“Yesterday is history, tomorrow is a mystery, today is a gift of God, which is why we call it the present.”
About a month ago, SESAC completed its capital structure refinancing, selling $530 million in bonds and gaining commitments for a $30 million revolving credit facility. According to sources, the deal, which was structured as a whole business securitization, went so well with investors that it was oversubscribed by double to the tune of almost $1.5 billion. Securing SESAC’s bond offering means that the bond holder’s loan would take priority before addressing any other money owed to vendors or SESAC affiliates in the event of financial difficulties.
The US House Judiciary Committee wrote a letter to the US Trade Representative this week on September 23, urging the removal of safe-harbor provisions in a new free trade agreement between the US, Mexico, and Canada. Lawmakers are expected to announce policy decisions by the end of this year.
YouTube added a new format called Video Reach Campaigns this week, which will maximize reach by allowing advertisers to upload multiple video creatives like six-second bumpers or skippable in-stream ads into one single Video Reach Campaign. The company is also releasing the TrueView for Action ad format to YouTube home feeds, featuring a prominent call-to-action via headline text overlay or on video end screens. This announcement was made not too far after the launch of YouTube’s most prominent ad format - the Masthead - on smart TV screens released last week.
Now, the details...
Compiled by Heidi Seo
Exploration Weekly - September 27, 2019
Last month, SESAC successfully completed a refinancing of its capital structure, selling $530 million in bonds and gaining commitments for a $30 million revolving credit facility. The deal was so well received by investors that it was oversubscribed by double to the tune of almost $1.5 billion, according to sources familiar with the deal. SESAC is the third largest US performance rights organization (PRO) that competes with ASCAP and BMI, as well as Global Music Rights. Annual debt service went from about $34.45 million to $27.65 million, a savings of nearly $7 million. The deal was structured as a whole business securitization for the first time in the music industry, which means that all of the company’s income streams and assets are backing the bonds. This helped provide a credit enhancement that priced the bond offering at lower interest rates. The securing of SESAC’s bond offering means in the event of financial difficulties leading to a default and a Chapter 11 bankruptcy filing, the bond holder’s loan would take priority before addressing any other money owed to vendors or even SESAC affiliates. The bonds are seven-year notes due in July 2026. The PRO has approximately 34,600 songwriter and publisher affiliates with 127,000 licensees. The bond offering was issued by SESAC Finance, with Guggenheim Securities serving as the structuring advisor and book runner, FTI Consulting as the back-up manager, and Citibank as the trustee.
This week on September 23, the US House Judiciary Committee wrote a letter to the US Trade Representative, who is currently negotiating a new free trade agreement between the United States, Mexico, and Canada. Inclusion of a safe harbor provision was mentioned in the letter, similar to the one that exists in the Digital Millennium Copyright Act (DMCA). Safe harbor provisions in the DMCA protects internet service providers (ISPs) and user-generated platforms from the copyright infringements of their users. The new trade agreement includes this provision. The letter also made note of the fact that the US government has been reviewing the safe harbor provision for a number of years. Lawmakers are expected to announce policy decisions by the end of this year. The new Copyright Directive issued by the European Union was also included in the letter. The Directive has dramatically increased liabilities for service providers and may affect the debate over the provisions in the US. The Judiciary Committee is urging the removal of safe-harbor provisions to the new trade treaties, and service providers are not concurring. Read the full copy of the letter here.
YouTube announced a brand new format called Video Reach Campaigns this week, allowing advertisers to upload multiple video creatives into a single Video Reach Campaign, whereby Google will harness machine learning technology to serve the most efficient combination of different YouTube ads in order to maximize reach. Ads include six-second bumpers, or skippable or non-skippable in-stream ads. Benefits are that they don’t require marketers to manage separate campaigns for aforementioned formats. An optimized combination will be distributed automatically. Vishal Sharma, YouTube’s VP of product management, wrote in a company blog post that Video reach Campaigns aim to increase brand awareness. One early tester of the format is Ford, which found that it was able to decrease campaign costs by over 20%. In addition, YouTube is also bringing its TrueView for Action ad format to YouTube home feeds. This format features a prominent call-to-action, such as linking viewers to a product or service, or asking them to share their contact info, via headline text overlay or on video end screens. TrueView For Action campaigns can only run as skippable in-stream ads, but were not previously available on the Home feed, which is where viewers can discover new creators as sorted by YouTube recommendations. The company also announced last week that it is launching its most prominent ad format, the Masthead, on smart TV screens.
Global music industry body the IFPI has published its latest “Music Listening” report for 2019, based on a survey of 34,000 people in 21 countries. The survey was conducted in April and May this year by the IFPI and its research partner AudienceNet. Interesting points include people spending on average around 18 hours a week listening to music, up from 17.8 hours a year ago. Streaming is driving this with 89% of respondents now using some kind of on-demand streaming service, while 64% listened to music through audio-streaming services in the last month. The highest rate of growth for use of streaming services comes from 35-64 year-olds: 64% of 35-44 year-olds, 53% of 45-54 year-olds and 44% of 55-64 year-olds used audio-streaming services in the last month, up by nine, eight and nine percentage points respectively. Another interesting stat from the report is that Mexicans spend on average 25.6 hours a week listening to music, compared to the 18 hours global average. This is a reminder of why Mexico has become such an influential market in the streaming ecosystem. Koreans come on top when it comes to actually buying music: 44% of respondents said they had bought CDs, vinyl, or downloads in the last week, well ahead of the 26% global average.
An 11-judge panel of the 9th Circuit Court of Appeals questioned the attorney claiming that Led Zeppelin ripped off the acoustic guitar opening in “Stairway to Heaven” on Monday. Francis Malofiy argued the case on behalf of Michael Skidmore, a journalist who represents the estate of the late Spirit frontman Randy Wolfe. Skidmore sued Zeppelin in 2014, alleging that the opening of “Stairway” borrowed its descending melody from Spirit’s 1968 track “Taurus.” In 2016, a jury ruled against the estate, and Malofiy is now seeking to overturn the verdict and get a new trial. A three-judge panel of the 9th Circuit Court of Appeals sided with the plaintiff in September 2018, vacating the jury verdict, but Judge Gary Klausner was found to have erred by giving the wrong jury instructions. Led Zeppelin’s attorneys sought a rehearing before an en banc panel of the 9th Circuit, which agreed to take a fresh look at the case. On Monday, Judge Andrew Hurwitz asked whether Malofiy contends that Spirit can claim a copyright in the album version of “Taurus,” rather than the deposit copy that was registered with the US Copyright Office. Malofiy responded that the deposit copy was flawed, and that it would be hard to find infringement from that version of the composition. The Department of Justice weighed in on Led Zeppelin’s behalf in an amicus brief last month. A ruling may not be issued for several months, and the case could be appealed to the Supreme Court.
YouTube Music announced 14 new artists to Foundry, the platform’s global artist development program, on Tuesday September 24. Artists include rapper Jpegmafia, queer Norwegian bedroom pop star Girl In red, UK teen singer-songwrtier Beabadoobee and South Korean pop-rock sensation Sam Kim. The program was launched in 2016, and it was designed by YouTube to provide up-and-coming independent artists with crucial resources including marketing, promotional support, and access to new content formats to help grow their fandoms. Past Foundry artists are Dua Lipa, Rosalia, Dave, and Gunna.
The Spotify for Artists app has been redesigned for iOS and Android. The new app shows a refreshed design, a new “home” tab with access to resources and updates about milestones and expanded real-time stats for new releases. After a new release goes live, users will be able to see real-time listening stats for the first week. It will make the new app easier for artists to “track important milestones,” such as being playlisted, or gaining new followers. The new Home tab will feature recommendations for articles and videos to help artists “get the most out of Spotify.” The company also added that it will now be easier for managers with a roster of artists to switch between them in app. “As always, we’re making it as easy as possible to get to know who’s listening to your music — who they are, where they’re coming from, and similar artists they’re jamming out to,” writes Spotify.
According to Nielsen Music, in the week ending September 12, there were 14.8 billion on-demand audio streams registered, bringing 2019’s total to 505.5 billion. That figure is up 23% compared to the same time a year ago: 409.6 billion year-to-date through the week ending September 13, 2018. In addition, in the same week ending September 12, Ariana Grande’s “Thank U, Next” album surpassed 2 billion on-demand audio streams for its songs in 2019, making it the first album to reach the 2 billion mark for the year. It continues to be the album with the most streams for its songs in 2019. The second-most-streamed album of 2019, in terms of on-demand audio song streams, is Billie Eilish’s “When We All Fall Asleep, Where Do We Go?”, with 1.887 billion. In terms of total on-demand streams, combining both audio and video, 2019’s year-to-date total stands at 775.3 billion, up 28% compared to the same point in 2018, which was 603.9 billion through the week ending September 13, 2018. At the rate 2019 is piling up streams, this year could be the first where total on-demand streams surpass 1 trillion in the US.
YouTube Music unveiled a new automated playlist called “Discover Mix,” set to rival Spotify’s “Discover Weekly.” The playlist is filled with 49 songs based on an algorithm and a past listening history, and helps listeners find new songs and artists in line with their musical tastes. The logo is a retro neon affair, much like YouTube Music’s “New Release Mix.” According to the description, “Discover Mix” is based on listening history and updated every Wednesday. The move into automated playlists by YouTube Music is one way the service is trying to set itself apart. “Discover Mix” is rolling out worldwide. YouTube Music is now available in over 63 countries.
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