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The way things are going, music rights valuations are likely to remain steady in the new year, according to dealmakers.
Total music consumption in the United States rose 9.2%, according to Luminate’s 2022 year-end report. While that was slower than the 11.3% consumption growth in 2021, “9.2% relative to 11.3% is not a massive move in growth,” says David Dunn, managing partner at Shot Tower Capital. “As a whole, the growth rates are within expectation for me and still very healthy,” adds Andy Moats, executive vp and director of music, sports and entertainment at Pinnacle Financial Partners. Last year’s numbers were also in line with the expectations of Daniel Weisman, principal at Bernstein Private Wealth Management. “Goldman Sachs’ report published in June of 2022 put streaming CAGR [cumulative annual growth rate] at 12%,” he says.
A mitigating factor is the difference in margins between digital and physical formats. On-demand song streaming — both audio and video — climbed 12.2%. On-demand audio streaming grew 12.1%, the same rate achieved in 2021. Physical album unit sales dropped 3.5%. CD unit sales fell a modest 11.6%, while vinyl LP unit sales grew 4.5% to a record 43.5 million units. Despite Taylor Swift selling nearly 1 million units of her Midnights album on vinyl and Beyoncé showing strong album sales across vinyl and CD formats, music consumption was — again — more digital than the prior year.
With streaming up and physical formats down, that mix is favorable for catalogs. “Margins are improving” as a result of increased digital consumption, says Dunn. Digital music is less expensive to distribute than physical formats — especially vinyl, which has relatively weak margins and high shipping costs. The cost of producing an additional download or stream is effectively zero, aside from negligible costs of data storage and bandwidth. That’s a net positive for catalog valuations. Experts value music catalogs by discounting future cash flows to a single present value. When revenues shift to higher-margin digital formats, rights holders will receive more cash.
The gains do not accrue evenly to all recordings and compositions, though. Last year’s streaming growth could “potentially” support current valuations for a catalog 10 years or older, “especially against a rising rate environment,” says Weisman.
Younger catalogs with decaying royalty growth, however, are a different matter. “I think for newer catalogs that have not yet leveled off and whose royalties are not increasing, it’s hard to argue that all the external economic factors — rising interest rates, inflation, etc. — do not have an impact,” says Weisman.
The shift in product mix carries implications for recorded music valuations specifically. As consumption increasingly skews toward digital, recorded catalog margins will catch up to those in the publishing business, says Dunn. “I generally think margin growth is continuing and I think investors are realizing you can exploit recorded catalog at margins similar to publishing.”
Focusing only on unit sales doesn’t tell the entire story, however. Vinyl records may have relatively poor margins, but rising vinyl prices create more margin dollars for labels. In the first half of 2022, the average sale price of vinyl in the United States rose 5.6% to $26.16, according to the RIAA.
Streaming is also becoming more valuable. After more than a decade of flat subscription prices, companies such as Apple, Amazon and Deezer are raising prices. Spotify’s CEO has indicated the company intends to raise prices in 2023, as well. Due to these increases — often just $1 per account — the U.S. streaming market could generate hundreds of millions of additional dollars this year without sacrificing a meaningful number of subscribers.
Nari Matsuura, partner at Citron Cooperman, believes the U.S. market is even healthier than Luminate’s data shows. That’s because music is becoming more ubiquitous with tech in our everyday lives, meaning there is revenue growth that consumption data can’t track.
“While streaming growth captured the whole narrative of the U.S. market a few years ago, now the narrative has changed to include much more than streaming,” she says. “Growth also needs to take into account the licensing of alternative music platforms, such as Peloton and Facebook, as well as the stellar growth in synch licensing due to the volume of new programming by SVODs as they compete for subscribers.”
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Source: NurPhoto / Getty / Netflix
If you’re one of those people who share their Netflix password with friends, count your days because the streaming service is coming for you.
Spotted on The Verge, Netflix will begin cracking down on password sharing “more broadly” toward the end of the first quarter of 2023, the streaming giant announced in its earnings report.
“While our terms of use limit use of Netflix to a household, we recognize this is a change for members who share their account more broadly,” Netflix writes. “As we roll out paid sharing, members in many countries will also have the option to pay extra if they want to share Netflix with people they don’t live with.”
Netflix fully expects the crackdown will cause a “cancel reaction” in each market in the short term but also feels there will be “improved overall revenue” as a long-term benefit as it will force more people to pay their subscriptions.
The streaming giant has been testing different methods to crack down on password sharing in South America. In countries like Chile, Costa Rica, and Peru, Netflix has begun prompting users to dish out coins for an extra account if Netflix determines someone is using the subscription outside of the primary user’s home.
According to a report from the Rest of the World, the anti-password sharing policy was not going over well with subscribers in Peru.
If it’s not going over well in Peru, we can only imagine how upset subscribers will be when the password-sharing crackdown begins in the United States.
The streamer is trying to maximize every dollar as it continues to pump out premium content like Glass Onion: A Knives Out Story and see its subscription growth slow down.
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Photo: NurPhoto / Getty
Subscribers to Amazon Music Unlimited in the U.S. and U.K. will have to pay a higher price for the on-demand streaming service starting in February. According to Amazon’s customer service pages in both countries, subscribers to both individual and student plans will begin paying more starting Feb. 21.
In the U.S., Amazon Music Unlimited will increase from $9.99 to $10.99 for individual subscribers and climb from $4.99 to $5.99 for subscribers to the student plan. Likewise, U.K. prices will increase from 9.99 pounds to 10.99 pounds for individual subscribers and from 4.99 pounds to 5.99 pounds for student subscribers.
The e-commerce giant’s decision follows Apple’s move in October to charge higher prices for Apple Music as well as other cloud-based entertainment platforms and services. Apple Music also raised individual subscriptions from $9.99 to $10.99 per month in the U.S. It also increased the price of family plans, which offers up to six accounts under a single subscription, from $14.99 to $16.99 per month. Deezer, a small player in the U.S., raised the price of individual plans to $10.99 per month in 2022.
In May 2022, Amazon raised the price of Amazon Music Unlimited for Prime subscribers from $7.99 to $8.99 per month, and from $79 to $89 annually.
Spotify, the largest music subscription service, could soon follow suit. On the heels of Apple’s announcement, CEO Daniel Ek said during the company’s Oct. 25 earnings call that a U.S. price increase “is one of the things we would like to do.” Spotify has not raised its standard price from $9.99 since launching in the U.S. in 2011.
More than 1 billion music streams in France — or between 1% and 3% of all streams in the country — were detected to be fraudulent in 2021, according to a report released this week by a French government organization that analyzed data from Spotify, Deezer and Qobuz.
If the report’s number were to hold true for the worldwide music market — which the IFPI valued at $16.9 billion in 2021 — that would mean approximately $170 million to $510 million of streaming royalties are being misallocated globally. This is roughly in line with a 2019 estimate of $300 million lost to streaming fraud cited during Indie Week.
The Centre national de la musique (CNM), an organization created by the French government in 2020 that operates under the Ministry of Culture, found that fraud is widespread in France, the fifth-largest music market, to a sobering degree: “Irregularities are spotted” on both major-label and independent releases, national and international albums, old catalog and fresh new singles alike, the CMN says in its 56-page study. “The methods used by fraudsters are constantly evolving and improving,” it notes, “and fraud seems to be getting easier and easier to commit.”
The genres which had the highest percentage of fraudulent streams detected in the CNM’s report were background music (4.8% on Deezer) and non-musical titles (3.5%). While the raw number of fraudulent streams detected was highest in rap — the most popular genre in France — that represented just 0.4% of overall plays in the genre on Spotify and 0.7% on Deezer.
CNM’s report appears to be the first country-wide investigation of streaming fraud. “We’re happy with the effort by the CNM and the French government as a whole to look into this and take it seriously,” says Morgan Hayduk, founder and co-CEO of Beatdapp, a Canadian company that provides fraud detection software to streaming services, labels, and distributors. “This issue deserves the weight and attention that they gave to it.”
CNM’s report comes with several caveats, however. The organization’s data does not include information from Apple Music, YouTube and Amazon, who declined to share information about fraud on their platforms. According to a recent estimate from MIDiA Research, those three services account for slightly more than 35% of global streaming subscriptions. (MIDiA did not share country-level figures.)
In addition, Hayduk says, the report only looks at country-level data. This means it does not account for VPN usage that allows fraudsters to mask their country of origin.
Bad actors committing streaming fraud often “rotate through multiple countries redirecting traffic constantly,” says Andrew Batey, Beatdapp’s other co-CEO. “It’s not uncommon when we find fraud cases to see 15 devices spreading plays across 30 countries.” To catch that, he says, “you need a global view.”
Fraudulent streams, once defined by former Napster executive Angel Gambino as “anything which isn’t fans listening to music they love,” have become a major topic of music industry concern in Germany, France and Brazil. That’s because undetected fraudulent streams can impact market share calculations and divert money from honest artists.
The countries have taken different approaches to combat this fraud. The IFPI led a legal effort to shut down German websites that offered streams for cash starting in 2020. The organization made the case that manipulating play counts allows artists to create a false impression of popularity, ultimately misleading consumers and violating Germany’s Unfair Competition act.
In Brazil, law enforcement worked in conjunction with Pro-Música, IFPI’s Brazilian affiliate, to shut down 84 stream-boosting sites in the country in 2021. Prosecutors there argued that sites that offered fraudulent streams were violating Brazil’s Consumer Defense Code and treated the activity as a criminal act.
Brazil’s coordinated effort — dubbed Operation Anti-Doping — determined that the fraudulent streams were actually being generated outside of Brazil, illustrating the limitations of a single-country approach to fraud reduction. “No company in Brazil has the technology to make these fake streams,” Paulo Rosa, Pro-Música’s president, told Billboard in 2021. “This technology comes from websites hosted in Russia.”
The U.S. industry has historically appeared less bothered by streaming fraud — or at least less willing to acknowledge its existence publicly, with executives and streaming services reluctant to discuss the subject. This may be starting to shift, however. At a Music Biz panel in May, SoundCloud vp of strategy Michael Pelczynski noted that the current streaming ecosystem is rife with “very prevalent fraud and abuse,” and that this activity has “cultural ramifications.” When undetected fraudulent streams “start influencing the way we measure the success of music, we are literally supporting inauthenticity,” Pelczynski said.
The CNM appeared heartened by the fact that, since the summer of 2021, it has seen “the growing mobilization of platforms, distributors and producers” worried about fraud, resulting in the creation of “dedicated teams” and the outlay of increased resources to battle “manipulation.”
But there remain several key challenges when attempting to tackle fraud. The lack of transparency from some streaming platforms, and the inability to push toward assembling a comprehensive global data set, means that the scale of the problem is still unknown.
What’s more, as the CNM points out, it’s nearly impossible to punish those engaged in fraud because they are rarely identified. The penultimate section of the report lays out potential legal remedies that could be used to fight fake streams in France — if authorities were able to prove that bad actors violated laws related to illegal hacking or unfair business practices. They include fines of up to 300,000 euros ($324,000) and prison sentences of up to five years for perpetrators.
The CNM pledged to release a follow-up report in 2024.
LONDON — A U.K. Parliament committee is calling on the British government to address the “pitiful” returns that many artists and creators earn from music streaming and says it should develop and implement a “wide-ranging national strategy for music.”
A report from The Digital, Culture, Media and Sport (DCMS) Committee published Friday (Jan. 13) urges the government to take a “more proactive strategic role” in the music industry to help ensure creators and performers receive a greater share of streaming revenue.
The report doesn’t go into detail about what form an overarching national music strategy would take. But it nevertheless recommends it be developed and overseen by the DCMS and looks at the impact of new digital technologies on musicians, songwriters and composers, as well as the U.K. industry’s potential for growth.
Taking such an approach could help address many of the issues caused by the government’s current approach to policymaking for the music business, which sees policy and trade negotiations handled by multiple different government departments and, says the report, is “too scatter-gun to be effective.”
The DCMS Committee’s recommendations come 18 months after it published a damning report in July 2021 on the economics of music streaming that called into question the major record labels’ dominance of the industry — and how they leverage that market power at the expense of artists, songwriters and independents. It concluded by saying that the global streaming model is unsustainable in its current form and “needs a complete reset.”
In response to that report, the U.K. competition regulator carried out a market study review of the record business. It ended in November with the Competition and Markets Authority (CMA) surmising that low returns from streaming “are not the result of ineffective competition” between the three major labels — Universal Music Group, Sony Music Entertainment and Warner Music Group.
The British government has also set up a number of working groups — led by the Intellectual Property Office (IPO) and made up of industry stakeholders — to look at issues raised in the Parliament probe, including problems around transparency and metadata.
Reviewing the progress that has been made since July 2021, the DCMS committee commended the government and IPO for the work and research it has undertaken but said that more still needs to be done on core issues, such as creators’ share of streaming royalties.
In particular, the committee recommends the IPO establish working groups to look specifically at remuneration and performer rights, with greater involvement from government officials and ministers. It also says there needs to be greater transparency around membership of the working groups, agendas and deadlines, none of which are currently made publicly available.
“Over the last 18 months the Government has made some welcome moves towards restoring a proper balance in the music industry, but there is still much more to do to ensure the talent behind the music is properly rewarded,” Damian Green MP, acting chair of the DCMS Committee, said in a statement.
Green says too many musicians and songwriters are frustrated at receiving “pitiful returns” from streaming and says the government “now needs to make sure it follows through on the work done so far to fix the fundamental flaws in the market.”
The committee has also requested that the three major labels provide it with evidence of the royalties they have distributed to legacy artists under the various unrecouped advances programs introduced over the past two years.
Sony Music Group was the first to announce, in June 2021, that it would start paying royalties to artists with unrecouped advances from pre-2000 record deals. Warner Music Group followed in February 2022 and Universal Music Group in March 2022.
A spokesperson for the DCMS committee says that while it has no formal powers to compel businesses to provide them with information, businesses are expected to comply with the request. The government now has two months to respond to the committee’s recommendations and outline any actions it will be taking. (The DCMS committee, which is made up of 11 members of Parliament, is responsible for monitoring the policies and practices of the Department for Digital, Culture, Media and Sport and its associated bodies, including the BBC.)
Responding to Friday’s report, David Martin, CEO of the Featured Artists Coalition, and Annabella Coldrick, chief executive of the Music Managers Forum, said they “wholeheartedly” welcomed Parliamentary support for improved remuneration and contractual rights.
“Our organizations are in complete alignment with other creator bodies on the need for greater fairness, transparency and remuneration.” Martin and Coldrick said in a joint statement. “These issues are not going away, and neither are we.”
A spokesperson for U.K. labels trade body BPI thanked the committee for highlighting “the positive steps that the industry has taken” since its original 2021 report but cautioned against any calls for sweeping government reforms.
“At a time when the global music market is more competitive than ever,” the spokesperson says, “public policies must be firmly rooted in driving sustainable growth across the entire U.K. music ecosystem.”
Apple TV+ will boot scoot into the reality music competition space on March 24 with the launch of My Kind of Country. The series will feature country stars Jimmie Allen, Mickey Guyton and masked crooner Orville Peck as scouts who will search the world to find the next big country star. In addition, executive producers actress Reese Witherspoon and singer Kacey Musgraves will be featured in the series.
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The show was described in Friday’s (Jan. 13) release as, “a fresh take on a competition series, breaking down barriers in country music by providing an extraordinary opportunity to diverse and innovative artists from around the world.” The three A-list scouts will choose a roster of up-and-coming artists, who they will invite to Nashville to showcase their sounds for the panel in a chance to win a once-in-a-lifetime shot at stardom.
The winner of the eight-episode series will receive what is described as a “life-changing prize” from Apple Music that will include “unprecedented support and exposure on the platform.”
In addition to Witherspoon and Musgraves, the show’s other executive producers include Hello Sunshine’s Sara Rea and Lauren Neustadter; Sandbox Entertainment’s Jason Owen; Emmy-nominated showrunner Izzie Pick Ibarra (The Masked Singer, Dancing With the Stars); and Done + Dusted’s Katy Mullan (The Disney Family Singalong, The Little Mermaid Live!). Emmy-winner Adam Blackstone (Justin Timberlake, Alicia Keys, Faith Hill) is the series’ music director.
This is The Legal Beat, a weekly newsletter about music law from Billboard Pro, offering you a one-stop cheat sheet of big new cases, important rulings, and all the fun stuff in between. This week: A huge group of artists push to clear up uncertainty about termination rights and streaming royalties, Dr. Dre threatens to sue Marjorie Taylor Greene, the man accused of murdering Takeoff is released on bond, and more.
Sign up for the free email version of The Legal Beat here.
THE BIG STORY: Top Artists Demand Streaming Royalties Rule
When I first reported in October that the U.S. Copyright Office was looking to enact an “obscure” rule change about termination rights and streaming royalties, I received a bit of light-hearted criticism from some folks who had been following the issue closely. They conceded that the subject matter was complex — it’s mind-meltingly complex, trust me — but also said that the stakes were huge.
I guess others agree: In a letter sent last week, more than 350 artists, songwriters, managers and lawyers threw their weight behind the Copyright Office’s proposed rule change, saying they were worried about music creators being “deprived of the rights afforded to them by copyright law.” Signed by Don Henley, Sheryl Crow, Sting, Bob Seger, Maren Morris, John Mayer, Dave Matthews, members of The Black Keys and many others, the letter said that opposition to the agency’s new rule would constitute “a vote against songwriters.”
What’s this new rule they’re so fired up about? As mentioned, it’s pretty arcane stuff. (Go read our explainer if you want more details.) But basically:
The group created by the Music Modernization Act in 2018 to collect mechanical royalties from streaming services (the Mechanical Licensing Collective, or MLC) enacted a new policy in 2021, dealing with who should receive such royalties after a songwriter invokes their termination right. Termination is a provision under copyright law that allows creators to take back control of their works decades after signing them away to a publisher. The problem? The MLC’s new policy seemed to say that if a song had already been uploaded to Spotify’s server prior to when a songwriter invoked their termination right, those royalties would need to keep flowing to their old publisher — seemingly forever — regardless of who now owned them.
That bizarre outcome would seem to be at odds with the basic point of termination, which is designed to help original creators finally derive value from their own works. So in October, the Copyright Office proposed a new rule requiring the MLC to “immediately repeal its policy in full,” calling it an “erroneous” reading of the law. And last week, spurred by groups like the Music Artists Coalition, a huge number of influential members of the music industry said they agreed.
Some of the wording of the letter — about a “vote against songwriters” — was pretty ominous. But it doesn’t seem like there’s any real industry opposition to the Copyright Office’s change. The National Music Publishers’ Association has quibbles about how such changes are enacted, fearing that they might lead to uncertainty and litigation over past practices. But the group says it fully supports a rule change and the goal of making sure that terminating songwriters actually get paid.
Will the Copyright Office enact the new rule as originally proposed, or make changes when the final rule is released? We’ll let you know what the final rule looks like — and whether everyone likes it.
Other top stories this week…
DR. DRE WARNS REPUBLICAN – Dr. Dre sent a scathing cease-and-desist letter to Rep. Marjorie Taylor Greene, threatening the conservative lawmaker with a copyright lawsuit for using the rapper’s 1999 smash hit “Still D.R.E.” without permission in a social media post. “One might expect that, as a member of Congress, you would have a passing familiarity with the laws of our country,” the letter read.
MORE MUSIC TROUBLE FOR TRILLER – Universal Music Group filed a lawsuit against Triller over allegations that the video-sharing app has failed to make payments for months under its music licensing agreements, despite “lavish” spending elsewhere.
MIGOS MURDER SUSPECT RELEASED – Patrick Xavier Clark, the man accused of murdering Migos rapper Takeoff, was released from a Houston jail after posting a $1 million bond. He was placed under house arrest and will be subject to GPS monitoring.
LAWSUIT OVER UMG’S SPOTIFY STAKE – ’90s hip-hop duo Black Sheep filed a class action against Universal Music Group over the label’s ownership stake in Spotify, claiming UMG has accepted low royalties in return for stock in the streaming service. Seeking to represent thousands of others, the case says UMG is “withholding hundreds of millions of dollars in royalties.”
SONY SETTLES FUTURE CASE – Sony Music reached a settlement to end a lawsuit that claimed the name of Future’s chart-topping album High Off Life infringed the trademark rights of a company called High Off Life LLC, a creative agency that says it’s used the name for years.
ROCKER ARRESTED ON GUN CHARGES – Matt Shultz, the lead singer of the band Cage the Elephant, was arrested in New York City and hit with two charges of criminal possession of a weapon after police found two loaded firearms in his room at the Bowery Hotel.
MARILYN MANSON CASE DROPPED – A federal judge tossed out one of the several sexual abuse lawsuits filed against Marilyn Manson, dismissing a case filed by model Ashley Morgan Smithline because she failed to retain a new lawyer after splitting with her old legal team last fall.
GLORIA TREVI ABUSE SUIT – Mexican pop star Gloria Trevi was hit with a new lawsuit over a decades-old claim of sexual assault against two minors, who alleged the singer “groomed” and “exploited” them when they were between the ages of 13 and 15 back in the early 1990s. Trevi strongly denied the accusations, saying she’d been “totally acquitted” when such claims were made in a criminal case in Mexico in the 2000s.
Your nightmares have been answered. Netflix confirmed on Friday (Jan. 6) that its massive hit series Wednesday will return for a second season on the streamer. Though a date has not yet been announced for season 2, in an interview with Tudum, creators/executive producers Alfred Gough and Miles Millar talked about bringing back Wednesday Addams (Jenna Ortega) for another go.
“We can’t wait to dive headfirst into another season and explore the kooky, spooky world of Nevermore,” showrunners Millar and Gough exclusively told the Netflix news site. “We just need to make sure Wednesday hasn’t emptied the pool first.”
The news came along with a video trailer teasing the return cued to the viral TikTok hit launched by Wednesday’s dance to The Cramps’ 1981 single “Goo Goo Muck,” which inspired users to swap in Lady Gaga‘s 2011 Born This Way deep cut “Bloody Mary.” In the 45-second clip, perennially dyspeptic teen detective Wednesday recaps being hunted by monsters, haunted by ghosts and mocked on the internet.
“It’s been pure torture,” she says grinning as the sped-up version of Gaga’s “Mary” swells in the background and the screen reads, “More misery is coming.”
“[Wednesday] sticks to her guns, and she’s not out to please anybody,” Ortega told Tudum of the series that smashed records for Netflix, with 411.29 million hours viewed in its second week, 22 billion views on TikTok and 1.237 billion hours viewed, making it the second most-popular English-language hit in the streamer’s history. “Which, as someone who used to be an immense people pleaser, I really respect.”
The viral “Bloody Mary” phenomenon helped push the Gaga track into the top 40 of the Billboard Global Excl. U.S. chart las month despite it not being featured in the series proper; the revamped dance sequence also helped propel “Bloody” onto the Billboard Global 200. The trend blew up so big, in fact, that even Mother Monster got in on the action, posting a black and white response video in early December in which she slips into the signature Wednesday Addams look and dancing with her hands, hands, hands.
“It’s been incredible to create a show that’s connected with people across the world,” Millar and Gough said while (spoiler alert) hinting that the stalker running around Nevermore in the season one finale remains a threat to Addams. “We’re thrilled to continue Wednesday’s torturous journey into Season 2.” Millar and Gough said that casting and plot news will be revealed at a later date.
Check out the video below.
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:
De La Soul has made a career of being ahead of the pack. The legendary New York hip-hop trio’s debut album 3 Feet High and Rising was beloved upon its 1989 release because of its hippy-esque, hyper-positive approach and unpredictable sampling, often being cited as the genesis of what’s referred to as “alternative hip-hop.” De La also co-founded the Native Tongues collective, alongside like-minded groups the Jungle Brothers and A Tribe Called Quest, and kicked off what the group referred to as the “D.A.I.S.Y. Age” (short for DA Inner Sound, Y’all) in rap – though they would move beyond that early sound and image in acclaimed subsequent releases like 1991’s De La Soul is Dead and 1996’s Stakes Is High.
So when music industry red tape and sample clearances prevented their all-time great catalog from becoming available on digital marketplaces and streaming services, their modern-day accessibility suffered in a way unfitting of their massive legacy. Still, the trio continued to make their presence felt in other, less-conventional spaces.
In 2009, they connected with Nike to release Are You In?, an album that was part of the company’s Original Run series. Five years later, the group celebrated the 25th anniversary of 3 Feet High, by making nearly their entire catalog up to that point — six albums between 1988 and 2001 — available for free download, essentially bootlegging their own music. And in 2015, they launched a Kickstarter campaign to fund their ninth album, the live band-backed …and the Anonymous Nobody. They’ve stayed busy on the road, while also making a huge crossover appearance on Gorillaz’ Grammy-winning 2005 smash “Feel Good Inc.,” and most recently scoring a major synch for their 3 Feet single “The Magic Number” in the 2021 blockbuster Spider-Man: No Way Home.
But in 2021, the rights to De La Soul’s former label Tommy Boy were acquired by the music rights firm Reservoir Media — with whom the group secured a deal to retrieve their masters, finally giving them the ability to re-release their music on their own terms. Now, their first six albums will all be available on streaming platforms (along with exclusive merch, vinyl, CDs and cassettes), via their label AOI, distributed by Chrysalis Records. The campaign starts on January 13, with “The Magic Number” being made available for streaming and their website hosting a 7″ vinyl and cassette single for sale — and the group’s first six albums are scheduled to arrive in full on streaming on March 3.
Billboard spoke to two-thirds of the group, Posdnous and Dave, about the path to getting control of their music, whether or not they think hip-hop is currently accommodating veteran artists, and their take on the 21 Savage and Nas debate over “relevance.”
What happened within the last year or two years that made it possible to finally reach the point where the albums are coming out?
Posdnous: When the catalog got back in the hands of the original owner, Tom Silverman, he was in the process of clearing things and trying to get the music up. But he basically wanted for us to pay for old debts, that would have obviously been written off. That stalled it for the next three or something years after he got the music back. He wanted to put it back up, but we didn’t want to put it up until worked out a better deal.
I’m not trying to be correct and political; I wish that man no harm in his life. And I don’t mean physically, I mean in terms of his name. At one point, people could feel like that was being tarnished; there were a lot of fans who loved us and were disrespecting him in comments, and that wasn’t what we were trying to do at all. We just wanted to benefit from our work. It almost felt like we were being erased from history, because our music wasn’t up.
When Reservoir acquired it, they worked out what we needed to be worked out, which was great. But once it got into our hands, along with Reservoir assisting us, once again, there were a lot of samples and things that needed to be taken care of. It was long, but it wasn’t grueling. What’s great is that a lot of these owners, writers, and publishers were De La Soul fans, and they had publicly understood what was going on. They were happy to see that was in our hands now, and when we went to try to clear things, everyone pretty much came to the table to really work it out and get it done.
It was a long journey when we got to this point, but it was still a great journey to see that people were willing to help. People weren’t trying to make it that hard for us. And we got to really revisit a lot of the albums, which brought about a lot of great memories.
As outsiders, a lot of those conversations seem to focus on the ultimate goal of acquiring the masters. But for you guys, it sounds like acquiring the masters is where everything began, not where it started.
Dave: Yeah, it actually did begin at that point. You think that you own your stuff and that now it’s on cruise control, waiting for the checks to come in. But it is not that way at all. There’s a lot to do. Maybe you’re lucky and you don’t have to clear samples, maybe you don’t have to broker deals with different publishers, and there’s no one around to claim anything or to risk anything. But we had a job to do.
If we didn’t have the help of Reservoir, who picked up the project and is collaborating with us to do this release, I don’t know where we would turn to. It would have been even more work. So you do need collaborators, you do need help, you do need to rework back into the system and not necessarily be the lone commissioner of this project. You need allies, you need companies to work with, you need people to hire, and we learned a big lesson from that. It definitely wasn’t just, “We got our masters back!” It ain’t that.
With this music coming out again, you’ve got diehard fans who’ve been around the whole time who are going to finally have it on streaming, as well as fans who have wanted to hear your music but didn’t have the opportunity because it wasn’t on DSPs, and people who have rarely known much about you at all. How do you plan to reach out to all these newer fans?
Posdnous: We’re blessed to have people even feel that this is classic music, that it was very important to different references within the timeline of hip-hop. All I’m trying to say is that it’s still a part of what we were already doing. If we’re rolling with the Gorillaz, all those fans have been De La fans. If we never missed as one of the longest-touring groups in hip-hop from almost 15 years ago, we’re already seen as a generational group.
Our fans passed us down to their children. We always have people say, “I found out from you from my uncle, my brother, my moms.” So as much as our music needed to be up in this digital world, the people who were touched by our music made sure that it didn’t lose a beat in their life, and they made sure people around them learned about it.
In my DMs, a person was like, “Yo, after [“The Magic Number” appeared in Spider-Man: Long Way From Home], I couldn’t find it, then my grandfather pulled out his [record] and showed me.” I know my age, but I still feel like I’m cool as s–t, so this is weird that I could be a grandfather. [Laughs.] But it’s all coming together, and it’s great that the music that needs to be up [on streaming] will be there.
Usually, when we’re speaking about acts in hip-hop that have been out for a long time, we don’t even speak about them in terms of getting new fans; we just think about them in terms of catering to the fans that they’ve already had. Is finding new fans something that you guys find important?
Dave: I wouldn’t say important. But the opportunity for people to hear this thing regardless of what they know about it, and maybe inspire some kid that wants to be different or sound odd, and gain fans at the same time, it’s something that we appreciate and want to happen. It isn’t really about, “We got to do something for these people who’ve never heard our music,” it’s just that the exposure could open so much more. We want people to hear it, and maybe run off and do something amazing that’ll impress us, and it keeps going back and forth.
We’ve always talked about the lopsided aspect of hip-hop. I think hip-hop has a sound right now that needs balancing. It’s important to us that we create balance and pull people in and make this thing bigger and better. And if our music can be a part of that, then yeah, we’re trying to do that.
Over the past five to six years, there are more rappers in their mid-to-late 40s who are still making great music — whether it’s Hov, Nas, Busta. But I feel like your music had already matured considerably by the first Art Official Intelligence album in 2000. Rap has long been criticized for not respecting its veterans enough. Where do you think hip-hop is now in terms of respecting the artists who have actually paid their dues?
Posdnous: I still think it has a ways to go. We learn from our own elders — when you really think about it, my elder was like a Melle Mel, he was maybe 17 when he started what he was doing. Now, in this friendly competition – when it was friendly, it was still about, “I’m better than you.” There’s a level of respect that sometimes is not really there fully. Because we just really gotta learn to respect ourselves, to respect each other, and didn’t respect the entire craft. But as a group, we’re blessed to be here.
I feel the majority of our music fits into something that feels timeless. There always will be a reason to say “One Love,” and you can hear all these great Bob Marley records. There’s always a reason to say “Fight the Power.” So these things that, unfortunately, still exist in the world, the music will be relevant to it. And I think that it’s the same with us. There’s always a level of understanding yourself, individualism, “Me, Myself, and I”; there’s a reason for those albums and those in those worlds to exist.
What I’ve actually loved and appreciated about some of the younger guys, they’re really honest and saying, “Even I don’t see myself talking about popping bottles, bugging out, and drinking lean when I’m 31.” They’re thinking of it like, “This s–t is just a way to get me to where I need to be. So when it’s over, all these business moves I made, I’m good.” But it is good when you can see those same people respect what has gotten them there.
I don’t think that hip-hop is the only victim. We use the internet all day long, and no one would necessarily care who created the internet. I think hip-hop is the same way. I tell younger kids, “When it comes to some street s–t, though, you respect who Al Capone is. That’s the same reason you should respect who Kool Herc is. These people helped create this tool that you use to better your life.”
Along with all of the incredible music you guys did for the first six albums, you guys have been responsible for a couple of my favorite moments in the past 10 years. One of them is when you guys basically bootlegged your own catalog. What was that experience like, and what did you learn from it that you can apply to this experience of putting it back out on streaming?
Posdnous: I’m not sure what the other guys would say, but I didn’t really learn anything. It’s what I already knew. And I feel like I could say that about the rest of the group. We knew how much people wanted and needed this music. Without the music even being up, we were still blessed to be a group that was always afforded or awarded the opportunity to travel all over the world. Everywhere we go, there was people who are so grateful for us to be there, letting us know, “but d–n, where’s your music?”
And we were trying our best to explain to Warner, who was in control of our music at that point, “Yo, it’s really in your best interest, along with us, to figure this out.” Because people wanted it. They were mad. But what was great about it was it helped them to see the data, that “yo, we really should be working to get this s–t out.” So it wasn’t a learning experience (for us). It was helping other people who needed to know to learn that we were still valuable to this culture.
You guys also had the Kickstarter campaign for the album …and the Anonymous Nobody. What was that process like doing for the first time, and being able to connect with your fans directly versus working with a label?
Posdnous: There were way more pros than cons. The cons, for me, were the phone calls that we spent working and figuring all that out man, they were long. And like you said, we’re men who have families and other responsibilities, along with just the responsibilities of being De La Soul. I almost felt — and I know Dave has said this as well — like, “Yo, are we begging for money?”
When we started this process of working on the album, we were working on a conventional De La album in the sense of producers getting us beats and we write rhymes over them. That was happening, and that album was going to be called You’re Welcome. But we just started working on this band project, and it just took on such a refreshing level to our creative psyche. Even friends of ours in the industry who happened to work at labels, they were like, “Yo, we’ll give you money for this.” So it wasn’t even like there wasn’t interest in putting out this album with labels. But it was a level of understanding that maybe we should put it out ourselves. So that took a lot of time to understand what Kickstarter was and how it’s being applied. It was a learning process, and it was fun learning it.
I feel weird asking this, just because you’re about to re-release six albums at once. But where are you guys with new music? You’ve spoken about the album with Primo and Pete Rock; I saw Prince Paul speak about work on a new De La album…
Posdnous: We definitely have a lot of work to do. We definitely want to get something done with Paul. What Paul was just referring to was the work he was putting in and helping us with the older catalog. So it’s not like we were working on new projects, but we’ve all discussed that as well. With Premo and Pete Rock, it’s the same thing. We were so drawn into what to do with this [release of the older material]. And then if there’s times where if we don’t have a lot on our table, we were like, “Let’s get up.”
But maybe Preem had too much to do, or then Pete was running the world doing what he had to do. We were just so at a point – and I know De La is [at that point] – of just wanting it to sound the way it needs to sound. So we was willing to keep trying to put in the work to get the right music. We have a few, and we just need a few more. [sighs] I really want that to come out, God willing. Me and Preem actually spoke about two weeks ago when I was in New York. “Come through, let’s try to cook some stuff up.” So hopefully we can get that done soon. A Gangsta Grillz with Drama would hit too, I would love to do that. So there’s a lot of things that I would love to see done. With new music, for me, it’s always about new along with what’s classic, what’s timeless.
Funny enough, Yasiin was around us not too long ago, he was always saying that, “As a musician, I just always want to put music out. I want to put something to something.” I was like, “Yeah,” and I totally agree. That’s why you always see me pretty much [recording] out of the group. I’m always featuring on something else, keeping the pen sharp and my mind moving with doing music.
There was a big conversation recently about 21 Savage and Nas, and the idea of “relevance.” They already worked out any misunderstandings there may have been, and made a song together. But I think that De La is interesting, in the sense that the music has lived on, and you’ve also done things that have kept you relevant – whether it’s releasing all your music that I mentioned before, the Kickstarter campaign, or your song appearing in the Spider-Man movie. Should relevance be a conversation for older artists, or is it just something you’ve done well?
Posdnous: Whether anyone wants to admit it or not, relevance will always be a conversation. But what is your checklist on why or what makes you relevant? My son is 17, and he has learned why Martin Luther King Jr. is relevant. But he can see a kid next to him from another culture, another race, who doesn’t find no relevance. They may know who he is, but they can just be like, “aight.” But does that stop Martin Luther King from being relevant? My son is perceived as African-American, but I understand why he immediately can click into it and some people won’t.
Same with music. I may see the name De La here and there, but that may not hold relevance to me, because I’m from the Bay, and they don’t mean something to me the way the OG E-40 means something to me. I could care less about sea moss when I was younger, I would never touch that s–t; now, I can’t go a day without my sea moss. [Laughs.]
Something can come into your life and you’ll be like, “D–n, I was really trying to like stay away from it. This is great.” I’ve had the biggest De La fans be like, “Yo, man, I can’t front, that [1993 album] Buhloone Mindstate, I wasn’t f–king with that when it came out.” And guess what? They can turn around now and be like, “now that I’m in my late 30s, this Buhloone Mindstate hits different now!” Things are meant to find people. I think that everything can stay in a place where it will hold its relevance to who it needs to hold it to. Some people will join in, some people will never join in, but you can’t let that s–t bother you, man.
The 21 thing was taken out of context, but a lot of young people try to shoot that gun at the OG, because the people who love the OG are so quick to down the young people on what they’re doing. But people around them are making them feel that since they’re young, what they’re doing doesn’t mean anything to the culture. And I feel that is 100% wrong. I didn’t sound like Kool G. Rap, I didn’t sound like Run-DMC. But you’re not going to tell me I didn’t know everything about Kool G. Rap and everyone else who was down with him, and I didn’t need someone trying to tell me to take my “Flower Power” s–t and get the f–k out the way. So you got to just kind of let these kids be who they are.
I do feel that a lot of the content can be poisonous; it can be unhealthy if that’s all you’re listening to. So if we have a problem with that, I as the OG shouldn’t have a problem talking with these younger kids and hanging with them. But to make them feel bad when they’re just using what they’re given? I’ve always grown up to be the type of person who is like, “Maybe I should have been did a better part, maybe Native Tongues should have been a better part.” I think that’s a better way to approach it, than to act like these kids landed from a whole ‘nother planet to f–k up hip-hop.
Looking back at your catalog and seeing that it’s about to come out again now, is there anything that you’ve done that you think would be seen differently if it dropped now versus when you dropped it before?
Dave: I think 3 Feet High and Rising, as much as people might claim it to be a hip-hop masterpiece – it’s a hip-hop masterpiece for the era in which it was released. I think the element of that time of what was taking place in music, hip-hop, and our culture, I think it welcomed that and opened up minds and spirits to see and try new different things. I think releasing 3 Feet High and Rising right now, even to maybe the age group that was listening back then, I think hip-hop as a whole just wouldn’t get it. I think hip-hop would possibly look at it as obnoxious, soft, that kind of thing.
But I think it’s also because where we’re at in hip-hop right now, hip-hop is about what you got on, who you’re impressing, what can you do, how much you got, how much you’re spending, and how much is in that bag that you got around you? I don’t think the impact of what 3 Feet High and Rising and what it meant back then would mean anything now. I feel like there are people who will get it, but I don’t know if there’s that acclaim to it in this day and age if it was something we’d never heard before.
I think the innocence that we had back then was brave, but we were in a time where innocence was so cool. Not sampling James Brown, but sampling Liberace; I think it was shocking [when] we came out [that] we sampled Liberace. I don’t know if it’d impact the same way [now].
I was thinking yesterday about something I think I’ve taken for granted with De La: How have you three stayed together all this time?
Dave: Man. It ain’t easy, but it’s the reality, it seems like. Even during the pandemic, I think there were talks of doing solo albums, or feeling like one person might want to record something at home and start working. There’s always been talk about stuff like that, Mace and Pos pushing me, like, “Yo, do a record.” We support each other in those ideas –, but at the same time, I think the magic really happens when it’s the three of us. I’m not trying to crack that formula, and I don’t think anyone else is, either.
When you get mad, and somebody blew your high, and maybe even somebody might feel disrespected – when those things happen, they’re real. We might not speak to each other for three weeks or months. But at the end of the day, when you’re craving that magic, that high that we get, you revert back to brothers and family. It’s like, “Yo, I think we need to talk about what happened.” For the sake of getting that feeling back, that’s really it. I think everybody could move on and do their own thing, and maybe not do their thing at all and just chill. But the magic happens with us three on the phone, in the same conversation, in the room together, in the studio, and hanging out on the tour bus. That’s where the magic happens, so that’s why we’re still here. We don’t want to interrupt that magic.
If a new group was asking you guys for advice on how to stay together, what would you say?
Dave: Fight, but remember that you’re fighting for the team. Even if you don’t agree, you’re fighting to get your point across for the team, not for you personally. Sometimes, we hold our tongue and we’re not as honest as we could be. One person is talking to someone else in the group, and they become allies. Taking one person’s problem and going to talk to his or her group of friends over here, and that becomes some sort of animosity.
Nah, man. I say this because many of my friends are people I know in the industry, and that’s how the breakups happen. Sometimes it’s about money, but then there’s an element of: We don’t get along because we haven’t been honest with each other. Get through that honesty, move on, and keep going – because it feels good going. Fight it out, get it all out, and come back know