Exploration Weekly - MLC Board Members Discuss Next Steps / Apple Earns $12.5 Billion in Services Revenue / Senators Call for TikTok Investigation

Aaron Davis -

“Why do you go away? So that you can come back. So that you can see the place you came from with new eyes and extra colors. And the people there see you differently, too. Coming back to where you started is not the same as never leaving.”


Terry Pratchett, A Hat Full of Sky

The Mechanical Licensing Collective, mandated by the MMA to administer the blanket mechanical license, is set to launch on January 1, 2021. MLC board chairman Alisa Coleman and non-voting board member Danielle Aguirre discuss where things stand now and the big obstacles before the board during an event for the Association of Independent Music Publishers (AIMP) in New York. The proposed budget is around $37 million in start-up costs and $29 million as a first-year operating budget, which will both likely be settled via a fee assessment proceeding by the Copyright Royalty Board.

Apple unveiled its services business earned $12.5 billion in quarterly revenue, making up nearly 20% of its entire business. The non-hardware services include offerings like Apple Music, Apple Pay, and iCloud. This showed a growth of 18% compared with the same period last year. Apple TV+, the company’s forthcoming $5-per-month subscription video service, is set to increase revenue in this sector, and expects to launch November 1.

TikTok, a video-sharing app owned by Chinese company ByteDance, will be investigated after Senate Minority Leader Chuck Schumer and Sen. Tom Cotton requested that US intelligence officials look into security risks posed by the company. The letter, addressed to acting Director of National Intelligence, Joseph Maguire, outlined concerns stating that the app could be used for intelligence-gathering and foreign influence campaigns by the Chinese Communist Party. There could also have been possible “censorship or manipulation of certain content” on the platform, pointing to recent media reports that TikTok removes materials “deemed to be politically sensitive to the Chinese Communist Party.” TikTok released a statement refuting the allegations on October 24. The company was also called by the NMPA to be investigated over potential copyright theft earlier this month.

Now, the details...
Compiled by Heidi Seo

Exploration Weekly - November 1, 2019

Mechanical Licensing Collective Board Members Outline Challenges, Next Steps

The deadline for building the Mechanical Licensing Collective (MLC) is on January 1, 2021. MLC board chairman Alisa Coleman and non-voting board member Danielle Aguirre laid out where things stand now and the big obstacles before the board during an event for the Association of Independent Music Publishers New York Chapter on October 21. The NMPA-led MLC was chosen by the US Copyright Office in July to administer the blanket mechanical license as administered by the Music Modernization Act. Specifically, the MLC must build a song database, matching compositions to recordings so copyright owners can receive the correct remuneration of mechanical royalties from digital music services for playing their work. The proposed budget submitted to the Copyright Royalty Board is around $37 million in start-up costs and $29 million as a first-year operating budget. This will likely be settled via a fee assessment proceeding similar to the rate trials that the CRB oversees. The MLC board has narrowed its search for vendors to help it build and implement the database, with three organizations likely to be contracted.

Apple’s Services Business Grows to $12.5 Billion in Quarterly Revenue

With the launch of Apple TV+ fast approaching, Apple revealed on Wednesday that the sale of services now make up nearly 20% of its business. The tech giant earned $12.5 billion from non-hardware offerings like Apple Music, Apple Pay, and iCloud during the three-month period from July to September. That represents 18% growth and an all-time high for the segment compared with the same period last year. Products, however, continue to be the main driver for the company. During the fiscal fourth quarter, the company had $51.5 billion in net sales from devices, up just short of 2% from last year. Total Apple businesses brought in $64 billion in sales during the period, up nearly 2% from last year. iPhone sales declined 9% to just short of $7 billion. Profits fell 3% to $3.05 per share. Apple TV+, the company’s forthcoming $5-per-month subscription video service, is set to launch Friday with four series, a documentary, and some kids programming. The service is also being given away for free for a year to customers who upgrade certain devices including the iPhone.

Senators Call for TikTok Investigation Over Chinese Espionage Concerns

Chinese-owned video-sharing app TikTok is under scrutiny after Senate Minority Leader Chuck Schumer and Sen. Tom Cotton asked US intelligence officials to look into security risks posed by the company, as stated in a letter addressed to acting Director of National Intelligence Joseph Maguire. Concerns included that the app, owned by ByteDance, could be used for intelligence-gathering and foreign influence campaigns by the Chinese Communist Party, which controls the country’s government. The letter also states possible “censorship or manipulation of certain content” on the platform, pointing to recent media reports that TikTok removes materials “deemed to be politically sensitive to the Chinese Communist Party.” On October 24, TikTok released a statement refuting the senators’ allegations by noting the app stores its user data entirely outside of China and is therefore not “subject to Chinese law.” It further noted that TikTok has “a dedicated technical team focused on adhering to robust cybersecurity policies, and data privacy and security practices” and that it does not remove content based on political sensitivities to the Chinese government. Earlier this month, the NMPA also called on Congress to investigate the app over potential copyright theft. That move followed Sen. Marco Rubio’s prior request for an investigation into the company by the Committee on Foreign Investment in the United States (CFIUS).

Spotify Now Has 113 Million Premium Subscribers, Up 31% From Last Year

Spotify’s latest financial results for the third quarter of 2019 were announced, showing 248 million monthly active users (MAUs), up 30% year-on-year, having added 16 million in Q3. 113 million of those users are premium subscribers: 31% growth in the last year, with five million having been added during last quarter. Q3 revenues for the streaming service grew by 28% year-on-year to €1.73 billion, including 29% growth for its premium subscriptions and 20% growth for its advertising revenues. Subscriptions thus account for 90.2% of Spotify’s overall turnover. Operating profit reached €54 million, compared to an operating loss of €6 million in Q3 last year. Spotify also reported a quarterly net profit of €241 million. “Developing regions” played a role in its MAU growth outperforming expectations. “Growth in Latin America accelerated sequentially for the 2nd consecutive quarter as retention among newer users continues to improve. Southeast Asia remains our fastest growing region (excluding India),” explained the company. Its chief financial officer Barry McCarthy will also retire in mid-January 2020, to be replaced by the company’s current VP of FP&A, treasury and investor relations, Paul Vogel. According to figures, Spotify expects to have 255-270 million MAUs and 120-125 million premium subscribers by the end of 2019.

AT&T to Invest $4 Billion in HBO Max Over Next 3 Years

AT&T confirmed this week that it plans to invest between $3.5 and $4 billion over the next three years in subsidiary entity WarnerMedia’s upcoming streaming service HBO Max, which is set to launch in spring 2020. According to Variety, the service will receive $1.5 to $2 billion next year, plus an additional $1 billion per year in 2021 and 2022. AT&T reports that HBO Max won’t become profitable until 2024, its fourth year of operation. The company is expecting the service to net around 50 million subscribers in the US by 2025, says Randall Stephenson, CEO and chairman of the company, in its third-quarter earnings call. Netflix and Disney-owned Hulu count 60.62 million US-based subscribers and 28 million subscribers, respectively. The spring launch date follows other entrants like Disney+ (launches November 12), Quibi (April 2020), and Peacock (April 2020). The service plans to build a sizeable initial subscriber base by giving HBO Max away for free to the 140 million AT&T customers who already subscribe to the HBO network ($14.99 per month). AT&T is preparing to invest significantly in HBO Max, because it wants to “maximize the value of the service, which will drive growth and value to WarnerMedia and to AT&T as a whole.”

Peloton Hit with New Legal Filing by Music Publishers

Music publishers fought back in their fight with fitness company Peloton with another legal filing insisting that they have not behaved in an anti-competitive way by coming together to sue the Peloton business for copyright infringement. Earlier this year, more than a dozen independent publishers sued Peloton for using their songs without a license. The fitness company then countersued in April, mainly on competition law grounds. It alleged that it had previously had good relationships with most of the publishers involved in the legal dispute and was negotiating licensing deals with many of them. Those relationships fell apart, it claimed, because of interference by the NMPA. These allegations were summarized further in another legal filing earlier this month. The NMPA has argued that the fitness company is pursuing competition law arguments because it knows the case for copyright infringement is so strong. Publishers have also restated their arguments in a new court filing submitted last week, citing the so called Noerr-Pennington doctrine under US law, which basically allows competing businesses to collude for the purposes of lobbying or litigation.

Spotify Kids App Launches in Beta, Starting in Ireland

Spotify has recently launched a new app called “Spotify Kids” this week, bringing together a hand-picked selection of age-appropriate music, singalongs, soundtracks, and stories for kids as young as 3 years old. It is available in a beta test period initially only in Ireland starting October 30, and will launch in other countries where Spotify Premium Family is available in the next few months. The Family plan is priced at $14.99 per month in the US, and it offers up to six accounts. Spotify Kids in Ireland will include 80 playlists with approximately 6,000 songs. However, the company said as the app rolls out more widely, the pool of content will grow over time. Parents can set up accounts with two distinct buckets of content: “Audio for Younger Kids” and “Audio for Older Kids”. The app is easier to use than the regular Spotify app and features the ability to select cutesy, animated avatars for each child’s profile. The app will be available for Spotify Premium Family subscribers at no additional charge for iOS or Android devices once the app launches in-market. Playlists in Spotify Kids will span various content categories including: movies and TV shows, current hits, activities, genres, seasonal, Spotify originals, and stories.

Appeals Court Revives “Shake It Off” Lawsuit Against Taylor Swift

The copyright infringement suit over Taylor Swift’s hit song “Shake It Off” was revived by a federal appeals court this week. Back in February 2018, the district judge dismissed the case, finding insufficient similarity between the song and the 2001 composition “Playas Gon’ Play.” Judge Michael Fitzgerald held that the songwriters of the earlier work, Sean Hall and Nathan Butler, did not display sufficient creativity in combining the phrases “playas gonna play” and “haters gonna hate.” However, a federal appeals court reversed the ruling on Monday, finding that the claim should be left for a jury to decide. “Originality, as we have long recognized, is normally a question of fact,” held the three-judge panel of John Owens, Andrew Hurwitz, and Kenneth Lee. But substituting his own judgment on the originality of the work at issue, the district court “constituted itself as the final judge of the worth of an expressive work,” the appellate panel held. The case was remanded for further proceedings at the district court. Swift’s attorneys are expected to seek dismissal on alternate grounds.

Random Ramblings

  • Composing music with your eyes.
  • Every boy band to chart on the Billboard Hot 100 since 1980.
  • The first sound recording in history.
  • Post Malone reclaims the top spot of the Billboard 200 with his third studio album, "Hollywood's Bleeding".
  • Watch Leonard Cohen's new video of his first single from his posthumous album, "Thanks for the Dance".


Who is Exploration?

Exploration is proud to be the company of choice to administer much of the world’s most important media. Utilizing competent staff and advanced technology, our clients are able to better control their data and collect their money.

We’re writing a free book on how the music business works. Learn more here.

The catalog metadata template offers the minimum viable data needed to collect publishing royalties. Download the .csv file here.

Please feel free to reach out anytime if you have any questions or ideas!

Hope you have a great weekend!

hello@exploration.io
http://exploration.io

Facebook
Twitter
Linkedin
Google+

310-739-5482
171 Pier Ave., #251
Santa Monica, CA 90405