Texas Bar Section Announces Nominations are Open for the Cindi Lazzari Artist Advocate Award

We’re pleased to help get out the word that nominations are open for the Cindi Lazzari Artist Advocate Award for “heroes and heroines” involved with artist advocacy in all Texas communities.  For Texas readers, there’s info below about how to nominate.  If you’re not in Texas you may want to look into whether your community has a similar award.  If not, you might consider starting one.

If you would like to nominate someone for the award, you may use this form.

PRESS RELEASE:

The State Bar of Texas Entertainment and Sports Law Section (TESLAW) announced that nominations for the Cindi Lazzari Artist Advocate Award are open now until 11:59 pm Central Time on October 1, 2019.  The award is named for the late Cindi Lazzari, a leading Texas attorney who went far beyond the call of duty in her efforts to protect the rights of artists in the music industry.

In these challenging times for Texas musicians, TESLAW wants to hear about the exciting heroes and heroines who carry on the tradition of Cindi’s good works in all the music communities across Texas.  Nominees need not be attorneys.

Previous recipients of the Lazzari Award include Juan Tejeda (musician, arts administrator and activist), Robin Shivers (artist manager and founder of the Health Alliance for Austin Musicians), Texas Accountants and Lawyers for the Arts, SIMS Foundation, Nikki Rowling (co-founder of Austin Music Foundation and author of the Austin Music Census), Casey Monahan (the first head of the Governor’s Music Office) and Margaret Moser (the journalist and long-time music editor for the Austin Chronicle).

Nominations for the 2019 Lazzari Award will be accepted through October 1, 2019 and should be sent by e-mail only to law@amyemitchell.com. The nomination email should include (1) the nominee’s name and contact information; (2) a one-page statement as to why the nominating individual believes the nominee should receive the award; and (3) a biography of the nominee.

TESLAW will present the Cindi Lazzari Artist Advocate Award at the annual Entertainment Law Institute, to be held in Austin November 20-22, 2019.

For further information, please see TESLAW’s web page at http://teslaw.org/awards/cindi-lazzari-artist-advocate-award/

@musictechsolve: Do Spotify Stock Downgrades Go Far Enough?

On June 24th, Spotify shares (ticker: SPOT) was downgraded by Evercore analyst Kevin Rippey, who cut the stock to Underperform from In Line.  Since then, analysts are steadily looking past the loss-making Spotify’s $1 billion stock buy back plan.

Rippey says investors are overestimating Spotify’s ability to make money from podcasts and offering services to musicians and are underestimating the competition from other streaming services—particularly in countries outside the U.S. He reduced his price target to $110.

As ARW readers will recall, I have long challenged Spotify’s kvetching about high royalty rates by pointing to the its high overhead, 7 figure performance bonuses to Daniel Ek when he failed to meet the bonus criteria, and other irresponsible behavior by the board that Ek controls.

Spotify’s interest in podcasts is another comical example of Ek as the Easter Bunny of Screw Ups.  He bought a podcasting company that was unionized.  Sheer genius.  Why did he buy them?  Some people think it’s because podcasts were another form of user-generated content where people work for free in exchange for hot meals…no, in exchange for exposure bucks.

Exposure Bucks

Apple is busy paying for podcasts according to Newsmax:

Apple Inc. plans to fund original podcasts that would be exclusive to its audio service, according to people familiar with the matter, increasing its investment in the industry to keep competitors Spotify and Stitcher at bay.

Executives at the company have reached out to media companies and their representatives to discuss buying exclusive rights to podcasts, according to the people, who asked not to be identified because the conversations are preliminary. Apple has yet to outline a clear strategy, but has said it plans to pursue the kind of deals it didn’t make before.

Apple all but invented the podcasting business with the creation of a network that collects thousands of podcasts from across the internet in a feed on people’s phones, smartwatches and computers. The Apple Podcast app still accounts for anywhere from 50% to 70% of listening for most podcasts, according to industry executives.

So Spotify’s law fare against Apple in Europe should come as no surprise (for more on that subject see the “Spotify Untold” corporate bio book).  What this comes down to is that once again, Apple understands its audience and what would delight them where Spotify wants to build them a faster horse (or at least a cheaper one).

Meanwhile, Spotify is commoditizing music into a “playlist friendly” environment based on your mood rather than being artist driven.  Why?  One possible reason is the psychographic research of Michael Kosinski, whose work formed the basis for techniques honed by Cambridge Analytica and the Internet Research Agency you hear so much about (although it must be said the Kosinski did not work for either of those outfits–no he works as a professor at…you guessed it…Stanford).  See his paper The Song Is You: Preferences for Musical  Attribute Dimensions Reflect Personality, available at the Leland Stanford Google University Business School.

The more insightful analysts are represented by Mr. Rippey, who seems to have a good grasp on Spotify’s business and sees through all the bright and shiny objects they want you to focus on as reported by Barrons (emphasis mine):

Rippey says Wall Street’s expectations assume that either the company will come out way ahead in negotiations with the music labels that control the vast majority of the content that Spotify streams, or that it will make a bundle of money from services that previously accounted for almost none of its income.

Now that the sugar high of the Spotify stock has passed through the system and artists either are happy or not happy with their share of the proceeds–which will be hitting royalty statements right about September 30–labels are now faced with a  second act, and that second act likely will require a bigger royalty check–not a smaller one.

To achieve Wall Street’s targets for gross profit, Spotify would either need to take a larger cut of proceeds from each song stream [also called a lower royalty to artists and songwriters] or generate as much as $650 million from “ancillary” areas like Spotify for Artists and podcasts by 2022—areas the company doesn’t make much money on today, Rippey says. Spotify for Artists offers data for musicians to track which songs are performing well and in which areas, among other benefits. [Which is OK if Spotify for Artists is free, I guess–since we sent them the fans–but my bet is that no one is going to pay for it, certainly no one with a modicum of leverage.]  Spotify makes money from ads on podcasts it owns and has also begun to launch exclusive podcasts that listeners can only get on Spotify.  [Spotify has never had a hit that originated entirely within Spotify.  When it does, check this space.]

Given that music crosses over multiple cultures but that Spotify brings a decidedly European and Anglo/American creative viewpoint to its distribution platform, it is unlikely to be able to fight all fights in all markets and be all things to all music fans in the some 60 countries it operates in.  This is particularly true in countries that actually value their culture and creators.

Spotify is the global leader in streaming music, but Rippey thinks that Wall Street overestimates the company’s power in local markets. “In emerging markets like India, local players dominate the market,” he writes, noting that Jio and Gaana were the market leaders there in the first quarter. “This fragmentation leads to an understatement of how competitive streaming music is globally.” Similar dynamics play out in countries like Indonesia too.

Those are some good concrete reasons why Rippey’s price target is $110, which I think is still about $50 too high because of Spotify’s C team management.  And also because the other analysts are all guiding too high in the Overton Window:

Analyst Rating Price Target
Evercore/Kevin Rippey Underperform (From In Line) $110
Nomura Instanet/M. Kelly Buy $190
Stifel/John Egbert Buy $175
Credit Suisse/B. Russo Underperform $120
BOA/Jessica Reif Ehrlich Buy $230

One major factor that all the analysts overlook, like they missed the subprime crisis, is buried in the commentary that never gets picked up in the Wall Street publications–the fact that artists can’t begin to make a living from streaming the way they could from the CDs that streaming is replacing.  This sudden contraction hurts artists at all stages of development.  To put it in terms that Wall Street might understand more readily, this is a supply chain issue.  The chain will have no supply if unsustainable economics expands which it seems like it will.

There’s about 5% of the tracks that make 90% of the revenue from Spotify-type streamers.  Fans are paying subscriptions every month for music they don’t listen to performed by artists they don’t like.  When that idea starts to permeate the Federal Trade Commission and the Department of Justice, who knows what may happen.  This will be true of podcasters, too–the unionized podcasters affiliated with the Writers Guild of America.  I’m looking forward to that collective bargaining experience.

But for now, it’s only a matter of time before artists who are not in that 5% start to jump ship.  Analysts should be asking, who can encourage them to jump and what will happen to the ship they jump from if there were some disruption below decks in the royalty rates?

Natasha Bernal: Clegg calls on Europe to drop threats to break up Facebook and unite against China

In The Grand Deflection category, mark your calendars: Where were you the first time you heard the word “tech lash”? They are the spin they’ve been waiting for.

Facebook hires former senior government officials to lobby for Facebook to use its tools for more surveillance capitalism by roiling against the surveillance state that uses their tools to perfect the totalitarian state.

Welcome to The Party.

[Sir Nick Clegg t]he former deputy prime minister [and now lobbyist for Facebook] has said the social network plans to set up an independent oversight board to which people can appeal against content decisions made by Facebook.  [But wait…they’re a platform…they’re a publisher…they’re a platform….]

He also defended the company, saying it was the victim of a “tech lash”.

Read the post on The Telegraph

@RBMillado: Too much streaming content is causing viewer ‘paralysis’: Nielsen

Playlistomania?  I wonder what it is on Spotify–that’s what 50 million tracks will do for you.  If this replicates to “listener paralysis” (which seems plausible), it may help explain why the streaming revenue share model leads to declining royalty rates and greater concentration of wealth in a hyper efficient market share distribution.  (Deezer reportedly conducted a similar study in 2018 using a casual poll with findings based more on age than choice.)  Less is more, kids, less is more.

Nielsen’s new Total Audience Report found that the average TV viewer takes seven minutes just to pick what to watch….[A]mong adult subscription-video-on-demand (SVOD) users, only a third of them bother to browse the menu to find content, with 21 percent saying they simply give up watching if they’re unable to make a choice when bombarded with options.

Read the post on the NY Post

@digitalmusicnws: BMG Files Lawsuit Against Hilton Hotels After Hotel Chain Refuses to Take Down Infringing Works

After victory in the landmark BMG v. Cox case, BMG leads the way again and protects their songwriters.  The company really sets the gold standard for music publishers with strategic thinking and leadership in enforcing the rights of their songwriters and the composers of their production music catalog.

BMG has filed a lawsuit against Hilton Hotels in the United States.

Filed at the United States District Court for the Southern District of New York, the company’s Production Music division accused Hilton Worldwide Holdings of direct, contributory, and vicarious copyright infringement.

According to BMG, the hotel company has willfully “exploited” four of its copyrighted sound recordings and compositions in “infringing” YouTube and Facebook promotional videos.

The self-described “production music house” writes,

The Defendants benefited from the unauthorized use of those copyrighted works in connection with the promotion and advertisement of their products and services.  [They also] benefited from the unlicensed use of BMG’s unregistered songs in connection with the promotion and advertisement of their products and services.

Read the post on Digital Music News

@musically: Spotify CEO says Libra currency could help listeners ‘pay artists directly’

Earlier this week, Facebook announced a new blockchain-powered currency called Libra, and a digital wallet for it called Calibra. Spotify was among the companies backing the plans by becoming a founder member of the independent Libra Association.

Now Spotify CEO Daniel Ek has been talking about his hopes for Libra, including the suggestion that it could one day facilitate direct payments to musicians from fans.

“I think like cryptocurrencies and blockchain are obviously two of the biggest buzzwords you can have today. And for me, I don’t think technology in itself is that interesting· What I do think is interesting is what we can do with that technology,” said Ek, in an interview for Spotify’s own Culture: Now Streaming podcast.

“What everyone who’s a part of Libra is trying to accomplish is: it’s interesting that we have all these different currencies, all of these different ways of doing things. But the reality is, there’s several billion people around the world that don’t even have access to a bank account,” he continued….(Whatever you think of Libra, the fact that Spotify is, right up to CEO level, even thinking about direct payments from fans to artists is a significant talking point for anyone mulling how the streaming service will evolve in the coming years.)

Read the post on MusicAlly