Watermelon Sugar.” The opening 60% grew to 66% by week four, and to 69% by month four. The same goes for recent releases by fellow Brits Adele and Ed Sheeran.
These examples, all of which debuted their entire track listings on the Global 200, suggest an urgency from American listeners for first-week listens, while international fans, broadly speaking, are slower to discover new releases. But while the artists mentioned above all follow this pattern, the closest comparison to Karol G’s glass-ceiling moment is the other artist to score major American success with all-Spanish albums.
Bad Bunny dominated 2022 with Un Verano Sin Ti, the album that spawned his biggest U.S. hits to date. The 23-song set debuted with 1.1 billion streams worldwide, 66% of which were from outside the U.S. That number is much closer to that week’s average than the opening week splits for Drake and Swift, but the fact that Bad Bunny was below the average at all, just as Karol G is on her debut week, was surprising. One week prior, he had six globally charting songs, averaging 75%. While the release of his new album generated huge numbers everywhere, the bigger immediate spike in consumption was in America, despite his all-Spanish-language material.
Less than a month after the album’s release, the pendulum moved closer to the center, up from 66% to 71% non-U.S. streams. That number remained relatively steady as the album continued to rule various charts. The happy medium between the album’s first week numbers and Bad Bunny’s pre-Verano figures also indicate that while he experienced the same U.S.-heavy first-week spike as virtually every other major pop act, the album may have done some heavy lifting in making him an even bigger star in the U.S. than he had been when he scored the first-ever all-Spanish No. 1 album.
Time will tell how consumption for Mañana Será Bonito will settle in the coming weeks and months, but Bad Bunny’s 2022 may be indicative of her future global prospects. Like Bad Bunny, Karol G scored her biggest Billboard Hot 100 hit yet upon impact, with “TGQ,” with Shakira, debuting at No. 7, leading a heap of debuts further down the U.S.-based chart and a giant domestic streaming total. We can expect international listeners, specifically those in South and Latin America, to close the gap somewhat, although her global star power could continue to rise in all directions.
Abu Dhabi-based music streaming company Anghami says its revenues grew by more than 35% to $48 million in 2022, driven by strong growth in paid subscribers, according to a statement the company released sharing its preliminary unaudited results for last year.
The company says its total number of paying subscribers grew 21% year-over-year to 1.52 million, while the overall number of music streams rose by 20% amid growing demand for Anghami’s music content, roughly 60% of which was Arabic-language in 2022.
“Our ability to provide an exceptional user experience and to deliver the best music and entertainment content in the (Middle East and North Africa) region and beyond is reflected in our strong financial performance in 2022,” Anghami CEO Eddy Maroun said in a statement.
As the most popular streaming platform in one of the fastest-growing streaming markets in the world, Anghami says it will achieve profitability later this year. But the company has faced its first public growing pains in recent months in the form of a lawsuit and regulatory reprimand.
In December, U.S.-based publishing company Reservoir Media and its Middle East partner PopArabia sued Anghami for alleged copyright infringement related to a dozen Western and Arabic songs by artists including Lil Jon and 50 Cent. Anghami has defended its payments to rights holders and called the lawsuit baseless and defamatory.
In January, the Nasdaq market exchange, where Anghami is publicly traded, notified the company that it was in violation of a filing rule requiring Anghami to submit a balance sheet and income statement to support its interim results for the second quarter ending June 30, 2022. The company had only submitted a press release with financial results for the period.
The regulatory flag did not affect Anghami’s listing or ability to trade on the exchange, and Anghami apparently remedied the issue this month by filing unaudited condensed financial statements for the first half of 2022 and 2021.
However, in a Feb. 27 filing, Anghami noted that its independent auditor, Ernst & Young Middle East, resigned this year and has been replaced by Grant Thornton. Ernst & Young audited Anghami’s financials for 2021 and 2022 without issue, but did include paragraphs in each of the year’s reports “regarding substantial doubt about Anghami’s ability to continue as a going concern,” Anghami said in the filing.
Grant Thornton is expected to release an audited version of the company’s full-year 2022 results by mid-April.