“I realized by using the high notes of the chords as a melodic line, and by the right harmonic progression, I could play what I heard inside me. That's when I was born.”
This week, Spotify entered into legal trouble with Warner Music Group as the music giant filed an injunction to stop Spotify from illegitimately using its publishing rights in India. The court decided that Spotify obtain a statutory license instead, deferring Warner’s injunction for a several-week period. The streaming service then proceeded to launch in India amid these events, pricing its premium product at just INR 119 ($1.67) per month. The company now counts 79 global markets with Spotify and 207 million users, 96 million of which are paid subscribers.
A report from sources also stated that Liberty Media, US investment firm KKR, and Chinese giant Tencent Music are among the potential suitors to purchase up to 50% of Universal Music Group from parent company Vivendi. The deal is priced around $23 billion with other reports setting UMG’s total valuation at $50 billion. Vivendi has previously stated that it is seeking a “strategic partner that will accelerate UMG’s growth” with limited involvement in the company’s decision-making.
And the copyright directive was recently approved by the European Parliament’s legal affairs committee this week, with sixteen votes in favor and nine against. The vote by the full Parliament is yet to still be made during this year. “We warmly thank all the MEPs who supported the copyright directive,” says the statement, “and in particular those who fought hard to strengthen the authors’ bargaining power and improve their remuneration.”
Now, the details...
Compiled by Heidi Seo
Exploration Weekly - March 1, 2019
Spotify has officially launched in India after months of delays and a legal intervention this week. The premium product is priced at just INR 119 ($1.67) per month, and the library counts 40 million songs. The streaming service will compete with local players like Gaana and JioSaavn, and will be available for access via Android or iOS app store. In order to prepare for the launch, Spotify striked an arrangement with music/film company T-Series to license more than 160,000 songs, including Bollywood soundtracks. The company also secured a license with the domestic collecting society, and entered content talks with the big three major labels, local labels, publishers, and indies. Just days before launch, Warner Music Group filed an injunction to stop Spotify from illegitimately using its publishing rights in India, involving the Bombay High Court. A day later, the court decided that Spotify must pause its application for a statutory license, and deferred Warner’s application for an injunction for a several-week period. It also instructed to audit all uses of Warner’s music. The launch in India now counts 79 markets with Spotify around the globe with 207 million users, 96 million of which are paid subscribers.
Liberty Media, the US investment firm KKR, and Chinese giant Tencent Music are among the potential suitors to purchase up to 50% of Universal Music from Vivendi, a potentially $23 billion deal, according to sources. Reps for all companies had no response to Variety’s requests for comment. According to a recent JPMorgan Casenove report, UMG’s valuation may be set at a jaw-dropping $50 billion, significantly higher than its previous valuation of $23.5 billion. An earnings report released by parent company Vivendi earlier this month stated UMG took in total annual revenues of approximately $7.15 billion. Vivendi is said to be seeking a “strategic partner that will accelerate UMG’s growth,” yet it also says the buyer will have very limited involvement in the company’s decision-making. However, these may be awkward fits for the reported potential suitors as Tencent owns 10% of Spotify, and Liberty owns SiriusXM, Pandora, and around 35% of Live Nation. KKR’s value as a strategic partner seems limited, although it did have a successful joint-venture with BMG, which ended in 2013. UMG also still owns 4% of Spotify from previous deals arranged in 2008, while all other major music companies have sold some or all of their interest in Spotify in April of last year.
The final draft of the European Copyright Directive was approved by the European Parliament’s legal affairs committee this week, with sixteen votes in favor and nine against. It seemed likely that the JURI committee would back the final draft. However, the vote by the full Parliament is still yet to be made this year. The European Copyright Directive includes the music industry backed safe harbor reforms and various new rights for artists and songwriters, including the controversial Article 13. The statement reported, “We warmly thank all the MEPs who supported the copyright directive and in particular those who fought hard to strengthen the authors’ bargaining power and improve their remuneration. Today’s vote sends a positive and historical signal to all citizens who want to write, compose, create and be fairly remunerated for their work. We now encourage all members of the European Parliament to formally adopt the copyright directive without further delay.”
Radio stations may not be obliged to pay “any new performance fee, tax, royalty, or other charge” on recordings, as the latest iteration of the Local Radio Freedom Act was recently backed by radio lobbyists and a bipartisan coalition of lawmakers in Washington D.C. this week. This marks the latest biennial attempt at passing this legislation after similar bills failed in 2017 and 2015. So far this year, 124 congress members and five senators have signed on as initial co-sponsors. Two bills, H.Con.Res.20 and S.Con.Res.5, have been introduced on Wednesday in the Senate, arguing that radio stations “provide free publicity and promotion to the recording industry and performers,” and imposing fees would cause “severe economic hardship.” Record labels and artists have been pushing since the 1940’s to get radio to pay for recordings, but those efforts have yet to be realized. To date, the full Congress has never voted on legislation that would require radio to pay such royalties.
A new feature has been revealed by Pandora this week, called Stories, a new format that will pair songs with podcast-like features in a single playlist. Artists will have the ability to add track commentaries in between their songs onto playlists, which may come in the form of spoken word commentaries discussing personal stories, calls-to-action, and the history behind each work, for example. In addition, according to the company, authors and “other creatives” besides artists will be able to employ Stories for storytelling, using licensed songs to add context. This feature will be accessible within Pandora’s Artist Marketing Platform (AMP), which includes Next Big Sound, an analytics service acquired by Pandora. Those subscribed to Premium currently can access Stories without any ads, whereas non-paying users and Plus subscribers can access Stories after watching a 30-second ad.
YouTube Music recently unveiled a new mini-series that will allow emerging artists to promote and express themselves creatively as well as engage with their fans. It will be between three and five installments, and selected artists will have the ability to connect with content creators and develop different video types - reaction, conversations, track-by-track commentaries, etc. The new launch has kicked off its first episode of three installments in partnership with 17-year-old singer-songwriter Billie Ellish, which centers around the creative process of her latest single, “Bury A Friend” to promote her upcoming album, While We All Fall Asleep, Where Do We Go?. The video features an interview with Ellish, drawings inspired by the lyrics, and the production background of the project. The mini-series will allow featured artists to own 100% of their content, as YouTube will upload the project onto each musician’s respective channel.
A figure of “100 million” people were thought to be using music streaming services in India last year, but a new update in a report published by Deloitte and Indian music industry body IMI, states that it was around “nearly 150 million”. Compared to India’s online video audience of more than 225 million, users of audio OTT (“over-the-top” services including Gaana, JioSaavn, Wynk Music, Apple Music, and Amazon Music) make up 60% of the online video audience, indicating significant growth opportunities in the space. The report also explains that less than 1% of subscribers are paid users, 14% subscribers are bundled users, and the remaining 85% of users are on free subscription. “Therefore, to inculcate the habit of paying for music among consumers,” the report continues, “it is critical that audio OTT platforms actively try and convert free users and bundled users to paid subscriptions…”
In 2018, the three major recorded companies combined generated an average of $19 million each day from streaming services. According to respective recent investor filings from UMG parent Vivendi, Sony Music parent Sony Corp, and Warner Music Group, Music Business Worldwide analyzed that the “Big Three” turned over $6.93 billion from streaming services in wholesale revenue last year. That number is up from the $5.3 billion the trio generated from streaming services in 2017. Across all formats, the three recorded music divisions turned over $13.14 billion last year, up $1.04 billion on the prior year. Music Business Worldwide’s calculations also note Universal’s annual streaming revenues bounce by 39% at the US dollar level in 2018 to top $3 billion for the first time. In 2017, Universal’s annual streaming revenues grew by 35%. Warner, second in biggest streaming gains last year, pulled in $1.44 billion from streaming in 2017 and $1.83 billion in 2018. Sony finished the year with more than $2 billion from streaming, up by $368 million.
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