@FeaturedArtist’s Lucie Caswell calls for “due reward” to artists from Spotify equity windfalls

[And what about the songwriters?]

As the trading floor eyes up Spotify’s float, the attention of the music industry is on its licensors. None more so than music makers, who created the assets which make Spotify and its rivals, the billion-dollar businesses they are today. In theory, those assets are due for a windfall as option agreements become exercisable and paper value crystallises into cash. This is potentially a moment which proves the extraordinary opportunities of our digital age, the borderless, boundless bounty of music, the leadership of music innovation and, the enormous value in this business we love, music.

Whose value and how much however, is the conversation of the day. Spotify floating as the New York Stock Exchange takes a hit, is hopefully not prescient of the rewards to the music value chain, through rights-owners and rights licensors who included equity in their licensing deals. Premium-priced initial sales would suggest otherwise. Those licensing deals intrinsically exist for the protection and monetisation of copyright – the music rights and songs artists entrusted to those licensors, for the best advantage to achieve fans and revenues. Rights-holders, distributors, aggregators and services like Spotify, all make money from that transaction and, that trust. Surely it is only sound business that the trust will be repaid and the creators receive due reward from those valuable assets, when money is made.  Whether marketing them, streaming them, building a business upon and around them or licensing them, this industry is sustained and sustainable only, with those songs and recordings.

How much value, will be a matter of the deal at hand and the hour at which the licensor cashes in (something which it seems, will be a tightrope dance of timing over the initial roller-coaster period of trading). From that point, the licensor must decide how to distribute the win across all of the assets it has licensed. Notice I say all. There is apparently some discussion of who should be included, of what repertoire may or may not feel the windfall and who is more valuable.

At this stage we point, as we have before, to the demonstrative WIN FairDigitalDeals Declaration. This landmark calling-card for fair play by rights-holders has come of age. Principle statements are now to become practice. This simple document, signed up to by a growing, global swathe of independent labels, is indicative of how good practice is the fair, transparent and creator-led business we strive for as the FAC.  Good players are many but they also provide precedent that business can be done with equal revenue shares, clear reporting and by fit for purpose, full and fair distribution of wealth to those who create it. Now is the time for all labels and licensors to really demonstrate good intent for artists, ensuring that our ecosystem is sustainable in practice and principled throughout.

Read the post in Music Week

@CMRRA: An Interview with Michael Abitbol

[Great news for one of the good guys.]

Native New Yorker and Senior Vice President of Business and Legal Affairs of Digital at Sony/ATV Music Publishing, Michael Abitbol, has more in common with Canadians than one might think.

First, he’s an avid ice hockey fan who has visited many hockey-related destinations in Canada. Second, he’s armed with a track record of fighting for the rights of songwriters and publishers like his industry colleagues across the border.

Abitbol was recently appointed to CMRRA’s Canadian Publishers Committee (CPC), established to oversee and advance the interests of CMRRA’s publisher clients in Canada.

Read the post on CMRRA (Canadian Musical Reproduction Rights Agency)

Must Read by @DavidGun10 and @justinhendrix: Mr. Zuckerberg, Here’s How You Should Be Regulated

[This is a highly insightful post by professors at the Terry College of Business at the University of Georgia (ARW readers will recall that Terry hosted the first Artist Rights Symposium a couple months ago where I spoke and of course is where David Lowery teaches.  Gunton & Hendrix make the case for regulating Facebook which make for required reading alongside Jonathan Taplin’s work.  (Prof. Taplin keynoted the Artist Rights Symposium.)]

On Wednesday, Mark Zuckerberg finally ended days of silence and set out on a media tour to explain Facebook’s role in the Cambridge Analytica data scandal. CNN’s Laurie Segall asked him if he was worried about Facebook facing government regulation after what he admitted was a massive breach of trust between the platform and its users. “I actually am not sure we shouldn’t be regulated,” he said. “I think in general technology is an increasingly important trend in the world. I think the question is more what is the right regulation rather than ‘yes or no should we be regulated?’”

It is certainly time for a robust international conversation about how best to regulate social media platforms, and data privacy more generally. Major technology companies — including Facebook, Google, Twitter, SNAP and others — define the information ecosystem in much of the world. Barely regulated and rarely held accountable, these companies are completely transforming the public sphere. While these platforms present new opportunities to connect people around the world, they also create new spaces for bad actors that wish to spread misinformation, encourage terrorism or incite violence, engage in online harassment, steal personal data, restrict free speech and suppress dissent.

As this urgent conversation gets underway, here are some factors to consider when imagining new regulations…

Read the post on Just Security

Guest Post by @sarahickman: Streaming Royalties Are Ending Opportunities for Working Musicians

[Sara Hickman is one of Austin’s most beloved songwriters.  She has allowed us to republish her viral Facebook post on how streaming is hollowing out the “middle class musician”.  (If you want data on this phenomenon, see the Austin Music Census, the most comprehensive work of its kind that actually connects with working musicians as opposed to the usual hoorah Chamber of Commerce bunk.)  Trust me–it’s not just Austin. As Maria Schneider has written, low streaming royalty rates and increased consumption are essentially destroying the music infrastructure from the ground up.  And the recurring theme from the World Trade Center offices of Spotify is that royalties are too high.  We’re honored to republish Sara’s important post.  And a 44% increase in streaming rates is still $0.00144.]

There were many reasons why I retired from music last year. I’ve never explained them or felt the need to, so I’m not going to start today.

But I do want to point out something that made a chilling difference in my decision. And that is streaming and downloading music versus selling physical cds/vinyl/cassettes, what have you. You’ve all heard how it affects us: the songwriters, the musicians, the bands. I want to share a living example of what streaming does. Because streaming is killing the opportunities of musicians to make a living off of their creations.

My song “I Couldn’t Help Myself” was my biggest success, in consideration of what the industry expects, it wasn’t much. But when it came out in 1990, there was a lovely video, lots of airplay, touring, promotion teams and I was flown to radio stations all over the country to perform live and chat with the DJs. All this to say hard work helped move the song to #3. I was blessed to appear on “The Tonight Show” while it was the single.

All this to lead up to the fact that it is 2018 (28 years later)
and I just received my quarterly royalty statement from Warner Music Group for all the songs from “Shortstop”. Believe it or not, my songs still get airplay around the globe, which blows my mind and, of course, makes my heart smile.

I hope you’ve read this far.

Because the pay off is you’re not going to believe what I’m about to tell you.

I recognize the numbers I’m about to share don’t amount to beans when compared with musicians who have made it to the big, BIG time. But I’ve always considered myself a working middle class musician; I worked my ass off to make a decent living and I was cool with that. I had a niche. I learned how to diversify my talents, read contracts, distribute, create and publish content (music) to support my dream. I enjoyed understanding what I was making and releasing into the world, knowing there would be end results of, hopefully, satisfied listeners and a financial reward parallel to the work, time, effort and costs associated on my end.

Having said that, I’ve watched how income numbers on royalties have dropped since streaming/downloads started.

This new earnings notice (Oct-Dec 2017) shows “I Couldn’t Help Myself” played 14,789 times (U.S., Italy, Canada, Japan, United Kingdom, United Arab Em., Belgium, etc) and here’s what that provided:

$15.98

That’s right.

FIFTEEN DOLLARS AND NINETY EIGHT CENTS for 14,789 captured results of people listening to my song.

That equals .0010 per download or stream. It’s not even
a PENNY per play. And it’s not because it’s me. That’s the level playing field of payment for all of us in music on Spotify, YouTube, Amazon download, Apple iTunes, Google Play, Tidal, Rhapsody, Slacker…even something called Neurotic Media.

Let me hip you to how many of those were downloads (as in paid for content):

19

Here’s how much streaming this one song of mine received:

14,770 plays

As today is the International Day of Women, I thought it was important to remind you of not only how women musicians are treated, but how ALL musicians are compensated and WHY it is IMPORTANT to remember to pay for music.

Video may have killed the radio star, but streaming is ending wages and opportunities for your creators.

You Can’t Find What You Don’t Look For: Spotify Still Can’t Find the #5 Record in the US

 

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Still not getting paid….

 

The more things change…great news for BlocBoy JB, he made the Top 5 on Billboard’s Hot  100.  The bad news…Spotify, Google and Amazon filed “address unknown” NOIs for his song which means these saviors of the music business just helped themselves to a royalty-free license for who knows how long.  Yes, it’s right there in the very easy to use SX Works NOI Lookup where we found it in literally 5 seconds.

Blocboy Look Alive SX

And of course…the song is right there in the very easy to use BMI repertoire lookup which we found in literally 5 seconds.

Blocboy Look Alive BMI

For more, read Andrew Orlowski’s priceless Spotify Wants to Go Public But Can’t Find Ed Sheeran (to pay him).  This is exceptionally absurd because Ed Sheeran is the most streamed artist on Spotify for 2017.

@musicbizworld: THE GREAT BIG SPOTIFY SCAM: DID A BULGARIAN PLAYLISTER SWINDLE THEIR WAY TO A FORTUNE ON STREAMING SERVICE?

[Tim Ingham tells a story of a Spotify royalty scam run by a “Bulgarian playlister” (…stop right there and go no further…who was running what are obviously scam playlists of snippets by manipulating Spotify subscription accounts.  As Tim notes, the fact that the “Bulgarian playlister” was able to manipulate a large number of “paying” subscription accounts, raises yet more important questions about Spotify’s subscriber numbers.  This is obviously of vital importance to potential buyers of Spotify’s stock–what subscriber numbers are real.  Perhaps the Securities and Exchange Commission will question the man behind the curtain.]

A Bulgarian playlist-maker scammed the Spotify payout system for months last year – and could well have made themselves a millionaire off Daniel Ek’s platform.

That’s the shock claim being made by multiple high-level industry sources to MBW this week.

Music Business Worldwide can today reveal details of the alleged shakedown, which reached its height at the end of last summer.

The evidence we’ve gathered strongly suggests that one party sucked a vast amount of money – as much as $1 million-plus – out of the Spotify royalty pool, and away from legitimate artists and labels.

And the best/worst part of all? They probably didn’t break any laws in the process….

Spotify tells us it’s now “improving methods of detection and removal”. But the big question remains: are the scammers out there improving their methods too?

Are there others, like our Bulgarian friend, purchasing multiple premium Spotify accounts and rinsing playlists stuffed with cheap music to which they own the rights?

If so, how many of these Spotify scammers exist – and how much money are they generating?

Are they operating at a lower commercial level than The Bulgarian and, therefore, not outing themselves by appearing on weekly top global playlist charts?

Crucially: what does all of this mean for the solidity of valuations for music’s biggest companies?

And even more crucially… what does it mean for the veracity of Spotify’s paying audience as the company begins its high-stakes escalation towards the New York Stock Exchange?

Read the post on Music Business Worldwide

 

@Maureenmfarrell: Private Trades in Spotify Shares to Play Key Role in Upcoming Debut

[Recall that Spotify is not doing a traditional IPO, but something called a “direct listing.”  The difference between the two is a bit down in the weeds, but is crucial.  In a traditional IPO (sometimes called a “full commitment underwriting”) a group of investment banks or the equivalent form an “underwriting syndicate” that buys new shares from the company at a valuation set by the underwriters.  Hence the “pricing” concept for IPOs–you will hear that right before a new company starts trading.  If the path to an IPO has been managed correctly, the underwriters’ valuation is higher than the last private valuation of the company’s last sale of its preferred shares to private investors.

The underwriters want to price in a range that they can resell to retail investors, so they wouldn’t ever price at $1,000 for a stock that is to sell in the open market.  Think about it–how long did it take Amazon and Google to get to $1,000 in the open market?  They didn’t start there.

Another reason–which I suspect is the true reason–that Spotify is not going the underwritten IPO route is because they can’t get the valuation they want.  This may have something to do with another aspect I believe to be true–Spotify is not cracked up to be a public company.

Chris O’Brien in Venture Beat has a really insightful post on Spotify’s problems with valuations:

The reality is that by taking this route Spotify is pursuing a risky strategy. And it’s likely only doing so because it was backed into a corner by its investors and by private fundraising that led to a dangerously high valuation of $19 billion.

“This is not a story of problems in the IPO market,” according to Kathleen Smith, a principal at Renaissance Capital and manager of IPO ETFs. “It’s a problem with Spotify’s valuation.”

So let’s be honest–the reason why Spotify wants to trade publicly has a lot more to do with Daniel Ek’s misplaced ego than it does with any intrinsic value of his company.   And don’t forget–when the dust settles, it is his company and this was his idea.  Genius or goat, he will get the credit.

But of course Spotify’s “public or bust” approach is really designed to allow existing stockholders to cash out.  And here’s the twist–if you’re going to sell, someone has to buy.  And if you don’t have underwriters standing behind a price point, then there is no floor to the stock price if the sellers start running for the exits.

So–Spotify is trying to look to existing private market sales–very limited and nothing like public market sales–for guidance on its stock price.  (Private markets are sometimes called “secondary markets” where you can buy private company shares.)  Maureen Farrell in The Wall Street Journal has some reporting on this which is both murky and enlightening coverage of who Spotify is “managing” (some might say “manipulating”) its stock price already.  And if you wonder what running for the exits looks like, check out the VIX crash.]

Spotify AB is counting on its surging private-market value to bolster the music-streaming service’s appeal to investors in an unorthodox public debut that could be the biggest since SnapInc.’s $20 billion IPO last year.

The listing, expected as soon as the end of March, isn’t an initial public offering, in which underwriters set a price and place shares with chosen investors before trading. Instead, the Swedish company will simply float the shares on the New York Stock Exchange and let the market find a price, in what is known as a direct listing.

While Spotify and its advisers are still determining how exactly the process will work, the company and its banks are expected to have a role in helping guide the market to a price and connecting buyers and sellers initially, people familiar with the matter said. A suggested price range is expected to be relayed to the market before trading starts, but the price will ultimately be set by what buyers are willing to pay and the price at which sellers part with their shares.

Private trading is expected to be a key part of the company’s effort to guide the market to a price, people familiar with the matter said.

The so-called secondary markets in private technology stocks are typically an afterthought in an IPO, in part because trading tends to be thin and not always a reliable indicator of value. But Spotify and its advisers at Goldman Sachs GroupInc.,Morgan Stanley and Allen & Co. are closely watching trades among private investors and have taken steps to spur volume, the people said. The company recently informed existing investors that it waived its right to buy shares before they are offered to others.

Read the post on the Wall Street Journal