State Champ Radio Royalties
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When Bonnie Raitt‘s touching ballad “Just Like That” won the Grammy for song of the year, the singer-songwriter seemed just as shocked as the crowd. “I am just totally humbled,” she said while accepting the award.
Though she is a decorated and critically acclaimed musician, with 11 Grammys and five top 40 hits on the Hot 100 to her name, Raitt’s “Just Like That” was the least commercially successful song up for the category this year by a long shot. Despite not cracking the Hot 100 chart, “Just Like That” managed to beat out the nine other nominated songs, each of which ranked in the top 20 of the Hot 100 this year, including two No. 1 tracks (“As it Was” by Harry Styles and “About Damn Time” by Lizzo). Many see Raitt’s win as proof that the top Grammy awards do not necessarily always go to those with the most commercial or widespread success.
This particular award win is surprising for Raitt in more ways than one. Song of the year is one of four top awards given out each year by the Recording Academy, along with record of the year, album of the year and best new artist, and it is the only one of the big four that honors the craft of songwriting specifically. Raitt, as she admitted in her acceptance speech, “[doesn’t] write a lot of songs,” but she did write “Just Like That” singlehandedly.
So how much did “Just Like That” earn in publishing royalties for Raitt as its only songwriter, and how much did the Grammy win help the song commercially?
Billboard estimates that before the Grammys, “Just Like That” had earned Raitt over $6,000 in publishing royalties from its release date (April 22, 2022) to the week of the Grammys, which aired on Feb. 5, 2023, for her work as a songwriter from U.S. streaming, sales and airplay combined. In the two weeks following the show, those formats earned her another nearly $6,000. In other words, Raitt earned almost as much from the song in just two weeks as she did in the more than nine months prior to the broadcast.
Raitt owns her publishing, and she houses her songwriting catalog under two entities, Kokomo Music and Open Secret Music. In 2018, she entered an arrangement with indie publishing house Bluewater Music to administer her publishing catalog worldwide. Because she owns her publishing and wrote “Just Like That” by herself, the vast majority of the money she earns from the song will end up in Raitt’s pocket, with deductions likely only made to pay Bluewater Music administration fees and whatever cut her manager makes.
Overall, since the release of “Just Like That,” Billboard estimates that Raitt has earned a total of about $12,000 in publishing royalties from streams and sales of the song. The majority of that came from both physical sales of the album on which the song appears — also called Just Like That — and U.S. on-demand audio streams, according to Luminate. In the two-week period after the Grammys, song downloads and streaming were the biggest source of royalties by far.
In terms of streaming alone, Raitt earned only about $975 worth of publishing royalties from U.S. on-demand audio streams in the almost 10 months that elapsed between the song’s release and the week of the Grammys. But in just the two weeks since her song of the year win, she has earned a little over $2,000 in publishing royalties for U.S. on-demand audio streams.
The week before the Grammys, dated Jan. 27-Feb. 2, “Just Like That” was racked up 44,000 on-demand audio streams in the U.S. The week after the Grammys, dated Feb. 3-9, on-demand U.S. audio streams increased by 3,028% to 1.377 million, according to Luminate. The massive spike, however, did not hold steady in the following week, dated Feb. 10-16, when the number of U.S. on-demand audio streams fell to just over 410,000.
On the physical sales side, Raitt earned over $4,000 in publishing royalties from selling copies of her albums through to the night of the Grammys. In the two weeks after the awards show, Raitt earned about $700.
Along with increased consumption in the sales and streaming categories, “Just Like That” has also sparked interest at radio. The week before the Grammys, it was played just a handful of times, but in the two weeks after her win, she received a total of 144 radio spins, according to Luminate. While still not significant enough to push her to the top of any charts, airplay could contribute solidly toward her future publishing earnings if it continues to gain traction.
So far, the big Grammy win for “Just Like That” doesn’t appear to be boosting sales and streaming activity for Raitt’s overall catalog in the U.S. While weekly catalog album consumption activity jumped to over 9,000 copies on average in each of the two weeks after the show — up from the weekly average of over 3,000 copies before the show — all of that gain is coming from the Just Like That album.
Just before the start of his previously scheduled trial, Jose Teran, who was accused of running a YouTube scam with a partner, has accepted a plea deal in which he has admitted to counts of conspiracy, wire fraud and transactional money laundering for his role in one of the largest royalty scams in history. In his plea, Teran admits to stealing over $23 million in royalties from Latin artists that he admits now he had “no lawful rights to monetize or otherwise control.”
Teran and his business partner, Webster Batista Fernandez, operated their scam under the business name “MediaMuv” and were originally indicted by a federal grand jury in Arizona on Nov. 16, 2021, on 30 counts of conspiracy, wire fraud, money laundering and aggravated identity theft. The scam was the subject of a Billboard investigation. Batista took a plea deal on April 21, 2022, in which he admitted to one count of conspiracy and one count of wire fraud. Batista now awaits sentencing, which is currently scheduled for March.
Teran’s plea agreement echoes much of Batista’s. Both pleas say that the MediaMuv founders “discovered there were songs of musicians and bands on the internet that were not being monetized.” So they began uploading the recordings to YouTube as MP3 files, claiming to own or control the rights. Between 2016 and 2021, Teran and Batista falsely claimed royalties from songwriters and artists ranging from independent creators to songs recorded by global stars like Daddy Yankee, Don Omar, Prince Royce, Julio Iglesias and Anuel AA.
Under the name MediaMuv, Teran and Batista signed a contract with YouTube to use its content management system (CMS), which rights holders use to claim copyright ownership and the ensuing royalties. “We falsely claimed that MediaMuv owned over 50,000 songs and further sought access to YouTube’s CMS in order to obtain royalty payments for these songs,” Teran said in his plea. In addition, the duo entered a contract with AdRev, a rights management company owned by Downtown Music Holdings, “to assist in administering the music [they] fraudulently claimed to own.”
Billboard’s investigation uncovered that YouTube royalty-claiming scams like MediaMuv’s are more common than is generally believed, but Teran and Batista’s scheme was particularly brazen in terms of both scale and style.
Sources who work closely with the platform say YouTube scammers typically just claim small fractions of songs they suspect have not been claimed properly and might go unnoticed. This is especially common on the publishing side, where some compositions have so many songwriters that ownership and royalties are far more complicated than they are for recordings. But MediaMuv often claimed 100% of royalties for master recordings or compositions.
Both Batista and Teran admitted in their pleas that they sent three falsified contracts with companies that “purportedly” managed artists to AdRev and YouTube “for the purpose of deceiving [them] into allowing [MediaMuv] to continue [its] fraudulent operation” in July 2017. According to Teran’s plea deal, these three forged management contracts were provided to support MediaMuv’s assertion that it controlled a vast Latin music catalog.
The plea deals also say the duo did not act alone. Both mention that they hired “over five co-conspirators” to help them find new music to fraudulently claim and, in return, those co-conspirators were paid “a portion of [MediaMuv’s] royalties.” Names are not revealed in these documents, but other court documents tied MediaMuv to a network of people who seem to have benefited financially from Teran and Batista’s scheme, including Batista’s then-wife, who purchased a house in Phoenix in cash with money from a MediaMuv-associated bank account, according to a court document filed by prosecutors.
The house she purchased, along with six bank accounts, a Tesla, a BMW and a plot of land, are all listed in Teran and Batistas’ plea deals as items they agree to forfeit.
Though the duo is ordered to “make restitution to any victim” of their crimes, one of the businessmen who represented multiple MediaMuv victims told Billboard in August he doesn’t “expect to get it all back. I’m sure they spent a lot of it on cars and travel and stuff.”
In a statement to Billboard, a spokesman for Downtown Music Holdings says the company is “pleased by the latest developments in the MediaMuv criminal case, as both defendants have now pleaded guilty and admitted their role in this complex fraud scheme. This case sends a strong message to other potential bad actors that this kind of fraudulent activity in our industry will be investigated and prosecuted to the full extent of the law.”
Representatives for Teran and YouTube did not respond to Billboard’s request for comment.
Teran’s sentencing is set for April 17, 2023.
The music business, historically speaking, has not been great at consensus. But there does seem to be growing agreement from many quarters now that the existing payment structure for streaming royalties isn’t working for everyone and that a different approach is required.
This isn’t a new idea, but it’s one that’s quickly gathering steam in the wake of Universal Music Group chairman/CEO Lucian Grainge’s internal staff memo/open letter to the industry earlier this month, in which he called for an “updated model” for the music industry — one that will be “an innovative, ‘artist-centric’ model that values all subscribers and rewards the music they love.”
It wasn’t clear what, exactly, Grainge meant in the letter. And on Tuesday (Jan. 31), it became a little bit clearer that, as of yet, there isn’t much clarity on what it will mean — though UMG is hoping to find it. To that end, Universal has announced a partnership with TIDAL to “research how, by harnessing fan engagement, digital music services and platforms can generate greater commercial value for every type of artist,” according to a press release. Essentially, there are a lot of unknowns here other than that something needs to change.
That was more or less what UMG’s executive vp/chief digital officer Michael Nash said in a statement accompanying the release. “As the digital landscape continues to evolve, it’s become increasingly clear that music streaming’s economic model needs innovation to ensure a vibrant and sustainable future,” he said. “Tidal’s embrace of this transformational opportunity is especially exciting because the music ecosystem can work better — for every type of artist and fan — but only through dedicated, thoughtful collaboration. Built on deeply held, shared principles about the value of artistry and the importance of the artist-fan relationship, this strategic initiative will explore how to enhance and advance the model in keeping with our collective objectives.”
This is not TIDAL’s first attempt at stepping out of the traditional streaming royalties model, in which streaming income is collected and divvied up among rights holders according to their share of total streams. In November 2021, the streamer announced a new three-tier membership structure and a step into a user-centric royalty model for its premium tier, which endeavored to pay rights holders based on the streaming activity of each individual user — with the additional element that 10% of each user’s subscription fee would go directly to their most-streamed artist.
That, in itself, is a twist on the “fan-powered royalties” that SoundCloud first rolled out in March 2021, which allocated streaming revenue to artists based on which acts a given user listened to, and which Warner Music Group opted into last year. (Deezer has also publicly supported a user-centric model.) SoundCloud says that artists using FPR generate 60% more streaming revenue than those who use the more traditional model, though it’s currently only being offered to indie artists and WMG artists on the SoundCloud platform; a MiDiA study said that 56% of artists were better off with FPR. Access to the data on who the fans are who are streaming that music the most, SoundCloud has said, is the true game-changer for the model.
There has, however, been some hesitance around that user-centric idea, mainly due to studies conducted in the last few years surrounding who would benefit, and at the expense of whom, by the switch. One study found that for 99.4% of artists, the switch would equate to less than a 5% bump in royalties — for many, effectively just a few euros per year — which could be offset by the administrative costs of the switch itself for the platform. That could disproportionately affect R&B/hip-hop artists, given that the genres have thrived in the streaming era, to the benefit of other, smaller or more niche genres. And it would definitely take away from top earners’ revenue — i.e., artists who wield an outsized voice in the business. A general view became that the switch would equate to moving money from one bucket to another, without really moving the needle for most artists at all.
TIDAL, in today’s announcement, effectively conceded the point and said they are stepping away from the user-centric model they were pursuing in order to take a step back and join in this new research project with UMG. “We are setting aside our current fan-centered royalties investigation to focus on this opportunity for more impact,” TIDAL’s Jesse Dorogusker said in a statement. “This partnership will enable us to rethink how we can sustainably improve royalties’ distribution for the breadth of artists on our platform.”
What they’re saying is, essentially, it’s time for a new study to see if there are better, perhaps more nuanced, ways to change up a model that pretty much everyone is beginning to agree is no longer functioning the way it was originally intended. “At TIDAL, we learned from [fan-centered royalties] there is an opportunity to build a royalties distribution model that could be better at compensating the breadth of genres and artists that contribute to streaming catalogs,” TIDAL’s global head of communications Sade Ayodele tells Billboard. “Many of the alternative models explored, however well intended that they are, unfortunately create a new set of winners and losers. With this partnership, we’re hoping to find a fairer and more equitable distribution approach that benefits a broader set of genres and artists contributing to the culture of music.”
Which brings us, again, to the original question: What will that look like? The answer could be varied, and it could be different for each streaming service. There have been some conversations in some sectors of the industry about weighting music streams higher than background sounds, for instance, or more heavily weighting intentional listening (searching for or clicking on a song or artist) over background listening (a playlist, or an algorithmically-chosen next song). There are already different models around ad-supported vs. paid subscription payouts, and there is a conversation to be had about how fan engagement should or could influence where money is directed. What UMG and TIDAL are trying to say with Tuesday’s announcement is, let’s go try some things and see what works, and let everyone else know what we’re doing so that maybe they can try to find an innovative answer, too.
Consensus is a hard thing to come by. There likely won’t be a consensus around what the end solution is, and several options could eventually emerge. But streaming has been around for more than a decade now, and if there’s any consensus at all, it’s that something needs to change.
BMG Rights Management is facing a new lawsuit claiming the publisher has failed to pay royalties from Mark Ronson and Bruno Mars‘ smash hit “Uptown Funk” to the families of late members of the Gap Band who are credited as co-writers on the song.
In a complaint filed Thursday in Manhattan federal court, the heirs of Robert and Ronnie Wilson claim that BMG breached a 2015 deal that was inked because “Uptown Funk” incorporated elements of the Gap Band’s 1979 song “I Don’t Believe You Want to Get Up and Dance (Oops Upside Your Head).”
“Despite its obligations to account for and pay to plaintiffs their share of all income received from the Uptown Funk musical composition, BMG has refused and failed to provide either the funds due to plaintiffs or an accounting despite plaintiffs’ repeated demands,” the lawsuit says.
A rep for BMG did not immediately return a request for comment on the allegations on Friday. Mars and Ronson are not accused of any wrongdoing and are not named in the lawsuit.
In a statement, Wilson family attorney Michael Steger told Billboard that his clients had been “working for years” to receive credit for their contributions to “Uptown Funk” and had been “left with no choice but to pursue litigation to protect their rights.”
As reported by Billboard at the time, the songwriting credits to “Uptown Funk” were suddenly amended in 2015, months after the song was released. After the owners of “Oops Upside Your Head” filed a claim against the song on YouTube – and in the cautious aftermath of a blockbuster infringement verdict over Robin Thicke‘s “Blurred Lines” — the five co-writers of the Gap Band song were each given 3.4% stakes in the then-new track.
The new case was filed by Linda Wilson, the widow of Ronnie Wilson, and by Robin Lynn Wilson, LaTina Wilson and Robena Wilson, the heirs of Robert Wilson, over those two late band members’ respective 3.4% stakes. The other three members who received such stakes are not involved in the case.
In their complaint, the Wilson heirs called the new allegations of non-payment against BMG “yet another chapter in a long-running series of disputes” over the hit song, which spent 14 weeks atop the Hot 100 and 56 total weeks on the chart.
They aren’t wrong. In the years after “Uptown Funk” was released, at least three lawsuits were filed claiming Ronson and Mars stole elements from earlier songs. One case involved the 1983 song “Young Girls” by the band Collage; another centered on the 1980 funk song “More Bounce to the Ounce” by the band Zapp; the third alleged they copied material from the 1979 classic “Funk You Up” by The Sequence.
All three cases were later dropped or settled.
Read the entire new lawsuit against BMG here:
Don Henley, Sheryl Crow, Sting and a slew of other musicians are throwing their support behind a new federal copyright rule aimed at making sure that songwriters who regain control of their music actually start getting paid their streaming royalties after they do so.
As first reported by Billboard in October, the U.S. Copyright Office wants to overturn a policy adopted by the Mechanical Licensing Collective (which collects streaming royalties) that critics fear might lead to a bizarre outcome: Even after a writer uses their so-called termination right to take back control of their songs, royalties may continue to flow in perpetuity to the old publishers that no longer own them.
In a letter Thursday organized by the Music Artists Coalition, more than 350 artists, songwriters, managers and music lawyers urged the Copyright Office to grant final approval for the proposed rule, warning that “music creators must not be deprived of the rights afforded to them by copyright law.”
“We stand together in support of USCO’s rule and believe that anything contrary would undermine the clear Congressional intent to allow songwriters, after an extended period of time, to reap the benefit of the songs they create,” the signatories wrote to the Copyright Office.
“It is simple, a songwriter who validly terminates a prior grant is the correct recipient of royalties,” the group wrote. “A publisher whose grant was terminated – and has received the benefit of the songwriter’s work for decades – is not the proper or intended recipient of these royalties.”
To fully understand the legal complexities of the Copyright Office’s proposed rule and what it might mean for songwriters, read this explainer.
Thursday’s letter, also signed by Bob Seger, Maren Morris, John Mayer, Dave Matthews, members of the Black Keys and others, came on the final day of the so-called “comment period,” in which outside groups could submit their opinion on the Copyright Office’s proposed rule.
The letter was the product of a call for signatures by the Irving Azoff-led Music Artists Coalition, which, along with other groups like Songwriters of North America, the Black Music Action Coalition and the Nashville Songwriters Association International, helped raise the alarm about the issue and spurred the Copyright Office to take action last year.
“Too often, music artists are quietly stripped of their rights,” Azoff said in a statement to Billboard announcing the letter. “But, today, the industry stood up to say ‘Not on our watch!’ We applaud the Copyright Office for its proposed rule. This rule should pass unamended and without delay.”
The Copyright Office introduced its new rule in October, saying the MLC’s policy had been based on an “erroneous” understanding of the law that created ambiguity about who should be receiving streaming royalties after a songwriter invokes their termination right and regains ownership of their music. Ordering MLC to “immediately repeal its policy in full,” the new proposal would make clear that when a songwriter takes back their music, they should obviously start getting the royalties, too.
In a message to members ahead of Thursday’s letter, MAC offered a plain-English explainer of the complex legal mechanics at play in the situation. The group urged its members to help end what it believed amounted to a loophole in the system created by 2018’s Music Modernization Act, warning that it could defeat the very purpose of both the new law and termination.
In an interview with Billboard, Susan Genco, co-president of The Azoff Company and a leader at MAC, said the group’s call to action – and the letter that came from it — was an example of how songwriters have become better mobilized after years of being “kept in the dark” on complicated policy matters that could have adverse effects.
“This is a big part of our role, to figure out which issues impact music creators the most, prioritize them, and then explain them to the community,” Genco said.
“We tried to paint a very clear picture for them,” added Jordan Bromley, a prominent music attorney and another key member of MAC, in the same interview. “Oh you think you’re getting your streaming mechanicals back through termination? Think again.”
In addition to advocating for the new rule, Thursday’s letter also came with something of a warning. The final sentence, separated into its own paragraph, read: “Any view opposing the USCO’s rule is a vote against songwriters.”
While not outright oppositional, the Copyright Office has received pushback on the proposed changes from the National Music Publishers’ Association. In a Dec. 1 submission, the group said it supported the overall goal of the new rule, but warned that the agency’s proposed approach “may have far-reaching and unintended consequences” and would likely lead to litigation in other spheres. Among other issues, the group said the rule must not apply retroactively.
“The breadth of the USCO’s legal reasoning in the [proposed rule] seems likely to increase legal uncertainty and questions,” the NMPA wrote. “This uncertainty will almost definitely raise the likelihood of litigation … including litigation concerning past payments made in accordance with what was then industry custom and practice.”
The NMPA instead advocated for “a consensus-based legislative solution” that would be passed by Congress, which it said could be narrower and more “carefully crafted” to avoid the problems the group has with the Copyright Office’s legal analysis.
In a statement to Billboard, NMPA president David Israelite stressed the industry group was aligned with songwriters on the ultimate policy goal.
“We strongly support songwriters receiving all mechanical royalties after a termination and have been working towards crafting legislation to ensure that outcome for years alongside the major songwriter groups,” Israelite said. “While not a concrete legislative remedy, our comments reflect our support for the Copyright Office’s proposed rule and offer ways to make that rule even more robust and less susceptible to legal challenges.”
The text of the Copyright Office’s proposed rule is available in its entirety on the agency’s website. The public comment period ended on Thursday, but all submitted comments will be made public on a public docket. The agency will review all comments and issue a final rule in the months ahead.
Read the entire letter sent to the Copyright Office on Thursday here:
Downtown Music Holdings has acquired Curve Royalty Systems, a company that specializes in royalty processing for digital income, it was announced Thursday (Jan. 5). Curve will now be a part of Downtown Music, a division that focuses on servicing the professional music industry.
In recent years, Downtown has pivoted away from its previous role as a traditional publisher and rights holder by selling off its 145,000-song catalog and putting its efforts into building a service-focused music company to tap into the growing cohort of DIY artists and professionals. The company has quickly amassed a suite of service tools via acquisitions including Curve, FUGA, CD Baby, Soundrop, AdRev and more. Downtown is also an active investor in companies like Beatbread and Vampr.
Though Downtown is integrating Curve into its suite of offerings for distribution and monetization, the royalty processing firm — which can distill multiple royalty statements into one cohesive report — will continue to serve its existing client base of over 1,000 labels and publishers worldwide. This includes Warp Records, Ingrooves, Mad Decent, MRC, Royalty Solutions Corp, Domino Recording Company, Hospital Records/Songs in the Key of Knife, Cal Financial and Alta Financial. Since its inception in January 2019 by co-founders Tom Allen, Richard Leach and Ray Bush, the company says it has processed nearly $4 billion in revenue.
Downtown Music president Pieter van Rijn said of the deal, “In Downtown Music, we’ve combined innovative technology and industry-leading services to create an offering that empowers music businesses and their creators. Curve perfectly complements our mission to be the leading music industry platform and their past work speaks to their high standards and pioneering technology.”
Downtown CEO Andrew Bergman added, “For some time, we have been admirers of the technology and service quality that Tom and Richard have been building at Curve. As we got to know them and their team, it became ever more obvious that their dedication and forward-thinking vision were a great fit for Downtown. Accuracy, precision, timeliness, and innovation in royalty services are core to Downtown’s mission of supporting creators and the businesses that serve them. Welcoming the Curve team to Downtown is another important step in furtherance of our mission.”
A prominent ’90s hip-hop duo is suing Universal Music Group for withholding royalties tied to what they’re alleging is a “sweetheart” deal the label reached with Spotify in the late 2000s.
Filed Wednesday (Jan. 4) in U.S. district court in New York by attorneys representing Andres Titus (Dres) and William McLean (Mista Lawnge), members of the hip-hop duo Black Sheep, the lawsuit claims UMG owes its artists approximately $750 million in royalties deriving from the company’s stock in Spotify. Under a licensing deal they claim UMG and the streaming giant reached in 2008, the label agreed to receive lower royalty payments in exchange for equity in the then-nascent streaming company. But Titus and McLean say the label breached their contract with Black Sheep and other artists by withholding what they argue is the artists’ rightful 50% share of UMG’s now-lucrative Spotify stock — and otherwise failing to compensate them for the lower royalty payments they received as a result of the alleged deal.
“Rather than distribute to artists their 50% of Spotify stock or pay artists their true and accurate royalty payments, for years Universal shortchanged artists and deprived Plaintiffs and Class Members of the full royalty payments they were owed under Universal’s contract,” the complaint reads. Titus and McLean further claim that Universal deliberately omitted from royalty statements both the company’s ownership of Spotify stock and the lower streaming royalty payments that resulted from its alleged deal with the streaming service.
“Over time, the value of the Spotify stock that Universal improperly withheld from artists has ballooned to hundreds of millions of dollars,” the complaint continues. “These and the other wrongful conduct detailed herein resulted in the Company’s breaching its contracts with artists, violating the covenant of good faith and fair dealing that is implicit in those contracts, and unjust enrichment at the expense of its artists.”
In a statement sent to Billboard, a UMG spokesperson denied Titus and McLean’s claims: “Universal Music Group’s innovative leadership has led to the renewed growth of the music ecosystem to the benefit of recording artists, songwriters and creators around the world. UMG has a well-established track record of fighting for artist compensation and the claim that it would take equity at the expense of artist compensation is patently false and absurd. Given that this is pending litigation, we cannot comment on all aspects of the complaint.”
According to the lawsuit, Titus and McLean signed a record contract with Polygram in July 1990 (later amended and revised in July 1991) as Black Sheep — the duo best known for the hit rap single “The Choice Is Yours (Revisited)” from their RIAA Gold-selling 1991 album A Wolf in Sheep’s Clothing. Black Sheep’s record contract was then assumed by UMG after the company merged with Polygram in 1998.
UMG acquired just over 5% of Spotify shares “in or around the summer of 2008” in a licensing agreement in exchange for lower royalty payments, the complaint adds, citing a 2018 Music Business Worldwide report. It claims that Universal acquired additional Spotify shares through its 2011 purchase of EMI, which had acquired shares in the streaming company around the same time, the suit alleges. It then cites UMG’s own prospectus, released in September 2021, revealing that the label held roughly 6.49 million, or roughly 3.35%, of Spotify shares as of June 30, 2021, valued at 1.475 billion euros ($1.79 billion).
It’s worth noting that UMG’s stake in Spotify has become significantly less lucrative since June 30, 2021, however. As of Wednesday’s closing price, UMG’s stake in Spotify is now worth just $560 million — the result of Spotify shares falling 70.5% over the past 18 months. Notably, Spotify isn’t the only streaming service UMG has equity in; according to the same prospectus, it also owns 0.73% of Tencent Music Entertainment shares, a stake that’s currently worth $112.5 million.
Included as an exhibit in the complaint is Black Sheep’s amended July 1991 contract with Polygram, which states that royalties paid to Titus and McLean “‘shall be a sum equal to fifty percent (50%) of [Universal’s] net receipts with respect to’ the ‘exploitation’ for any ‘use or exploitation’ of ‘Master Recordings’ created by Plaintiffs.” The plaintiffs claim they and other UMG artists are thereby entitled to 50% of the labels’ Spotify stock but that UMG has failed to pay it. This demand stems from a couple of broad assumptions: that all artists in the class signed similar contracts and that they were similarly not compensated with a portion of UMG’s stock holdings in Spotify.
The plaintiffs are asking for compensatory damages, punitive damages and an injunction “or other appropriate equitable relief” requiring UMG “to refrain from engaging in deceptive practices” as outlined in the lawsuit.
UMG isn’t alone among the major labels in acquiring Spotify stock — both Sony and Warner Music, as well as indie Merlin, also have or had stakes in the company. In May 2018, Sony sold half of its 5.707% stake in Spotify for an estimated $761 million, while that same month Merlin announced it sold its entire stake for an unknown amount and had shared the proceeds with its members. Warner followed suit in August 2018 when it sold its entire 2% stake in the streamer for $504 million, with the company announcing that around $126 million of the proceeds would be paid out to the company’s artists.
UMG has yet to sell any of its stock in the streaming giant.
-Additional reporting by Glenn Peoples
You can read the full lawsuit below.
Exactly one decade ago, on Dec. 21, 2012, Psy‘s “Gangnam Style” made history as the first music video to reach 1 billion YouTube views. As a result, YouTube’s Billion Views Club was born. A way to celebrate official videos that have achieved peak virality, the club is now home to over 300 music videos, including many of the most iconic hits from the past 10 years — from Adele‘s “Hello” to Luis Fonsi‘s “Despacito” feat. Daddy Yankee.
But how much do artists get paid for crossing the billion-view threshold for a music video on YouTube? The royalties are dependent on a few factors. Label affiliation, location and type of view affect these rates significantly. For example, artists signed to major labels — which represent the vast majority of members of the Billion Views Club — earn higher rates on the platform than those who are unsigned or affiliated with an indie label.
But location is possibly the biggest determining factor of all: in the U.S., rates are generally higher than in other countries. So while an official YouTube music video for a major-label artist could generate a blended average of $0.0038 per stream in the U.S., globally — which is how YouTube counts its views — Billboard estimates that rate at $0.0026 per stream. YouTube Premium video streams (views from customers who subscribe to YouTube’s ad-free video-watching tier) are also higher than plays from users on the ad-supported tier, both in the U.S. and globally.
Consequently, for major-label artists, 1 billion video streams on an official music video would generate about $2.6 million globally. That’s, of course, before the label takes their cut of royalties, which varies widely based on each artist’s individual deal, and before the artist takes into account what, if anything, they owe to their featured artists or producers on the track.
For non-official videos that use music — like a user-generated video of someone’s visit to the zoo, set to a song by a major-label artist — that global blended stream estimate would drop down to $0.0021, given lower payouts on UGC videos and the over-indexing of UGC viewership vs. that of official videos. So for a major-label song on YouTube that generates 1 billion views across all videos that use it, the label and artist would generate closer to $2.1 million.
Of the more than 300 music videos on YouTube to hit 1 billion views, the fastest to reach the benchmark is “Hello” by Adele, which took just 88 days from release to amass such a viewership. Next is a tie between “Shape of You” by Ed Sheeran and “Despacito,” both of which took 97 days. The third and fourth places on the list are also both held by Spanish-language songs, with “Mi Gente” by J Balvin and Willy William earning the title in 103 days and “Échame La Culpa” by Luis Fonsi and Demi Lovato taking 111 days.
Additional Reporting by Ed Christman.
Preview
Songwriters have something to celebrate this holiday season. Though it seemed rulings on royalty rates for the period of 2018-2022 (Phonorecords III) and 2023-2027 (Phonorecords IV) would not receive final judgement by the Copyright Royalty Board in time for Christmas, there is finally clarity about at least one type of royalty. The board on Friday (Dec. 16) accepted a proposed settlement to hike the royalty rate for U.S. mechanicals for physical products (like vinyl records, CDs, cassettes), permanent downloads, ringtones and music bundles.
Taking effect on Jan. 1, 2023, as part of Phonorecords IV, songwriters will earn 12 cents per track or 2.31 cents per minute of playing time or fraction thereof, whichever amount is larger for physical products and permanent downloads. This will also include inflation-based adjustments for subsequent years of the rate period, a major change for composers who have historically been locked into stagnant penny rates for sales, despite the increasing cost of living. Ringtones will remain at the same rate as they were previously, and the money earned for each element of a music bundle will be decided according to the rates for that element.
The new ruling today approves what is known as “Settlement 2,” which was formed by the National Music Publishers’ Association (NMPA), Nashville Songwriters Association International (NSAI), as well as the major music companies: Universal Music Group, Sony Music Entertainment and Warner Music Group earlier this year.
As the name of the settlement implies, there was one that preceded it. In 2021, the same parties proposed “Settlement 1” which would have upheld the long-standing 9.1 cent penny rate for physical goods and permanent downloads. That proposed settlement was sent to the Copyright Royalty Board judges for approval last year, but it triggered backlash among some in the independent writer community.
The 9.1 cent rate has been in effect since 2006 and has not risen with inflation. George Johnson, an independent songwriter who often pushes back against settlements at the Copyright Royalty Board in favor of higher rates, and other interested parties objected to continuing this 9.1 cent rate for another five year period. They also noted other issues with Settlement 1, like the lack of adjustments for inflation, and questioned a memorandum of understanding (MOU) between the major labels and the NMPA, which could have provided waivers on late fees the U.S. Copyright law allows when payment deadlines are missed.
In response to concerns, The CRB judges concluded the proposed settlement did not provide a reasonable basis for setting statutory rates and terms as stated in proposed settlement 1.
For many years, the CRB rate proceedings have primarily focused on achieving fair compensation for streaming rates. In 2021, audio digital services paid out about $1.3 billion to publishers and songwriters, according to data from the Mechanical Licensing Collective.
While sales formats comprise roughly 15% of the recorded music market, the NMPA estimates those formats produce just 5% of U.S. publishing royalties. If streaming continues to grow at its current pace, some say that within three years these sales formats that are covered by the subpart B configurations might only account for 1% of publishing royalties.
The NMPA has also pointed out in the past that rate litigation is expensive — often in the tens of millions of dollars — as a reason why they have focused on fighting for high streaming rates rather than what formats are covered by subpart B, noting that the cost of litigation could end up equaling or outweighing whatever additional money a higher subpart B hike could achieve.
In Friday’s ruling, however, the court notes that the royalties generated by vinyl, CDs, downloads and other formats covered in subpart B “should not be treated as de minimis, or as a ‘throw away’ negotiating chip to encourage better terms for streaming configurations.” They also noted the improvements to Settlement 2 as “distinguishable” from the first proposed settlement.
The event marks the biggest rate increase for songwriters for physical goods and permanent downloads in almost two decades.
Now, just one final step remains: the register of copyrights has to check and make sure this is compliant with the copyright statute, and if approved — which is typical — this will go into effect at the top of the year. However, participating parties also have 30 days to file an appeal to the CRB’s determination.
While the downfall of FTX and the Crypto Winter that saw NFT sales drop 90% dominated Web3 headlines this year, for many creators there was a bigger issue at play. Their royalties have been under attack, undermining a central promise of Web3 as a sustainable model for musicians.
Creator royalties on NFTs ensure that artists get paid a cut of revenue every time their work is sold on a secondary market. As the music NFT market has matured since multi-million dollar sales attracted widespread attention, these royalties have been a central part of the Web3 proposition — presenting musicians with a possible alternative to the major label system and allowing them to generate meaningful revenue over the long term. Only now, that promise is being pulled from under them as several new NFT platforms effectively or explicitly cut out creator royalties — even though it was a core part of the Web3 promise when they originally listed their NFTs for sale — in an aggressive bid for market share.
Even OpenSea, the largest NFT marketplace, briefly considered changing its policy before a deafening backlash from artists forced the company to double down on its commitment to royalties. OpenSea also introduced an “enforcement tool” allowing artists to blacklist rival marketplaces that don’t honor creator royalties. It’s a small win for creators although some have called it a “bandaid” as many growing platforms including Blur, Magic Eden, LooksRare and Sudoswap still do not enforce royalties by default. In some cases it’s a hardline policy, in others the royalty is “optional” allowing traders to opt out of paying the artist when they sell an NFT. Most traders opt out, making the effective royalty rate close to zero.
Creator royalties are the beating heart of Web3 and the primary reason why artists flocked to NFTs in the first place. “Coming from the music world, the promise of being able to earn royalties in perpetuity without the interference of middlemen, was something I could only dream about,” says Illa Da Producer, a 12-time platinum-certified music producer credited on Eminem’s “Killshot” and community lead at Yuga Labs, the company behind Bored Ape Yacht Club. The artist can choose their own royalty rate — typically 2.5% to 10% — and they are lucrative, earning more than $1 billion for creators on OpenSea in 2022 alone.
But there’s a problem. These royalties are not coded directly into the NFTs themselves. They were introduced by marketplaces like OpenSea, originally to attract artists to the space, which means they can be removed just as quickly.
None of this was an issue during the bull-run where cartoon animal JPEGs sold for over a million dollars a piece. Collectors were flush with crypto, happy to pay the artist royalty whenever they made a winning trade. But now the bubble has popped. The price of Ethereum has dropped by 75% and NFT volume is down 90% from the highs in January. NFT platforms are left fighting for market share in a shrinking economy and traders are trying to save as much money as possible.
In a desperate bid to attract users, rival marketplaces like X2Y2 effectively cut out creator royalties by making them “optional” — traders can choose not to pay the artist royalty when they sell their NFTs, therefore pocketing more money from each sale. Other platforms including Blur, LooksRare, Sudoswap and Magic Eden followed a similarly aggressive policy.
Creators were blunt in their criticism. “In many ways, it amounts to theft by the marketplace,” says Jeff Nicholas — founder of WRVPSound, a collection of 9,999 AI music NFTs and the biggest Web3 music project ever by volume at 6,115 ETH (~$7.15 million at current prices) traded, “If a project sets royalties in their terms of service and those royalties are not enforced.”
Nevertheless, it worked. Traders abandoned OpenSea in droves. The platform’s market share dropped from 80% earlier in the year down to 45% in November according to crypto research company Messari. As a result, OpenSea claims that more than $1 million of creator royalties was effectively bypassed in the first week of November alone. At risk of losing even more market share, OpenSea was forced to act quickly, launching a tool that allows artists to blacklist those rival marketplaces.
But there’s a catch. The tool only works for new NFTs. It would not work for the thousands of existing NFTs and projects. The future of royalties on these collections — including the Bored Ape Yacht Club, Doodles and Azuki, was left wide open. In a blog post, OpenSea put all options on the table, including the potential of optional royalties.
The backlash from artists was fierce. “The message to trading platforms like OpenSea is this,” says Gino the Ghost — a Grammy winning producer and founder of Web3 music project Blocktones — “You either stand firm to support the ethos of of Web3 as the creative revolution or you lose the trust and business of the very creatives that make you successful in the first place.”
Many artists spoke out about their fear of losing their livelihood if OpenSea followed through. “I am a transgender teen that escaped an abusive household through the power of NFTs,” wrote Fewocious — a 19 year old digital artist who’s built a massive following in Web3 — in a statement on Twitter. “And there are probably so many more artists, many of whom may not be as fortunate as me, who live off their artist royalties … Please reconsider removing royalties.”
Fewocious’ statement quickly spread across social media, garnering retweets from Snoop Dogg (“Power to tha artists”) and prompting further discussion from industry execs like Lady Gaga’s former manager Troy Carter, “Fucking over creators is very Web2.”
Founders in the space also warned that it would threaten the future of NFT companies, given that many projects rely on royalties to fund their business operations. “None of the top NFT projects you see would be where they are without them,” says Betty — founder of Deadfellaz, an NFT project that partnered with Steve Aoki in October for a Halloween merch drop and has generated more than $37 million in total volume since launching in 2021. “It’s why most of us flocked to this industry and it’s what platforms like Opensea were built on.”
After engaging with the community in several heated public debates, OpenSea clarified its position and promised to enforce creator royalties on all existing collections going forward. Speaking to Billboard, OpenSea admits they could have communicated better during this time. “We own that,” says Shiva Rajaraman, vp of product. However, he affirms that OpenSea has always stood behind artists and, while all options were discussed internally, OpenSea never truly wanted to cut out creators. “Honestly, the idea of just getting rid of creator fees made no sense.” Instead, OpenSea wants to put the power in the hands of creators, he explains. “We should respect, as platforms, that choice that is made [by creators], rather than make that variable.”
Meanwhile, the new on-chain enforcement tool — which Rajaraman describes as a “healthy tension against other marketplaces” — is beginning to work. At least one rival marketplace X2Y2 has backed down and conceded that it will also enforce royalties on all existing collections. OpenSea has since handed over ownership and control of the tool to a collective of several NFT platforms so that the community can be more involved in how it develops.
Artists have mostly responded positively. “This is actually a really good start to enforcing royalties,” says Nicholas. And it’s proof that artists can still make themselves heard, force change and define their terms in the nascent Web3 space. However, he also admits that this solution might just be a “bandaid.” Despite the progress made by artists in the last month, the final decision still appears to be in the hands of the marketplaces.
Some creators are therefore fighting for a complete change to the system. “[We need] a creator focussed and led solution,” says Deadfellaz’s Betty. “We’ve needed to come together for a long time … and work on solutions outside of centralized marketplaces.”
In the meantime, artists and OpenSea do agree that creator royalties should be enshrined as a social and cultural rule, even if they are not always honored by some marketplaces. “If we don’t,” says Nicholas. “Web3 runs the risk of going the same way every other technical innovation has over the last 20-plus years and squeezing the artists and creators yet again.”
