Publishing
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During the National Music Publishers’ Association (NMPA) annual meeting on Wednesday (June 12), the trade organization said it had calculated total U.S. publishing revenue at $6.2 billion in 2023, up 10.74% from the previous year.
The event, held at Alice Tully Hall at Lincoln Center in New York, is thought of as a state of the union for the U.S. music publishing business. During the presentation, it’s also common for NMPA president/CEO David Israelite to announce major actions it’s taking against tech companies on behalf of publishers. This year, he targeted Spotify, sending an official complaint to the Federal Trade Commission (FTC) as well as letters to the attorneys general of nine states and a list of consumer groups — urging them to stop Spotify’s efforts to bundle music and audiobooks into its premium tiers. It’s the first time the NMPA has involved the FTC in its fight with a tech company.
For publishers and songwriters, Spotify’s decision to include audiobooks in its premium tiers and categorize those tiers as “bundles” — a type of plan that qualifies for a discounted rate on U.S. mechanical royalties given that multiple products are offered under one price tag — means a lower royalty rate for music given that both music and audiobooks must now be paid out from the same royalty pool. In May, the NMPA launched its war with Spotify by sending a cease and desist letter to the streamer for allegedly hosting lyrics, music videos and podcast content that contain their members’ copyrighted musical works without proper licenses.
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In Wednesday’s FTC complaint, the NMPA says Spotify “has deceived consumers by converting millions of its subscribers without their consent from music-only subscriptions into ‘bundled’ audiobook-and-music subscriptions, publicly announcing increased prices for those subscriptions, failing to offer an option for subscribers to revert to a music-only subscription, and thwarting attempts to cancel through dark patterns and confusing website interfaces.” (For more on this, check out Billboard‘s full coverage of the FTC complaint here.)
Aside from Israelite’s big announcement, the event also honored top songwriters for their contributions to the music business — including an opening tribute to songwriter and outgoing NMPA board member Ross Golan. The NMPA also issued awards to Lana Del Rey, this year’s Songwriter Icon recipient, and Savan Kotecha, winner of the Non-Performing Songwriter Icon award. Elsewhere, “Can’t Help Falling in Love” was honored with NMPA’s Iconic Song award, featuring a performance of the song by Ingrid Michaelson.
The event additionally featured fireside chats with Robert Kyncl, CEO of Warner Music Group, and Shira Perlmutter, register of copyrights and director of the U.S. Copyright Office.
NMPA’s annual meeting comes amidst a busy year in the music publishing business. At the start of 2024, the MLC, which collects and distributes U.S. mechanicals, began its first-ever redesignation process — a routine five-year review of its operations to determine if any changes need to be made to the organization.
The same month, UMG pulled its music catalog from TikTok, including its publishing interests, alleging that the short-form app did not pay the “fair value” of music while also raising concerns regarding AI and artist safety. The NMPA showed its support for UMG regarding the move and even joined the music giant by letting the NMPA’s model license with TikTok, used by a number of indie publishers, lapse at the end of April. (UMG and TikTok eventually made a deal.)
The National Music Publishers’ Association’s (NMPA) war with Spotify continued at its annual meeting held Wednesday (June 12) at Lincoln Center’s Alice Tully Hall.
In an address to the publishing executives in attendance, NMPA CEO/president David Israelite announced that the organization has filed an official complaint with the Federal Trade Commission (FTC) and sent letters to the attorneys general for nine states as well as consumer trade groups to try to stop Spotify from reclassifying its premium tiers as “bundles” — a classification that allows the streamer to pay a lower mechanical royalty rate in the United States.
The NMPA alleges that Spotify has violated the Restore Online Shoppers’ Confidence Act (“ROSCA”), section 5 of the FTC Act and various consumer protection laws. Spotify has not returned Billboard’s request for comment.
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As Billboard previously reported, publishers anticipate a $150 million loss in U.S. mechanicals in the first year of the bundling reclassification compared to what publishers would have been paid had it never happened. The decreased payments began in March with no prior warning, according to the NMPA and the Mechanical Licensing Collective (the MLC). Spotify, however, believes it is playing by the book in making the change to how it pays out U.S. mechanical royalties given that it has “bundled” audiobooks in with the other offerings included in the streamer’s premium plans.
“Spotify has declared war on songwriters,” said Israelite at Wednesday’s meeting. “Our response shall be all-encompassing.” Israelite noted that the NMPA (as well as the MLC) has taken multiple actions to stop Spotify’s bundling reclassification already. The organization’s all-out retaliation began with statements made against the company in March, followed in May by a cease and desist letter in which the NMPA threatened to file a lawsuit against Spotify for allegedly using music and lyrics in some of its podcasts and videos without permission. (Spotify called the move a “press stunt” by the NMPA).
“Our letter was not just a warning shot, and the NMPA has never lost a lawsuit. So you’ll want to stay tuned,” Israelite added on Wednesday.
Only days after the NMPA threatened legal action, the MLC filed a lawsuit against Spotify for “improperly” reclassifying its premium tiers as bundles.
The following week, the NMPA sent a letter to the Judiciary Committees in both the U.S. House and Senate asking for an overhaul of the statutory license in section 115 of the Copyright Act, which binds publishers to strict regulations and rules over what they can charge streaming services for U.S. mechanicals.
In the NMPA’s letter to the FTC, obtained by Billboard, general counsel Danielle Aguirre wrote: “The [NMPA] writes to urge the FTC to address unlawful conduct by Spotify that is harming millions of consumers and the music marketplace… Spotify has deceived consumers by converting millions of its subscribers without their consent from music-only subscriptions into ‘bundled’ audiobook-and-music subscriptions, publicly announcing increased prices for those subscriptions, failing to offer an option for subscribers to revert to a music-only subscription, and thwarting attempts to cancel through dark patterns and confusing website interfaces. This bait-and-switch subscription scheme is “saddling shoppers with recurring payments for products and services they did not intend to purchase or did not want to continue to purchase.”
Aguirre continued, “Indeed, it has all the red flags of problematic negative-option practices that the FTC has consistently warned companies about: (1) Spotify has failed to give consumers all material information about its subscription plans up front; (2) Spotify has billed consumers without their informed consent; and (3) Spotify has made it hard for consumers to cancel.”
Other letters of complaint were also sent to the attorneys general for nine states, including California, New York, Tennessee, Colorado, Georgia, Connecticut, Illinois, North Carolina, Oregon and Washington, D.C. In the NMPA’s letter to both the New York bureau chief of the consumer frauds and protection bureau as well as the state’s assistant attorney general, obtained by Billboard, Aguirre wrote: “We urge your office to investigate and address Spotify’s conduct as well.”
Letters were also sent to consumer groups including the National Consumers’ League, the Consumer Federation of America, Public Citizen Consumer Action and the National Consumer Wealth Center in hopes of sparking a class action lawsuit.
The NMPA’s recent moves are being supported by representatives Ted Lieu (D-CA), Adam B. Schiff (D-CA) and Marsha Blackburn (R-TN) via a letter sent Wednesday to Shira Perlmutter, register of copyrights and director of the U.S. Copyright Office.
In the letter, the three representatives wrote: “As members of the Judiciary Committee, which originated the Music Modernization Act, we want to see the law faithfully implemented and copyright owners protected from harm arising from bad faith exploitation of the compulsory system. Digital service providers should not be permitted to manipulate statutory rates to slash royalties, deeply undercutting copyright protections for songwriters and publishers. A fair system should prevent any big tech company from setting their own price for someone else’s intellectual property, whether the owner wants to sell or not.”
Each year, the NMPA is known for announcing major breaking news at its annual meeting — typically against tech companies that, in its view, are not properly paying for songs. Last year, Israelite announced a $250 million lawsuit against Twitter, which is still in progress. In previous years, the NMPA has gone after Twitch, Peloton, Roblox and more.
“We will see what the Federal Court in the Southern District of NY, the United States Congress, the Copyright Office, the Copyright Royalty Board, the FTC, multiple State Attorneys General and consumer advocacy groups have to say,” Israelite told the crowd on Wednesday. “Most importantly, we will see what the songwriters and music publishers who make the product that allows Spotify to exist have to say.”
Around the time that ChatGPT was first released to the public, Alex Bestall, CEO of Rightsify, a music production library, discovered that he was sitting on a new, lucrative business opportunity. “I realized all the songs and all the metadata we have around the songs had a lot of value for AI,” he says. “It was a pretty quick and easy choice for us to license our library out.”
Hundreds of thousands — if not millions — of songs or other musical content are needed to train a competitive AI model to generate music. Though a number of AI companies believe they don’t need to pay for the music that their models train on, citing “fair use,” others have taken a more musician-friendly approach by paying artists and rights holders when using their music to train AI models.
On the surface, the AI industry seems like a perfect new customer for music production libraries — affordable, pre-cleared catalogs of songs in a variety of styles. Historically, production music has been popular among advertisers, social media creators, podcasters and low-budget film and TV producers who need music to soundtrack their creations but lack the time or money to license big-name hits, which often have multiple rights holders and hefty fees. As use cases for production music have grown, so has that sector of the publishing business. As of 2022, MIDiA Research says production music is worth about $1 billion across recorded music and publishing combined.
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While many artists’ rights advocates consider licensing songs to be the “ethical” way to train an AI music model, it still poses a legitimate threat to the existing music business: “Once the [licensing transaction] is made, that model is going to end up totally competing with you for the same customers,” says Antony Demekin, CEO of Tuney, an AI music company that makes songs intended for social media creators and podcasters. “Over time this could degrade your whole business if you’re not careful about the deal you make.”
No standard contract exists for the licensing of production music for AI training. Despite the long-term risks, Bestall says he has licensed his back catalog to multiple AI companies. (Non-disclosure agreements prevent him from revealing which ones.) “Usually we license our back catalog and then we have an ongoing commitment to deliver a certain amount of music over the next two or three years of the agreement,” he says.
In the short term, these new deals between music production libraries and AI companies have actually created jobs for more human musicians. Given his new customers’ desire for more music during their deal terms, Bestall now has 24 full-time musicians — and almost 100 contractors — employed to make more music and grow Rightsify’s library, which already has over 1 million copyrights.
Lee Johnson, CEO and founder of production library Audiosparx, says AI has also allowed him to grow his business. Audiosparx is best known for licensing its catalog to train Stability AI’s Stable Audio model beginning in 2023, and Johnson says he received permission from the musicians represented in his catalog before he agreed to license their music to the AI company. Audiosparx acts as the licensor for production musicians, but unlike Bestall’s library, it does not acquire the songs in its catalog outright. “We took the deal to our artist community and about 90% of the artists opted into it,” he says. “About 10% decided to stay out of it. It was encouraging to see that much uptake because a lot of people are very passionately against [AI]. … We just felt it made more sense to have a seat on the train and ride the train to the future, rather than getting run over by [it].”
Bestall and Johnson say that, so far, partnering with AI companies has not yet affected their other business. Bestall, however, remains sober about the changes that may occur in the next few years. “I know it’s a threat to our existing business lines, but a huge opportunity for the future,” he says. “I think if people are too married to the exact business model of the past, they may struggle.” Johnson, who has pivoted Audiosparx’s business multiple times over its 20-year existence, expresses a similar view about being open to change.
Not everyone agrees. “I think this is short-term money for a long-term loss,” says Henry Phipps, an emerging film composer who previously held a full-time job writing songs for a production library. After surveying the future of AI music, he left his post to try working for an AI music start-up. Now, he’s back writing for libraries and working toward his dream of being a film/TV composer. (Phipps spoke to Billboard under the condition that his former employers’ names would be kept private.) “But you can’t blame anyone for taking the opportunity to include their music in these datasets because you’d be missing out on a short-term paycheck, and everyone else would go ahead,” he says. “It’s kind of futile to try to stop the tide. Someone will always take the deal.”
To Phipps, the way production music is made is already similar to the way AI music is prompted. “I get a brief, which feels like a prompt,” he says. “Recently, one of those prompts was for reality TV with a bunch of adjectives, and then my job is to return a piece of music. It already feels like machine work in a way.”
While “very few people aspire to be production library composers long-term,” Phipps explains, “it is a way into [the music business] — to survive, eat and pay rent and work towards projects that are more creatively fulfilling.” Phipps says working at an AI music start-up made him “more nervous” for his future opportunities as a composer for film and TV. As he sees it, AI music could augment, but not entirely replace, the compositions of blockbuster film scorers — but it might “cut off the bottom rungs of the ladder” by decreasing opportunities for young upstarts like him.
Ed Newton-Rex, former vp of audio for Stability AI and founder of non-profit Fairly Trained, which certifies AI music companies that properly license their training data, advises that “if a library wants to take a deal like this, the terms should be very well thought through.”
Particular areas of concern Newton-Rex identifies include making sure that once a deal term ends, the AI model that used it will be retired or re-trained without the library’s material. “There’s no current way to just untrain a model, but you can add clauses to control what happens after the license is over,” he says. Newton-Rex also advises libraries to be careful about licensing their data to an “open-source model” — a move he calls “totally irreversible” because it makes the model available for public use.
Still, Newton-Rex admits there is “absolutely” still risk ahead. “Musicians making production music are hugely at risk,” he says. “Ultimately, generative AI is faster, cheaper and the quality is already very good.”
Just in case, Bestall is covering his bases by launching his own AI model, Hydra II, to generate royalty-free background music for cafes, hotel lobbies and other public spaces, should his customers ever prefer AI music to his current repertoire of background library music. Still, he feels his library will always be essential: “We’re not too concerned about the possibility of AI companies saying they don’t need production music anymore. Human data is so valuable for AI.”
On Tuesday (June 11), the Association of Independent Music Publishers (AIMP) held its annual global music publishing summit at 3 West in New York. Boasting panels on a wide-ranging list of publishing hot topics, from fraud to film/TV synchronization, the one-day event featured executives from ABKCO, Rimas Publishing, Spirit Music Group, Warner Chappell, CD Baby, Pex and more.
One highlight of the day included the panel Opportunities Abroad: Maximizing Overseas Collection featuring Michael Simon (Harry Fox Agency), Alexander Wolf (SESAC International), David Alexander (MusicIndustry.Africa), Mark Chung (Freibank Music Publishing, IMPF) and Tomas Ericsson (AMRA).
During the panel, the experts, who hail from around the world, discussed the increasingly globalized music market, which regions hold the most value and how to maximize that value. “It can’t be like it was in the 90s,” said Simon. “Back then the answer was to sit back and wait for checks to arrive in your mailbox — that world seems to be disappearing.”
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Some experts stressed the importance of leaning on sub-publishers with local knowledge to ensure proper collections. Ericsson, whose company AMRA collects digital royalties on a worldwide basis, explained that using AMRA can also be a solution to pain points in collection worldwide because “the majority of societies do not have the capital incentives to invest in better technology and therefore use whatever means they have to process this money to others.”
“My bet is on Asia,” said Wolf of the region with the most untapped potential for publishers. “They’re knowledgeable, and they’re making money… Africa as a continent is more troubled. Countries like Nigeria are especially great countries, great musicians but in the last thirty years, Nigeria had seven different collection societies. There is value there, but we need patience.”
The AIMP event coincided with what’s known as New York Music Month (NYMM) — a collection of events across the five boroughs to support the city’s local music scene. Though the festivities continue throughout the entire month, the bulk of NYMM events happen the week of June 10-15. In the publishing business, the annual gathering is fondly known as “Publishers’ Week” or “Songwriters’ Week” in reference to events like AIMP, the National Music Publishers’ Association’s annual meeting and the Songwriters Hall of Fame — all of which take place in the same five-day period. Others also call it “Indie Week,” a reference to the Association of American Independent Music’s five-day conference of the same name.
The Songwriters of North America (SONA) Foundation has partnered with mental health provider Backline to launch a new therapy assistance project. Called TAP, the program will provide qualifying songwriters up to $1,500 in funding for therapy services. Applications are accepted on a rolling basis and reviewed weekly. Each week, the program manager will send new […]
Singer-songwriters Kenya Grace and Cian Ducrot will be honored at ASCAP London Celebrates, an invitation-only celebration of top U.K.-affiliated songwriters and composers taking place in London on June 18. Grace, a British singer-songwriter and producer, who was born in South Africa, will receive the ASCAP Global Impact Award. Grace is best known for her 2023 […]
This July, roughly six years after the debut of Hipgnosis Songs Fund (HSF) on the London Stock Exchange, the relatively short-lived experiment of publicly traded catalog funds — also known as investment trusts — will likely end. Global investment giant Blackstone is expected to win over at least three-quarters of HSF’s shareholders with its $1.58 billion offer to buy the 65,000-song catalog.
The only other listed fund, Round Hill Music Royalty Fund, was taken private in November when Concord acquired it for $468 million. But though their runs were short, these funds transformed how the investment world sees music. Hipgnosis founder Merck Mercuriadis led the charge to convince institutional investors of the stable, noncyclical nature of song rights, and they poured billions into the asset class, bid up the prices of song catalogs to unprecedented heights and fueled a frenzy for acquisitions, which meant creators got more money than ever for selling the rights to their work.
Investments in music royalties keep thriving in the private market — where the Hipgnosis and Round Hill funds continue to do business — but the money is now flowing to asset-backed securities, the same financial vehicle used to create “Bowie bonds” in the 1990s. In the past two years, Concord, Kobalt, HarbourView Equity Partners, Chord Music Partners and others have raised $3.3 billion using securitizations, and music intellectual property investors say money of that magnitude will help keep catalog prices and multiples near record-high levels.
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Despite the game-changing effect that the Hipgnosis and Round Hill funds had on the music business, they faced a number of stumbling blocks. For one, investors “misunderstood” the way that music copyright grants administrative control to the owner, Round Hill co-founder Josh Gruss says. This was borne out by the due diligence report HSF released in March, which indicated investors didn’t comprehend the rights HSF had acquired or the lack of control it had over much of its portfolio.
But interest rates may have been the death knell. When rates were low, HSF and Round Hill offered attractive returns for an acceptable level of risk, but when rates began rising, the funds’ dividends weren’t nearly as attractive. By the end of 2022, the Bank of England’s official bank rate rose to 3.5%, which put downward pressure on HSF’s share price because the risk-free rate wasn’t far from the fund’s dividend. Round Hill was similarly affected. “If you can put your money in the bank and earn 4.5%,” Gruss says, “Round Hill should not [pay investors] 4.5%.”
HSF had other problems, too, including sizable debt and the lasting pall cast by a Sept. 7, 2022, Financial Times article that described HSF’s stalled growth as interest rates rose and a subdued share price that left the fund unable to sell additional shares to fund catalog acquisitions. “If the [Financial Times] thinks it’s a problem, it’s likely going to be a problem,” says Philipp Saure of ContourMusik, a firm that specializes in private securitizations of music assets.
Had HSF been founded today, it may have put more focus on asset-backed securitizations. First deployed in the music business by David Bowie in 1997 to raise $55 million from his recorded music catalog, they allow companies that own music rights to sell debt, using music royalties as collateral.
The size of recent ABS deals dwarfs the money raised by Bowie bonds. In 2022, Concord brokered a $1.8 billion securitization, and Chord, a venture of KKR Credit Advisors and Dundee Partners, did one for $733 million. Hipgnosis Song Management, a different Hipgnosis company that advises HSF, also raised $222 million through an ABS that year. In 2024, HarbourView and Kobalt put together $500 million and $267 million ABS deals, respectively, and sources say that far more unpublicized securitizations have closed in recent years.
While both the ABS and investment trust models let investors buy into recorded music and publishing royalties, there are key differences between the two. ABS debt is purchased by institutional investors such as pension funds and insurance companies with time horizons that match the long durations of music assets. “They’re not as impatient [as retail investors],” Saure says, “so you don’t have this ‘trial in the court of public opinion’ element.”
Institutional investors’ need for a specific rate of return is an approach that works well with established music catalogs that consistently generate cash. Shares in Universal Music Group or Warner Music Group are “speculative” investments that could lose money or produce double-digit gains, says a bank source, who adds that “public investors are growth investors, not just cash flow investors” who seek a steady return. In contrast, ABS investors know exactly what to expect over a specific period.
ABS deals are complex and involve ongoing administration and generally high costs, but they can be worth the effort. “Each structure has its pros and cons, and each is better-suited to varying market conditions,” Reservoir Media CEO Golnar Khosrowshahi says. “Securitization today is attractive because it lowers [the] cost of capital in this interest rate environment.”
Concord CFO Kent Hoskins says he prefers the flexibility of securitizations over traditional debt: “We’ve very much liked the capital structure that allowed us to relatively easily draw new debt for new acquisitions.” An ABS creates a trust that manages a collection of assets that acts as collateral for investors. If Concord is within its covenants, such as a specific loan-to-value ratio — the size of a loan compared with the value of an asset purchased with the loan — he explains, the company can get more debt out of a catalog’s particular value. Term loans are more restrictive, he adds, and give the borrower a lower loan-to-value ratio. Concord did an ABS deal in 2022 with what Hoskins calls a “relatively low” loan-to-value ratio in the “low 40s” compared with ABS deals that he says have gone as high as 65%. That buffer allowed the music company to do another issuance in 2023 for $500 million, which funded its $468 million acquisition of the Round Hill Music Royalty Fund in November.
Music may be a recession-proof, stable commodity, but well-diversified ABS deals aren’t without their risks. One source points to artificial intelligence as a factor that could jeopardize stable cash flows if it causes a major economic shift like pirated music did in the early 2000s.
In general, though, institutional investors see music as a safe asset class over time. “There has been strong demand for every music ABS deal we have done,” the same source says. “As some of the retail money is walking away,” Saure adds, “institutions are becoming more confident.”
Taylor Swift took pop songwriter of the year at the 2024 BMI Pop Awards, which were held at the Beverly Wilshire Hotel in Beverly Hills, Calif. on Tuesday (June 4).
Swift had a hand in writing 10 of BMI’s most-performed songs of 2023 – “Anti-Hero,” “Bejeweled,” “Cruel Summer,” “Karma,” “Lavender Haze,” “Maroon,” “Midnight Rain,” “Snow on the Beach,” “Vigilante Shit” and “You’re on Your Own, Kid.” Swift has received a total of 65 BMI Awards, including the BMI President’s Award in 2009.
On Nov. 10, 2023, Swift received her seventh Grammy nomination for song of the year for “Anti-Hero,” which enabled her to set a new record for the most nods in the category.
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Miley Cyrus, Gregory ‘Aldae’ Hein and Michael Pollack won the BMI Pop Award for song of the year for Cyrus’ megahit, “Flowers.” The smash entered the Billboard Hot 100 at No. 1 and remained there for eight nonconsecutive weeks. It won Grammys for record of the year and best pop solo performance on Feb. 4 (and was nominated for song of the year).
Sony Music Publishing received publisher of the year for the seventh year in a row. The company represented 34 of the previous year’s most performed songs, including “Anti-Hero,” “Barbie World,” “Eyes Closed,” “Flowers,” “Trustfall” and “Unholy.”
As previously announced, Benny Blanco, 36, received the BMI President’s Award. Blanco has won 55 BMI Awards, was named songwriter of the year four times, and won pop song of the year in 2013 for co-writing “Moves Like Jagger” performed by Maroon 5 featuring Christina Aguilera.
Blanco has received two Grammy nods for song of the year, for the Julia Michaels hit “Issues” and the Justin Bieber smash “Love Yourself.” Blanco has gone 0-11 at the Grammys over the years, so this BMI recognition was probably especially meaningful.
Blanco was presented with the award by BMI president and CEO Mike O’Neill, who praised the songwriter as an “unstoppable creative force who has shaped the sound of popular music.” Some of Blanco’s top collaborators, including Lil Dicky, John Janick, Blake Slatkin and Ed Sheeran, sent in video congratulatory messages. Sia then hit the stage to perform Rihanna’s 2012 hit “Diamonds,” which she co-wrote with Blanco.
On receiving the honor, Blanco said, “We have the best job in the world, and we are so thankful and lucky to be in this room. We have the opportunity to make things better through music and help people. We’re giving the soundtrack to peoples’ lives.”
Previous recipients of the BMI President’s Award include Luis Fonsi, Noel Gallagher, Ellie Goulding, Imagine Dragons, Jay Kay of Jamiroquai, Ludacris, P!nk, Willie Nelson, Pitbull, Taylor Swift, Brian Wilson, and Dwight Yoakam.
BMI celebrated 53 first-time Pop Award winners including Sabrina Carpenter (“Nonsense”), Ice Spice (“Boy’s a Liar Pt. 2”), Jelly Roll and Rob Ragosta (“Need a Favor”), Kamille (“I’m Good (Blue)”) and Stephen Sanchez (“Until I Found You”).
The private event was co-hosted by O’Neill and BMI vice president, creative, worldwide, Barbara Cane.
For the full list of 2024 honorees, visit https://www.bmi.com/award-shows/pop-2024/
Subscription gains and a string of acquisitions helped Reservoir Media’s fiscal year revenue grow 18% to $144.9 million, beating the company’s guidance from February of $140 million to $142 million, the company announced Thursday (May 30). Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the period ended March 31 climbed 20% to $55.6 million, topping guidance of $53 million to $55 million.
Organic growth, which strips out the impact of acquisitions made during the year, was 14% for the full year. Among the company’s catalog purchases during the fiscal year were four members of R&B group The Spinners, Latin music artist Rudy Perez, hip-hop producer Mannie Fresh and 2Pac collaborator Big D Evans. Reservoir also invested in Egyptian company RE Media and Saudi Arabian hip-hop label Mashrex.
Among Reservoir Media’s signings during the year were songwriter Steph Carter, who shares a co-writing credit on Sabrina Carpenter’s “Espresso,” and Rob Ragosta, co-writer of “Need a Favor” by Jelly Roll. The company also landed publishing deals with rock band Kings of Leon and rock legend Joe Walsh.
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The company said it expects fiscal 2025 revenue to be between $148 million and $152 million, which would reflect 3.5% growth at the midpoint. Adjusted EBITDA is expected to be $58 million to $61 million, which implies 7.0% growth at the midpoint.
“Our financial guidance reflects our confidence in growth driving organic growth with our value enhancement efforts and capitalizing on the projected growth of the music industry,” CEO Golnar Khosrowshahi said during Thursday’s earnings call. Some of that organic growth will come from additional price increases at music subscription services, she added: “Looking forward, we are poised to benefit from what we believe will become a regular cadence of price increases across streaming platforms.”
Shares of Reservoir Media jumped 15.5% to $9.00 Thursday morning before falling to $8.26, up 6.1%, by late afternoon.
Elsewhere, full-year publishing revenue at the company rose 15% to $96.2 million. Digital revenue grew 17% to $51.6 million and performance royalties jumped 36% to $22.8 million. CFO Jim Heindlmeyer said the “improvement is largely derived from higher royalty rates and price increases at multiple music streaming services, as well as the expansion of our catalog through M&A.”
Recorded music revenue grew 22% to $42.4 million in the full fiscal year largely due to price increases at subscription services and the timing of Reservoir Media’s release schedule, Heindlmeyer said. While physical revenue climbed 49% to $8.9 million, digital revenue rose 17% to $26.9 million and accounted for the majority of recorded music’s $7.6 million in revenue growth.
Fiscal fourth-quarter revenue grew 12% to $39.1 million. Operating income grew just 2%, however, to $8.8 million, while adjusted EBITDA improved 6% to $16.0 million.
Reservoir’s pipeline of potential acquisitions dropped by 50% to $1 billion, down from $2 billion at the end of December. Khosrowshahi downplayed the change, however, noting the company is seeing “ample deal flow” despite “a couple of larger deals” having moved. Liquidity at the end of the year of $132.3 million from $18.1 million of cash and $114.2 million available in a revolving credit facility “gives us the capital to fund our strategic objectives,” said Heindlmeyer. Added Khosrowshahi, “I’m generally quite optimistic about what that pipeline looks like.”
On May 24, Sexyy Red and Drake teamed up on the track “U My Everything.” And in a surprise — Drake’s beef with Kendrick Lamar had seemingly ended — the track samples “BBL Drizzy” (originally created using AI by King Willonius, then remixed by Metro Boomin) during the Toronto rapper’s verse.
It’s another unexpected twist for what many are calling the first-ever AI-generated hit, “BBL Drizzy.” Though Metro Boomin’s remix went viral, his version never appeared on streaming services. “U My Everything” does, making it the first time an AI-generated sample has appeared on an official release — and posing new legal questions in the process. Most importantly: Does an artist need to clear a song with an AI-generated sample?
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“This sample is very, very novel,” says Donald Woodard, a partner at the Atlanta-based music law firm Carter Woodard. “There’s nothing like it.” Woodard became the legal representative for Willonius, the comedian and AI enthusiast who generated the original “BBL Drizzy,” after the track went viral and has been helping Willonius navigate the complicated, fast-moving business of viral music. Woodard says music publishers have already expressed interest in signing Willonius for his track, but so far, the comedian/creator is still only exploring the possibility.
Willonius told Billboard that it was “very important” to him to hire the right lawyer as his opportunities mounted. “I wanted a lawyer that understood the landscape and understood how historic this moment is,” he says. “I’ve talked to lawyers who didn’t really understand AI, but I mean, all of us are figuring it out right now.”
Working off recent guidance from the U.S. Copyright Office, Woodard says that the master recording of “BBL Drizzy” is considered “public domain,” meaning anyone can use it royalty-free and it is not protected by copyright, since Willonius created the master using AI music generator Udio. But because Willonius did write the lyrics to “BBL Drizzy,” copyright law says he should be credited and paid for the “U My Everything” sample on the publishing side. “We are focused on the human portion that we can control,” says Woodard. “You only need to clear the human side of it, which is the publishing.”
In hip-hop, it is customary to split the publishing ownership and royalties 50/50: One half is expected to go to the producer, the other is for the lyricists (who are also often the artists, too). “U My Everything” was produced by Tay Keith, Luh Ron, and Jake Fridkis, so it is likely that those three producers split that half of publishing in some fashion. The other half is what Willonius could be eligible for, along with other lyricists Drake and Sexyy Red. Woodard says the splits were solidified “post-release” on Tuesday, May 28, but declined to specify what percentage split Willonius will take home of the publishing. “I will say though,” Woodard says, cracking a smile. “He’s happy.”
Upon the release of “U My Everything,” Willonius was not listed as a songwriter on Spotify or Genius, both of which list detailed credits but can contain errors. It turns out the reason for the omission was simple: the deal wasn’t done yet. “We hammered out this deal in the 24th hour,” jokes Woodard, who adds that he was unaware that “U My Everything” sampled “BBL Drizzy” until the day of its release. “That’s just how it goes sometimes.”
It is relatively common for sample clearance negotiations to drag on long after the release of songs. Some rare cases, like Travis Scott’s epic “Sicko Mode,” which credits about 30 writers due to a myriad of samples, can take years. Willonius tells Billboard when he got the news about the “U My Everything” release, he was “about to enter a meditation retreat” in Chicago and let his lawyer “handle the business.”
This sample clearance process poses another question: should Metro Boomin be credited, too? According to Metro’s lawyer, Uwonda Carter, who is also a partner at Carter Woodard, the simple answer is no. She adds that Metro is not pursuing any ownership or royalties for “U My Everything.”
“Somehow people attach Metro to the original version of ‘BBL Drizzy,’ but he didn’t create it,” Carter says. “As long as [Drake and Sexyy Red] are only using the original version [of “BBL Drizzy”], that’s the only thing that needs to be cleared,” she continues, adding that Metro is not the type of creative “who encroaches upon work that someone else does.”
When Metro’s remix dropped on May 5, Carter says she spoke with the producer, his manager and his label, Republic Records, to discuss how they could officially release the song and capitalize on its grassroots success, but then they ultimately decided against doing a proper release. “Interestingly, the label’s position was if [Metro’s] going to exploit this song, put it up on DSPs, it’s going to need to be cleared, but nobody knew what that clearance would look like because it was obviously AI.”
She adds, “Metro decided that he wasn’t going to exploit the record because trying to clear it was going to be the Wild, Wild West.” In the end, however, the release of “U My Everything” still threw Carter Woodard into that copyright wilderness, forcing them to find a solution for their other client, Willonius.
In the future, the two lawyers predict that AI could make their producer clients’ jobs a lot easier, now that there is a precedent for getting AI-generated masters royalty-free. “It’ll be cheaper,” says Carter. “Yes, cleaner and cheaper,” says Woodard.
Carter does acknowledge that while AI sampling could help some producers with licensing woes, it could hurt others, particularly the “relatively new” phenomenon of “loop producers.” “I don’t want to minimize what they do,” she says, “but I think they have the most to be concerned about [with AI].” Carter notes that using a producer’s loops can cost 5% to 10% from the producer’s side of publishing or more. “I think that, at least in the near future, producers will start using AI sampling and AI-generated records so they could potentially bypass the loop producers.”
Songwriter-turned-publishing executive Evan Bogart previously told Billboard he feels AI could never replace “nostalgic” samples (like “First Class” by Jack Harlow’s use of “Glamorous” by Fergie or “Big Energy” by Latto’s “Fantasy” by Mariah Carey), where the old song imbues the new one with greater meaning. But he said he could foresee it being a digital alternative to crate digging for obscure samples to chop up and manipulate beyond recognition.
Though the “U My Everything” complications are over — and set a new precedent for the nascent field of AI sampling in the process — the legal complications with “BBL Drizzy” will continue for Woodard and his client. Now, they are trying to get the original song back on Spotify after it was flagged for takedown. “Some guy in Australia went in and said that he made it, not me,” says Willonius. A representative for Spotify confirms to Billboard that the takedown of “BBL Drizzy” was due to a copyright claim. “He said he made that song and put it on SoundCloud 12 years ago, and I’m like, ‘How was that possible? Nobody was even saying [BBL] 12 years ago,’” Willonius says. (Udio has previously confirmed to Billboard that its backend data shows Willonius made the song on its platform).
“I’m in conversations with them to try to resolve the matter,” says Woodard, but “unfortunately, the process to deal with these sorts of issues is not easy. Spotify requires the parties to reach a resolution and inform Spotify once this has happened.”
Though there is precedent for other “public domain” music being disqualified from earning royalties, so far, given how new this all is, there is no Spotify policy that would bar an AI-generated song from earning royalties. These songs are also allowed to stay up on the platform as long as the AI songs do not conflict with Spotify’s platform rules, says a representative from Spotify.
Despite the challenges “BBL Drizzy” has posed, Woodard says it’s remarkable, after 25 years in practice as a music attorney, that he is part of setting a precedent for something so new. “The law is still being developed and the guidelines are still being developed,” Woodard says. “It’s exciting that our firm is involved in the conversation, but we are learning as we go.”
This story is included in Billboard‘s new music technology newsletter, Machine Learnings. To subscribe to this and other Billboard newsletters, click here.