Mark Mulligan: 'Artists are more empowered than ever'

By Emmanuel Legrand

The music industry will have to adjust to a series of “mega trends” if it wants to continue to grow in the new digital environment, according to analyst Mark Mulligan, a principal at London-based MiDIA Research. Mulligan was speaking at the Eurosonic Noorderslag conference and festival in Groningen, Netherlands.

MiDIA Research's Mark Mulligan

  Mulligan outlined what the future of music could look like in an eco-system dominated by the attention economy, the rise of independent creators, the business of rights, and the dominance of streaming as the main music distribution channel. “Music no longer operates in its own vacuum,” he quipped. Music, he added, is among the products that compete in the attention economy, alongside video games, video streaming, books, live entertainment, sports, etc.

  On the positive side, Mulligan noted that “the music industry is in a good place” with revenues up to $21 billion last year, counting 340m subscribers to music streaming services, and with about $4.5bn invested in the acquisition of music rights. “There's a lot happening, a lot of growth and a lot of revenues,” said Mulligan, “but when is this going to end?”

  In the short term, Mulligan suspects there is an economic recession looming which could hit streaming services' revenues as consumers will discard non-essential expenses. “It is easy to cancel a subscription and still have a quality experience with YouTubeor free tiers,” said Mulligan.

Streaming growth to slow down

  But overall, he sees global streaming revenues continuing to grow, even though the growth will be slowing, especially in mature markets. “There's still a lot of growth there,” said Mulligan, predicting that by 2026, global revenues for the music industry will reach $44.5bn, with 20% growth in 2019 down to 7% in 2026. Growth will come from territories such as Mexico, Japan, Russia and India.

  Streaming has a very US-centric outlook, with a majority of the music market controlled by US-based companies. “If the US sneezes the rest of the world catches a cold in the music business,” joked Mulligan.  

  Mulligan warned that more changes are coming both for labels and for streaming services. For example, he noted that “tension exists” between streaming services and record labels (or, as he puts it, distribution v. rights) with distribution services “doing more things and start competing with what record companies do.” There's a conflict between “the new way of doing things v the old way of doing things.”

  As an example, he mentioned Spotify building sets of tools for creators. “It's subtle way to start a long journey,” he said.

A Netflix moment for radio

  In terms of consumption, “streaming is eating radio, as young listeners have switched to streaming, and older audiences are eaten away by podcast,” explained Mulligan who predicted “a Netflix moment for radio.” He added: “Consumers listen to radio, then switch to podcast and podcasts are competing for listeners time. When we will get podcasts and music together and create content that did not exist, we will se an upswing in consumption.”

  However, Mulligan said that the music business still revolves around charts and sales, as well as the album format. “These are old ways of viewing the world,” he said. “It's trying to interpret the new world through old language. It is not just that people are not buying albums anymore, but listening is more fragmented. Niche is becoming the new mainstream.”

  For Mulligan, it will be important to sustain growth that streaming services find ways to differentiate themselves. “About 20 years ago, people were talking about internet making music like water, so yes, this is where we are,” said Mulligan. “But when music becomes a utility it is less important. Music is increasing becoming this sonic stream around us. The platforms are all the same, so they have to make sure we get the best and most new music in order to we feel that we cannot exist without our streaming service.”

The rise of the independent artist

  One of the key takeaways from recent market developments is, according to Mulligan, “the rise of the independent artists,” who represent “the fastest growing part of the recorded music business," with artists' direct revenues and label services revenues reaching $1.580 billion in 2018. “We are at the cusp of really big changes,” said Mulligan. “There is a new generation of artists who do not want to play by the old rules."

  Some companies have embraced the new paradigm and are focused on the needs of artists, said Mulligan, for whom “artists are more empowered than ever and fandom may be tomorrow's currency.”

  This new way of doing business will have an impact of the way record labels traditionally operated. “If you cannot own the copyright anymore, you have to think about how you approach the market, and maybe you do not want to invest as much in it,” said Mulligan in reference to the recent wave of highly paid catalogues.

Aligned with creators

  At Eurosonic, Paul Hitchman, president of Kobalt's artist services division AWAL, also embraced the notion that there is a wide future for independent artists, who now have tools at their disposals to reach the global music market. “Artists need to be entrepreneurs,” said Hitchman.

  Hitchman said AWAL's model is to be “aligned with creators.” He elaborated: “We think this is a good business principle as well as a moral principle. We work for artists rather than artists work for us. If you think you are bigger than the artists, this is where you are going wrong. We now we have a roster that is more than a match for the majors, we have nine offices, and we are really the alternative to the majors.”

  Hitchman noted however that “transparency has a long way to go” in today's business. He added: “That's a principle the industry should embrace. Any data we collect we share with artists. People in business should be sharing data, sharing information. The problem with a lot of the incumbents in the industry has been to focus on their share of the pie rather than increase the size of the pie.”

The post format era

  Mulligan concluded by offering several options for the future of the music industry. “We can carry on as we are,” he said. “The system is not broken enough so we can carry on, and focus on how much money is generated. “Another option is that streaming gets social. "Look at what happens in China where streaming services monetise fandom," said Mulligan. "Services make more money with virtual gifts than money made by music.”

  And further up on the road, there is the prospect of the end of streaming. “Eventually, something new replaces streaming,” said Mulligan. “We are in a post format era. So there's no limits.”

The UK will not implement the EU's Copyright Directive

By Emmanuel Legrand

British creative sector has expressed its disappointment at the UK government's decision not to implement the European Union's Copyright Directive into domestic law. 

  The British government indicated, through the Secretary of State for Business, Energy and Industrial Strategy Chris Skidmore that as the UK will leave the European Union on 31 January 2020 and the Implementation Period for the Directive will end on 31 December 2020, "the United Kingdom will not be required to implement the [Copyright] Directive, and the Government has no plans to do so."

  Skidmore, who was responding to a written question by Member of Parliament Jo Stevens, added: "Any future changes to the UK copyright framework will be considered as part of the usual domestic policy process."

A betrayal of creators

  Reacting to the news on Twitter, Ivors Academy chair CrispinHuntsaid the government decision was "a real betrayal of UK Creators." In the wake of Skidmore's announcement, Tom Kiehl, the Deputy CEO of cross-industry organisation UK Music, send a letter to the government official requesting "an urgent meeting" to discuss the matter.

  Wrote Kiehl: "Your statement is extremely disappointing, especially for the many music creators across the country who have campaigned for the Directive over a number of years. The Directive is designed to improve the way creators in the music industry and those that invest in them are financially rewarded."

  Kiehl reminded Skidmore that the British government "played a key role in developing and agreeing to the many necessary provisions within the Directive," and added that while Google-owned YouTube currently pays creators "significantly less than the real value to them," failure to implement "the core principles of the Directive would let Google off the hook and mean creators continue to get a raw deal."

  He concluded: "If it is the case that Brexit presents an opportunity for the UK to write its own laws, then there is no excuse for a delay to our existing call for the Government to set out a road map outlining how it intends to take forward its support for the Directive's key proposals."

Protecting the UK music industry

  Skidmore's confirmation that the UK will not implement the Directive contradicted earlier statements from Minister of Culture Nigel Adams who said that while the government supported the "overall aims" of the Copyright Directive, but that the UK's imminent departure from the EU meant that the country was not required to implement the Copyright Directive "in full."

  Adams offered however some reasons for the creative sector to remain hopeful. "It’s absolutely imperative we do everything possible to protect our brilliant creators, as well as the consumers and the rights of users who consume music," said Adams. "I look forward to working with the music industry to ensure we achieve this."

  The British decision follows the UK Parliament's legislation confirming that the country to leave the European Union on Jan. 31, 2020. The Copyright Directive, which contains a series of articles on the liability of digital service providers, among other things, was voted by the European Parliament in March 2019 and now needs to be transposed by EU members by 7 June 2021.

  The UK government supported the Directive and was among the 19 countries from the Council of Europe that voted for it. In addition, most British MEPs voted in favour of the Directive. After the Directive was voted, Boris Johnson, who was not yet Prime Minister, said the Directive was "terrible for the internet." He added: "It’s a classic EU law to help the rich and powerful, and we should not apply it. It is a good example of how we can take back control."

Selling out British creators

  Former UK Music CEO Michael Dugher wrote on Twitter: "Conservatives said they supported measures in the Copyright Directive. If Brexit means ‘taking back control’ there’s nothing to stop them legislating now in the UK. If they don’t, it will look like they’ve caved into Google & completely sold out exploited British music creators."

  Geoff Taylor, chief executive of the British Phonographic Industry (BPI) and BRIT Awards, which represents some 3,000 British music companies, said: “It remains of vital importance to British music and the UK’s creative industries that digital platforms pay fairly for the content they use and put in place effective proactive measures to ensure illegal content does not appear on their services."
  Taylor said the music sector will "continue to engage closely with Government on this subject to ensure this goal is achieved.”

Remaining an attractive home

  Andrea C. Martin, chief executive of UK rights society PRS for Music said that while she acknowledges the political reasons behind the government's announcement, "that doesn’t change the fact that in some areas the UK’s current copyright framework is failing to protect creators. This lack of clarity will stifle the UK’s creative sector – one of our engines for growth."

  Added Martin: "If our creator community is not going to benefit from the same level of protection as those in Europe, we urge the government to set out clearly and quickly how it will ensure the UK remains an attractive home for creative businesses and their rights."

  Julia Reda, the former MEP who was the main opponent to the Directive, also reacted on Twitter: "Are you kidding me?? The UK will not be transposing the #copyright DSM directive after Brexit. Well, if the UK government didn’t like it, they could have just, you know, not voted for it in Council and it would not have had a majority! #Article17"

Downtown's AVL Digital acquires distribution and services company FUGA

By Emmanuel Legrand

AVL Digital Group, a subsidiary of US independent music group Downtown Music Holdings, has acquired B2B music technology and services company FUGA. Terms of the transaction were not disclosed. 

  The Netherlands-based company will continue to operate as a stand-alone business within Downtown's portfolio of services companies which includes CD Baby, Soundrop, DashGo and AdRev. Downtown also owns rights management company Songtrust.

  In a statement, Downtown said that "as part of a broader enterprise, FUGA, its clients and partners will benefit from expanded resources, infrastructure and global scale to more quickly bring to market added services and unparalleled innovation for music industry rights holders."

A 'full-stack' music company

  Downtown also said that FUGA's acquisition was part of a strategy to "methodically" build out a “full-stack” global music company to cater for the needs of the independent sector, in particular independent artists. 

  FUGA's platform provides content management, work-flow and distribution services, delivering content to more than 260 different digital service providers globally. FUGA also provides full service marketing, promotion, monetisation and label services to the independent music sector. Over 500 different businesses, such as labels, artist platforms, distributors and other rights holders use FUGA’s technology and services to support their operations.

  “We could not be more enthusiastic about becoming part of the Downtown portfolio," said FUGA CEO and co-founder Pieter van Rijn, who will continue to run the operations. "This acquisition will give FUGA the backing to achieve our global ambitions in this space so we can continue serving the independent music community, developing our service offering and improving our technology."

A more equitable eco-sysem

  Commented AVL CEO Tracy Maddux: “Pieter and the team at FUGA have built an impressive business that offers clients an impeccably high level of service. Their robust technology, well-earned reputation for innovation on behalf of the clients they serve, and global perspective of the digital music industry are welcome additions to our existing set of capabilities and services."

  For Downtown Music Holdings CEO Justin Kalifowitz, the acquisition of FUGA, following that of AVL in March 2019, is "a natural next step for Downtown in developing businesses that support a more equitable and innovative music eco-system."

MLC appoints Warner exec Kris Ahrend as its new CEO

By Emmanuel Legrand

MLC's Kris Ahrend

Kris Ahrend has been appointed CEO of the Mechanical Licensing Collective (MLC), the new rights management organisation set up to license and administer mechanical rights in the US. After stints at Sony Music and Sony BMG Music Entertainment, Ahrend joined Warner Music Group's Rhino Entertainment. 

  In 2013, he helped set up within WMG a legal, financial, and administrative shared services organisation. In 2016, he was promoted to President of US Shared Services at WMG, overseeing the operations of 15 different functional teams. Ahrend will work from the MLC's offices in Nashville.

  MLC Board Chair Alisa Coleman said Ahrend was selected by MLC's Board after "a competitive process." She added that "both his background and vision stood out amongst many qualified candidates. The unique combination of his experience with license administration, his tenure as a business and legal affairs executive in the music industry, and his most recent involvement in leading the design and operation of a large client service organisation makes him well-suited to operate the MLC."

  Ahrend said: “We will provide songwriters and publishers unprecedented transparency, rights, and the ability to claim what is theirs. Through the MLC, we are committed to improving the system for everyone.”

China's TikTok signs global licensing deal with Merlin

By Emmanuel Legrand

Independent labels agency Merlin has inked a multi-territory licensing deal with TikTok, signaling that the Chinese-owned short-video platform is opening a new chapter in its history by seeking licensing deals with rights owners.

  The deal, effective immediately, will allow TikTok to use the repertoire of Merlin's members, representing about 15% of the global music market, sourced from tens of thousands of independent record labels, distributors and artist management companies. Merlin described the deal as "a significant music partnership."

  The partnership is the first one under the leadership of Jeremy Sirota, the new CEO of Merlin. Sirota said: "This partnership with TikTok is very significant for us. We are seeing a new generation of music services and a new era of music-related consumption, much of it driven by the global demand for independent music. Merlin members are increasingly using TikTok for their marketing campaigns, and today’s partnership ensures that they and their artists can also build new and incremental revenue streams.”

A larger canvas from which to create

  TikTok's Global Head of Music Ole Obermann, said: “Independent artists and labels are such a crucial part of music creation and consumption on TikTok. We're excited to partner with Merlin to bring their family of labels to the TikTok community. The breadth and diversity of the catalogue presents our users with an even larger canvas from which to create, while giving independent artists the opportunity to connect with TikTok's diverse community."

   Sirota was appointed early January to replace Charles Caldas, who served as Merlin’s CEO since the agency’s founding in 2007 and left at the end of 2019. Sirota joined from Facebook where he was part of the music team. Previously he held various positions at Warner Music Group, including at Alternative Distribution Alliance (ADA), Warner’s distribution arm for independent labels. 

  Sirota will lead a management team at Merlin with Charlie Lexton (CCO) and Helen Alexander (CFO) based in the UK and Jim Mahoney (VP Global Operations) in the US.



>  DaveHansen, the former GM of Epitaph Records, is taking on the new role of Executive Chairperson of Merlin. Following Merlin's biennial board elections, eight new executives joining the organisation’s 15-member board. The new incoming board members are: Alexandria Hock (Better Noise Music),Carlos Mills (Mills Records), Chan Kim (FLUXUS), Katie Alberts (Reach Records), Marie Clausen (NinjaTune), MeridaSussex (Stolen Recordings), Michael Ugwu (Freeme Digital) and Pieter van Rijn (FUGA). In order to fully reflect the organisation’s global outlook, Merlin’s board is divided into three territorial blocs with equal representation given to North America, Europe and ROW.  

Molly Neuman: 'Songtrust is a low-risk, creator-focused offer'

Songtrust's Molly Neuman

Songtrust, the global royalty collection platform owned by US independent music company Downtown Music Holdings, has had a stellar year 2019 with milestone growth. During the year, Songtrust grew the total number of songs it represents to over two million and the songwriters and producers affiliated to the platform to 300,000.

  The company does not disclose details of its financial results, except to say that it has grown its overall collections by nearly 250% year-on-year and "significantly increased" the amount of royalties paid to its clients, thanks in part to an expanded global reach. Songtrust is now able to collect royalties from more than 150 countries and territories and has over fifty direct affiliations with collection societies around the world.

  Creators using the platform for global royalty collection include Jeremy Zucker, Tessa Violet, Craig Finn of the Hold Steady, and writers who have written or co-written songs for Billie Eilish, J. Cole, Anderson.Paak, Meek Mill, among others.

  The company also acts as the administration partner for the repertoire of works represented by companies such as sister company Downtown Music Publishing, Sub Pop Publishing, ZJS Music Publishing (Average Joes Entertainment), Merge Music Publishing, Symphonic Publishing, Passé Publishing, in addition to business partnerships with distributors like CD Baby, DashGo, Audiomack, Tracklib, and Symphonic Distribution.

 
  This year was also one of leadership transition as Joe Conyers, who co-founded Songtrust with Downtown CEO Justin Kalifowitz, relinquished day-to-day management duties at Songtrust to focus on strategy at Downtown Holdings. As a result, Molly Neuman, who had been Global Head of Business Development for the past two years, was promoted to President.

  Neuman has had a long career in the music business, with positions within independent music companies (Lookout Records), as well as digital services (eMusic, Rhapsody, Kickstarter). She also ran A2IM, the organisation representing independent music companies in the US. She joined Songtrust two years ago and is now in charge of the company's global business. 

  Neuman spoke to Emmanuel Legrand as the year was closing and reflected on her journey so far.

 

What's is Songtrust about?
Molly Neuman: It's a platform that makes available the revenues that songwriters and creators are earning through our direct affiliation with the collection's network that historically had not been available. Traditionally music publishers focused on the top 1%. The industry was driven by large advances and by copyright acquisition. What we are making available is access to those royalties generated that are rightfully earned by these creators, without taking any ownership percentage and without long-term deals. So it's a different way of thinking about publishing entirely.

What's your remuneration model?
Our standard deal is $100 to access the network of collection societies and then 15% on royalties that are earned.

If you collect $5 or $5m you will still take your 15%?
Correct.

What led you to become the President of Songtrust?
I built my career being aligned with independent music primarily. I started as a drummer and transitioned to the music industry, working with Lookout Records in the early 1990s. From a label I went to management and then to eMusic, and then to A2IM. So my journey has been meandering to a degree but it feels that it is aligned with my core values when I started, which were about independence. Making the independent network as strong and as vibrant as possible has been what I have been able to carry through throughout my career journey. Two years ago, after leaving Kickstarter – which was also very much aligned with my mission in that I was trying to bring the music industry to the creative community at Kickstarter – I got to know Justin [Kalifowitz] who is our CEO, and some of the non-business initiatives that he was championing, such as his initiative for tax credit for studios and companies creating music in New York, and Sound Thinking which is bringing education specifically around music for woman and students in New York public schools. I found someone I share a lot of personal values with. With what they had been building at Songtrust, which is to try to address the lack of access to publishing royalties for individual creators, I felt this was very much the right opportunity for me. I have been here for two years. I have been leading the sales, marketing and business development team, and we've been very successful. We made a lot of progress, and we've been able to grow our client base by over 100%, our royalties collected by 250%. We know that there a plenty of opportunities to grow the business. I have the confidence of Justin and Joe [Conyers], the co-founders, to lead Songtrust into the next phase of our company and I am really excited about that.

What's the next development phase for Songtrust?
At the moment we are very much focused on publishing administration. We are affiliated to 50 societies [around the world], and we are collecting the digital income from all the services. A tremendous amount of our clients are extremely successful on digital platforms and no so much on TV and radio performances, so making sure that the digital income is collected precisely is a big mission for us. That's our main focus: make sure that we continue to improve the technology, the efficiencies that we offer, the registrations and the payments of royalties. We need to make sure that we are marketing ourselves properly so that people understand that there is more available than just recording royalties, and that we are a low-risk, creator-focused offer that really empowers them. We don't do the creative side like putting creators together to collaborate, we don't represent their works for sync usages, because we find that managing expectations on that front can be very challenging. We prefer to focus on being the best in class on royalty administration and be excellent partners with the network that we operate with. What we are aiming to do with SACEM, with PRS for Music, BMI, ASCAP and all the other societies is to work with them because we represent so many copyrights that we want to do it in a way that makes sure that we get everything that our clients are owed but not overburdening them.

What are your goals at Songtrust?
Growth! We are set up for growth. Our plan is to grow the flow of royalties we collect for our clients and to continue to build a healthy business.

How do see the whole business of collective management of rights? Is it going in the right direction?
We have to respect the fact that many societies have been in business for over a hundred years and they have adapted to the needs of the industry and some of those request a lot of investments. They have to make progress with efficiencies and a lot of societies are demonstrating that. Everyone knows there are challenges with pools of royalties unmatched and we have to deal with that. We are trying to be a good actor in that way when we are doing the registrations, entering the ISWCs as well as the ISRCs. Some societies do not manage that piece yet. We are trying to make sure that they get as much data as possible while they build their new systems. There are more openness to the changes and we are trying to encourage that.

In between Kickstarter, A2IM and now Songtrust, you've been dealing mostly with independent music companies and creators. Is it a good time to be an independent these days?
Individual creators and small businesses are being able to access the market and build from their core business with efficient products like ours. That simply was not possible. Back in the days we had many creators that were even affiliated with a PRO. An important part of what we are doing is supporting independents and offering them access for their artists to a complete royalty picture. In many cases they are managing the master side and this is an opportunity to represent the full royalty streams for masters and publishing. It's an exciting thing and this area is growing significantly.

Any challenges in the marketplace?
In the US, there are some contentious issues about [mechanical] rate setting that I hope will be resolved soon. The appeal of the Copyright Royalty Board rates setting by digital platforms is disappointing, but having worked at record companies and with digital platforms, I know that people approach these issues through the lenses of their own interests. But I do hope that these issues are resolved because publishing is already at a disadvantage compared to recording with regards to royalty revenues, so any improvement in the royalties generated by compositions would be welcome. The rates set by the CRB in 2018 was great news and we had a lot to celebrate, but the appeal has been disappointing and challenging. Services are important partners at the same time so we know that we will get to a positive result eventually. And I hope that's relatively soon.

Is the creation of the Mechanical Licensing Collective in the US a good thing?
I think so. There are models around the globe for mechanical collectives and the fact that the US hasn't had that yet is a little bit funny. We see it as resetting the overall picture and we also see it as a way to validate the complete publishing picture that we provide and make our efficiencies available for global collections. We think it is a positive evolution. What I would say is that there has been more discussions about publishing and royalties in the past few years than in my whole career. Many of our conversations with early-career songwriters and rights holders are about the fundamentals of royalty collection. While there are still many open questions, there is more understanding, more discussions being generated around the whole picture and that is very positive.

Regarding Kickstarter, the crowd-funding model has taken a bit of a hit with what happened with Pledge Music. Is the model broken or that was just a hiccup?
Pledge had a different model than Kickstarter, fundamentally, which was to their advantage initially but at the end of the day was what created the challenges. With Kickstarter the risk is significantly less. Failure to deliver a project at Kickstarter was a very small percentage. And if you think of it as an investment scheme, it is a pretty healthy ratio. It's disappointing to see what happened, because there are many artists and creators that ran projects and they did not happen. And it is painful to see a company that had great potential not meet that. But there is a lot to learn from things that are not successful. At Kickstarter I always believed that what we were doing had a strengthening opportunity for the overall eco-system.

You are one of the very few women President of a music company. Does is feel kind of lonely up there? How can the industry make more room for women in top executive positions?
One of the things I believe in is that in many different times of my life, there were opportunities and encouragements. These are sort of the basic fundamental pillars of how I like to live my life. When you open the doors of opportunities and you encourage that, things can be surprising and results can be incredibly powerful. My journey has been a perfect example of that. The confidence that Joe and Justin and our executive team have put in me to lead our organisation mean that there are set skills that I have. If you look at my career over the years, it does add up. I think that one thing that executive teams and leadership in trade organisations and in music companies can do is identify areas not just for women but for many other dimensions for which we need to see more balance. A little bit of accountability and transparency is needed. The more that we make inventories in what our teams look like, the more we can aspire and commit to measurements of improvement. If we are able to say that our company has X amount of diversity, we would aspire to improve the situation and commit to that. You can always understand what the challenge is and meeting it. That's where I hope our industry improves. And I think it can!

Barcelona court allows songwriters and publishers to withdraw their rights from Spanish society SGAE

By Emmanuel Legrand

 

A ruling by Barcelona’s Commercial Court just before Christmas has opened a new sequence in the on-going saga involving Spanish authors' society SGAE by authorising authors and publishers who wished to leave SGAE to withdraw their rights “without unnecessary and unjustified restrictions.”

  The interim measures taken by the court lifted SGAE clauses in the organisation's standard contracts that prevented the withdrawal of rights without limitations and also lifted provisions that prevented rights holders to withdraw partial rights from the society.

  However, the magnitude of the withdrawals was hard to evaluate at the start of 2020. Following the ruling by the Barcelona court, SGAE said in a December 30 statement that “both multinational and independent publishers, as well as practically all authors who had requested their withdrawal for this year, have announced the revocation of them prior to December 31 and, therefore, will remain in SGAE.”

 

An intense calendar

  SGAE added that the decision to stay with SGAE was the result of “a dialogue process by the presidency and its management team with all the sensibilities represented in the entity,” and that SGAE's leadership will have “an intense" calendar of meetings with publishers “to address the challenges of the entity's future.”

  The legal procedures were instigated by Barcelona-based rights society Unison, which has been trying to set up an alternative to SGAE. The court's decision should open to doors for songwriters and publishers who have been seeking to leave SGAE to join Unison. In 2016 Unison filed a complaint before the National Market and Competition Commission (CNMC) against SGAE, accusing SGAE to hinder Unison’s access to the rights management business in Spain.

  A May 2019 decision by the CNMC found SGAE guilty of abuse of a dominant position and imposed a fine of €2,949,660. Unison then asked the Commercial Court to issue a resolution to be applied as a matter of urgency that would compel SGAE to allow the owners to withdraw their rights from the society in accordance with the Spanish Competition Authority previous resolution, Directive 2014/26/EU and the recent reforms of Spain's Intellectual Property Act. Such request was granted at the end of 2019.

 

Puttin an end to SGAE's monopoly

  Unison CEO Jordi Puy said he was “satisfied that the resolution comes at the right time, since the rights holders who had requested the total or partial withdrawal of their repertoire from SGAE had done so with effect from 31 December 2019″ and because it is “another step in demonstrating that the monopoly on the management of music rights is history.”

  SGAE has been under pressure for now several years to change its governance statutes and fix a scam knows as “La Rueda” (The wheel). The society's inability to address these issues led the International Confederation of Societies of Authors and Composers to suspend SGAE's membership from the global organisation. On two occasions, SGAE's leadership failed to win a majority to pass new statutes.

  On January 2, the Board of Directors of SGAE has approved the call for an Extraordinary General Assembly to be held on January 30, which is expected to vote on new governance proposals and renewed statutes. “With all the advances of the last months and a new vision of our organisation, participating in this Extraordinary General Assembly is fundamental so that with our new approved Statutes we can build the SGAE that we all deserve,” said the society in a statement.

US DoJ extends Live Nation-Ticketmaster consent decree by five and a half years

By Emmanuel Legrand

 

The US Department of Justice’s Antitrust Division will file a petition asking the court to clarify and extend by five and a half years the 2010 consent decree related to Live Nation and ticketing company Ticketmaster. The decision has been described by the DoJ as "the most significant enforcement action of an existing antitrust decree by the Department in 20 years."

  The original decree was agreed by Live Nation and Ticketmaster as the condition for the DoJ to authorise their merger. According to the new terms of the Consent Decree, Live Nation will be subject to an automatic penalty of $1 million for each violation of the Decree and will pay costs and fees for the DoJ’s investigation and enforcement. 

 

  In addition, Live Nation is not authorised to threaten to withhold concerts from a venue if the venue chooses a ticketer other than Ticketmaster and any threat by Live Nation to withhold any concerts because a venue chooses another ticketer is a violation of the Decree.

 

Preserve and promote ticketing competition

 

  “When Live Nation and Ticketmaster merged in 2010, the Department of Justice and the federal court imposed conditions on the company in order to preserve and promote ticketing competition,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. 

 

  He added: “Today’s enforcement action including the addition of language on retaliation and conditioning will ensure that American consumers get the benefit of the bargain that the United States and Live Nation agreed to in 2010. Merging parties will be held to their promises and the Department will not tolerate transgressions that hurt the American consumer.” 

 

  Live Nation commented: "We have reached an agreement in principle with the Department of Justice to extend and clarify the consent decree. We believe this is the best outcome for our business, clients and shareholders as we turn our focus to 2020 initiatives."

EU Court of Justice finds reselling ebooks violates European copyright law

By Emmanuel Legrand

 

The Court of Justice of the European Union (CJEU) has ruled that reselling electronic books violates EU copyright law, following a request from a Dutch appeals court in The Hague to clarify the legal framework for second-hand markets for digital creative works. The CJEU ruled that e-book resales qualify as unauthorised communication to the public.

  The case was initiated in 2014 by two organisations — Nederlands Uitgeversverbond (NUV) and Groep Algemene Uitgevers (GAU) — which represent the interests of publishers in the Netherlands against Tom Kabinet Internet, a digital platform that offered second-hand digital versions of books.

  The CJEU was asked questions concerning a) whether the supply of e-books by downloading online for permanent use is covered by the right of distribution within the meaning of Article 4 of Directive 2001/29, b) whether that right is exhausted by such a supply made with the author’s consent, and c) whether the acts of reproduction necessary for the subsequent transfer of an e-book acquired in that way are lawful. 

 

Important ramifications

 

  The Court found that "the supply by downloading, for permanent use, of an e-book is not covered by the right of 'distribution to the public' provided for by Article 4(1) of Directive 2001/29, but that it is covered by the right of ‘communication to the public’ provided for in Article 3(1) of that directive, in which case exhaustion is excluded under paragraph 3 of that article."

 

  The CJEU found that "in the present case, since the making available of an e-book is generally accompanied by a user license authorising the user who has downloaded the e-book concerned only to read that e-book from his or her own equipment, it must be held that a communication such as that effected by Tom Kabinet is made to a public that was not already taken into account by the copyright holders and, therefore, to a new public."

  In a Twitter post, Tom Kabinet said the CJEU "overlooked the fact that we actively enforce one-copy one-user and therewith come to a conclusion that is not in our advantage. It's up to The Hague's court to check the facts now and set it straight."

 
  Analysing the conclusions from the CJEU, the National Law Review noted that although the decision only concerns ebooks, it "may also have important ramifications for the music and film industries, since the CJEU’s reasoning indicates that the resale of a download link to a permanent copy of a music or video file would also require the consent of the rights holders."

China's Tencent and various investors acquire 10% of Universal Music Group

By Emmanuel Legrand

A consortium of investors – led by Tencent Holdings, parent company to Tencent Music Entertainment Group (TME), operator of China's leading music streaming services – will acquire a 10% share in Universal Music Goup from parent company Vivendi, at a company valuation of €30 billion ($34 billion).

  The agreement also offers the consortium to purchase an additional 10% equity stake in UMG at the same enterprise value before Jan. 15, 2021. In addition, Tencent Music Entertainment will buy a minority stake in UMG's greater China subsidiary.  

  Details about the participants in the consortium have not been disclosed. Reuters reported that Singapore's state investment firm GIC and Qatar Investment Authority (QIA) were involved in the project.

Validating UMG's strategy

  TME will invest up to a 10% equity interest in the Consortium. “TME is thrilled to join the consortium in investing in UMG, and intends to further deepen the cooperation with UMG and drive the development of music entertainment market in China,” said the company. Tencent operates China's popular music apps QQ Music, Kugou Music, Kuwo Music and WeSing.

  Universal Music Group chairman and CEO Lucian Grainge commented in a memo to staff: “With the exception of additional resources to further advance our strategy, everything else will remain the same: our strategic vision; our company, label and business unit names; our locations; and of course, our outstanding people. This is an exciting development reflecting a strong validation of our business strategy, our incredible team and your excellent work. It also reflects our shared optimism about UMG’s continued role as the driving force in our industry and how focused we are on the future.”

A risky transaction for consumers

  The transaction is subject to regulatory approvals, and is expected to close by the first half of 2020. European independent music company's trade body IMPALA announced last November that it would challenge the transaction on the grounds that “the risk of harm for consumers and competitors from such a transaction would be a concern because of the impact in both the digital market and the music sector, with independents being squeezed further and artists also losing out,” according to IMPALA’s executive chair Helen Smith.
 
  "If I were an artist on the label I’d be watching this deal closely. Although things probably won’t change if it goes down, it could be a periscope into what might happen in the future, and that could make many artists uncomfortable," wrote Bobby Owsinski of Music 3.0, in a blogpost titled 'New Universal Music Investors May Not Be What Artists Want'.

8tracks shuts down after 137 weeks due to royalty costs and dropping listenership

By Emmanuel Legrand
 
Music streaming service 8tracks has closed at the end of 2019 after a 10-year run. Founder David Porter explained in a blogpost that the decision was based on the cost of content combined with a drop in ad revenues linked to a decreasing audience. "To state it simply, we’re shutting down because we can’t generate enough revenue, at our current scale, to cover royalties that continue to increase," wrote Porter.

  He added: "Given the magnitude of music royalties, the only way to field a enduring streaming music service (if music from the major labels is to be offered) is through money and scale. We're nearly out of cash and can't afford to pay current and past royalties."

  8tracks launched on August 8, 2008 with the ambition to provide highly curated playlists by top DJs, and with attractive visuals. In November 2019, it had 927,000 monthly active users.

  Porter explained in the blogpost that raising sufficient financing proved difficult, and while the audience was growing, so did fixed costs. Initially operating under the Small Webcaster license, where cost of content is based on a percentage of revenues paid to SoundExchange, 8tracks switched to the Large Webcaster license, with set rates per stream, as the business grew.

High pay-per-play rates

  "We now had to pay high per-play rates as a Large Webcaster, taking us out of profitability," explained Porter. "Given our primarily ad-based business model in which revenues can fluctuate significantly from one month to the next, it was hard to predict profitability." Porter also said that the development of Spotify's free tier with on demand access to a large repertoire, and the development of curated playlists affected 8tracks' business.

  Overall, he added, 8tracks was hurt by a combination of Spotify’s growth in listenership and the mainstream adoption of on-demand streaming, which impacted listenership and CPMs. In October 2019, subscription revenues reached $47,000 while advertising revenues were a mere $6,000, far from the $500,000 it generated during its best month in 2013.

  "The reason we fell behind in royalties is because we steadily lost the scale of listenership necessary to sell advertising with a direct sales team at CPMs that would cover compulsory royalty rates with a solid margin," wrote Porter, who invited users with playlists to migrate them towards their "second-favourite music streaming service."