From Sony’s historic unrecouped balances transfer to Common funding [PIAS]: It’s MBW’s Weekly Spherical-Up
Welcome to Music Business Worldwide’s weekly roundup – here we make sure you’ve caught the top five headlines of the past seven days. The MBW roundup is backed by Centtrip, which helps over 500 of the world’s best-selling artists maximize their income and reduce their touring costs.
The headline MBW made in our explosive history today did the job: Historically, Sony Music ignores artist balances from the Heritage catalog.
But if we had felt a little mischievous we might have gone with: Sony Music merely voluntarily reduced its revenue to “do the right thing”. Will Universal and Warner follow suit?
This brings to the heart of the intriguing aftermath of Rob Stringer and Co’s decision to effectively write off uncollected credits for qualified artists signed with Sony Music prior to 2000.
Stringer is playing a wise gamble: that a small reduction in Sony Music’s margin is worth it today if it means his company is building a long-term reputation for generosity and fair trade in the artist community – where power continues to grow. (Quick math: if, for example, there are 2,500 old Sony artists benefiting from it, and they get an average of $ 5,000-10,000 a year that they didn’t get before, then the Sony Music move will be $ 12.5-25 million Dollars cost m per year.)
This risk in itself is, of course, reduced by the continued growth of streaming and the steady increase in record company profits that result directly from it.
Stringer is also smart enough to know that “voluntarily reducing revenue” is much harder to swallow today for his rivals, namely Warner Music Group – now a public entity on NASDAQ – and Universal Music Group in particular … that in short is about to go public in Amsterdam and is trying to get the highest possible valuation on the first day for current Vivendi shareholders.
One could argue that Stringer has just thrown its competitors into a catch-22: if they take on Sony by sacking old unredeemed balances, they risk a public investor riot; If they disagree with Sony by rejecting old unredeemed balances, they risk widespread artist annoyance.
A tricky balancing act.
MBW’s pro tip if we follow this story in the future: Even though Universal Music Group is now following Sony in disregarding unredeemed balances for legacy acts, don’t expect it to look like UMG is going to lag behind his rival.
As a market leader, perception is everything – and the second is nowhere.
Think back to the summer of 2018 when Rob Stringer made the unexpected announcement that Sony would pay over $ 250 million from its Spotify stock sale to artists while ignoring those acts’ undrawn funds.
Warner Music Group did not do the same and continued to split its Spotify equity across unpaid artist accounts. It was a more selfish look, but it filled WMG’s coffers.
Universal went a different way. In November 2018, UMG, like Sony before, publicly undertook to ignore unpaid credits when selling its Spotify stake. (UMG has still not sold this stake; its current value is around 1.6 billion US dollars).
Universal has not issued a standard press release to confirm this plan. Instead, Taylor Swift announced this as part of their new deal with Republic Records, suggesting that it was the most important part of their new deal with UMG. “There was one condition that meant more to me than any other deal point,” Swift wrote at the time. “As part of my new contract with Universal Music Group, I asked that every sale of their Spotify stock result in a non-refundable cash distribution to their artists.”
MBW couldn’t say this was all a fictional diversionary tactic invented by UMG and the artist (one that directly reinforced Swift’s own key attributes of the brand, an accomplished businessman with no fear of competing against The Man).
Who knows? Swift probably hit his fists on tables, knocked down desks and let pens float threateningly over competing record deal offers – while uncharacteristic beads of sweat roped down Sir Lucian Grainge’s forehead. Or maybe not.
The fact is: at the time, everyone was so blinded by the folklore artist’s version of events that most have forgotten that Universal’s Spotify payout policy was essentially an imitation of a groundbreaking move by its greatest rival.
This story, ladies and gentlemen, is further proof that the big record companies – no matter how much criticism they allow – not half have very bright minds.
Speaking of big record labels and bright minds: This week Universal Music Group also announced a new alliance with the independent music powerhouse. [PIAS].
UMG will hand over a financing package to Kenny Gates’ company, but will not receive any equity in return … at least for the time being.
In very-possibly-not-independent-but-also-possibly-independent news: Until the second half of 2022, UMG will be banned from buying assets (and signing artists) that the European Commission forced them to sell after the takeover by EMI Music in 2012.
Elsewhere this week, Believe was listed on the Euronext Paris Stock Exchange when video game phenomenon Roblox started a legal battle with music publishers after the latter filed a $ 200 million lawsuit against the former.
Read on to catch up on MBW’s biggest stories over the past five days …
1) IN THE HISTORICAL MOVE, SONY MUSIC WILL CHANGE BONUSED INVOICES FOR HERITAGE CATALOG ARTISTS
Sony Music made an announcement today (June 11th) that will be the talk of the music business for years to come.
In a letter sent to thousands of artists today and received by MBW, Sony Music Entertainment (SME) announced the launch of a new initiative called “Artists Forward” that focuses on “being transparent with creators in all aspects of their development to prioritize “. “.
The groundbreaking new guideline from SMEs under “Artists Forward” is called “Legacy Unrecoped Balance Program”. The letter affirms: “As part of our ongoing focus on developing new financial opportunities for YouTubers, we will no longer apply existing unredeemed credits to artist and participant earnings that occurred on or after the 1st before the year 2000 and after No advance payment received in the year 2000. “
2) Universal Music Group and [PIAS] strategic global alliance strike
Independent music company [PIAS] and Universal Music Group (UMG) have formed a strategic global alliance.
As part of the deal, Universal is committed to [PIAS] with an undisclosed financing package. In return, the UMG can open [PIAS]international sales network through the recently renamed sales and service department, [Integral].
Unusually for a deal like this, Universal Music Group takes no stake, not even a minority stake, in [PIAS]: The indie company remains completely controlled by [PIAS] Co-founders Kenny Gates and Michel Lambot.
3) Believe is a public company as CEO Denis Ladegaillerie rings the bell on its debut on the Paris Stock Exchange
Yesterday (June 10), distribution and services company Believe officially went public today (June 10) and debuted at Paris Euronext.
The company spent 14.35% of its equity through its IPO and raised 300 million euros in the process.
After the IPO, TCV will continue to own 41.67% of Believe, while the music company’s founder and CEO Denis Ladegaillerie will hold 12.62%. Another major shareholder, Ventech, will own 17.08%.
4) ROBLOX SAYS COPYRIGHT CLAIMS OVER $ 200 MILLION ARE BASED ON A “BASIC MISUNDERSTAND”. MUSIC PUBLISHER DOES NOT AGREE.
The video game platform Roblox responded to a lawsuit filed by music publishers in the United States with more than $ 200 million in copyright infringement lawsuits, stating their “surprise and disappointment” with the lawsuit.
News of this lawsuit became known yesterday (June 9th). It is spearheaded by the National Music Publishers’ Association and supported by indie and major publishers such as Concord, Downtown, Kobalt, Hipgnosis, Reservoir, and Universal Music Publishing Group.
In response to allegations of widespread copyright infringement on its platform, a Roblox spokesperson told MBW, “As a platform run by a community of creators, we are passionate about protecting intellectual property rights – by independent artists and songwriters to music labels and publishers – and require all members of the Roblox community to adhere to our community rules. “
5) SNOOP DOGG SUPPORTS DEF JAM AS EXECUTIVE CREATIVE AND STRATEGIC CONSULTANT
Calvin Cordozar Broadus Jr., known professionally as Snoop Dogg, joins Def Jam as an Executive Creative and Strategic Consultant.
With an immediate focus on A&R and creative development, Snoop Dogg will serve as the lead strategic advisor in his new role at the label.
He is based in Los Angeles and reports to Universal Music Group Chairman and CEO Sir Lucian Grainge and Def Jam Interim Chairman and CEO Jeffrey Harleston.
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