Exploration Weekly - Facebook Reels Launches in the US / Spotify Hires Copyright Office Exec / Pershing Square’s SPAC Sued

Aaron Davis -

“It is impossible to discourage the real writers - they don't give a damn what you say, they're going to write.”

Sinclair Lewis

Facebook Reels is now being rolled out in the US, a new short-form video feature launched earlier this year in India, Mexico, and Canada. Facebook users can choose songs from the platform's music library, record their own original audio, or even use someone else’s audio if their Reels are set to public.

Spotify has recently hired Copyright Office exec Regan Smith to fill their head of public policy and government affairs role. Smith had worked at the Copyright Office for several years as former general counsel and associate register of copyrights, handling regulation, litigation, and other legal affairs.

On August 17, Pershing Square Tontine Holdings (PSTH) was hit with a lawsuit pertaining to its failed attempt to invest in Universal Music Group (UMG). The suit alleges that PSTH is not a proper special purpose acquisition company (SPAC), but rather an investment firm, and requests damages reflecting PSTH’s "breach of fiduciary obligations" under the Investment Company Act of 1940.

In the 8th installment of our Behind the Scenes in the Music Business series, CEO and co-founder Aaron Davis hones in on Exploration's business operations and upcoming "sprints" and business reviews.

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Compiled by Heidi Seo

Exploration Weekly - August 20, 2021

In Growing Battle with TikTok, Facebook to Test “Facebook Reels” in the US

Facebook announced it will begin testing a new feature in the US - Facebook Reels - which will give users the ability to create and share short-form video content directly within the News Feed or within Facebook Groups. The addition is an expansion of tests launched earlier this year in India, Mexico and Canada, which had focused on bringing short-form videos to Facebook users, including by sharing existing Instagram Reels to Facebook, as had been reported. For audio, creators can either choose a song from Facebook’s music library, record their own original audio or even use someone else’s audio, if their Reels are set to “public.” The company explained the decision to replicate the Reels product inside Facebook is a result of consumers’ growing interest in video, and particularly short-form video. Today, video accounts for almost half of all time spent on Facebook, in fact. On Facebook’s latest earnings call, CEO Mark Zuckerberg remarked that Reels was “already the largest contributor to engagement growth on Instagram,” given the popularity of short-form video.

Spotify Poaches Copyright Office Exec for Public Policy Role

Spotify has hired a new exec with plenty of relevant experience in the US: former general counsel and associate register of copyrights at the US Copyright Office Regan Smith. She has joined the streaming service as its head of public policy and government affairs, working with a growing team there. Smith had worked at the Copyright Office for nearly seven years, handling its regulation, litigation and other legal affairs, including being its “domestic lead on music and audiovisual statutory licensing matters”.

Pershing Square’s SPAC Sued Following Failed Bid for UMG Stake

Pershing Square Tontine Holdings' failed attempt to invest in Universal Music Group (UMG) continues to be a problem for the Pershing Square Holdings hedge fund. A lawsuit filed on August 17 alleges that PSTH is not a proper special purpose acquisition company (SPAC), but rather an investment firm, a legal distinction that determines how SPACs can use its funding and compensate its founders. The complaint seeks a declaratory judgment that PSTH is an investment company and requests damages reflecting PSTH's "breach of fiduciary obligations" under the Investment Company Act of 1940, a law that primarily regulates mutual funds that’s stiffer than the rules that govern SPACs. Pershing Square, led by Bill Ackman, called the lawsuit "totally without merit" in a statement on Tuesday. "The complaint bases its allegations, among other things, on the fact that PSTH owns or has owned U.S. Treasurys and money market funds that own U.S. Treasurys, as do all other SPACs while they are in the process of seeking an initial business combination. PSTH has never held investment securities that would require it to be registered under the Act, and does not intend to do so in the future."

Music Venue Trust Surveys Fans and Venues on Concerts’ Return

Live music has been up and running at a greater scale for around a month now, in the UK. The Music Venue Trust (MVT) has been using that time to gather opinions from music fans and venues alike about the return. Among the findings from the 1,891 fans surveyed: 76.3% of them were double-vaccinated; and 91.3% had chosen to take some kind of precaution before attending a live music event. They were also asked about how they feel about music events requiring ‘certification of health status’ for attendees: 8.9% would like to see this, but only 2.1% wanted that certification to be double vaccination (as opposed to pre-event testing). As for venues, the MVT’s survey found that 86% of grassroots venues are now open and trading, with 817 venues having put on more than 13,000 shows in the last month. However, just over two thirds reported that their advance ticket sales are down compared to pre-COVID-19, and more than half are taking less money from their bars.

Tencent Music Changes Focus After Regulatory Slap, Profits Drop

China’s Tencent Music Entertainment is to adjust its business model after being hit with regulatory penalties and seeing its share tumble to record lows. It will downplay music streaming and control of exclusive content and instead emphasize related services such as karaoke and social entertainment. The company, which is listed on the New York Stock Exchange, but remains controlled by China’s Tencent, released its quarterly results for the three months to June this week. They showed a 16% increase in revenue to RMB8.01 billion ($1.24 billion) and profits reduced from RMB943 million to RMB871 million. In a filing, the company prioritized apologies for its recent regulatory troubles over commentary on the drop in profitability. “We would like to reiterate that TME sincerely accepts the decision issued in July by the regulator pertaining to exclusive music licensing arrangements. We are committed to fully complying with all requirements in a timely manner,” said Cussion Pang, executive chairman. He also warned that compliance will have “some impact to our business operations.”

Random Ramblings

  • Why vaccination proof is suddenly becoming a new standard for concert entry.
  • Does Netflix now need to Disney-fy itself?
  • Barbra Streisand makes chart history with "Release Me 2" Billboard 200 debut.
  • The Weeknd's “Blinding Lights” breaks record for the most weeks spent on the Billboard Hot 100.
  • Pentatonix reimagines two of BTS' biggest hits in a mashup performance.

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