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Happy New Year! As we turn the page on the calendar, the beat of the music business continues to resonate with opportunities, challenges, and groundbreaking developments. In this edition of our newsletter, we're thrilled to bring you a symphony of updates from the ever-evolving world of music.

Here's to a year filled with innovative deals, strategic partnerships, and the unwavering rhythm of success in the music business. Let's make 2024 our most harmonious year yet!

In this newsletter:

The UK recorded music market experienced a positive sign in 2023, with a notable increase in audio streaming volume.

Spotify has taken action in response to France's plans to implement a 'streaming tax,' withdrawing financial support for two major music festivals, Les Francofolies de la Rochelle and Le Printemps de Bourges.

Anghami has unveiled some of its performance details for the nine months ended September 30th, 2023 and published a comprehensive breakdown of its H1 2023 operations.

Now, the details...

Exploration Weekly - January 5, 2024
Compiled by Ana Berberana

The UK Recorded Music Market Saw 179.6 Billion Audio Streams Last Year - Up 12.8% YOY

We don’t yet know how the world’s largest recorded music markets performed commercially last year – but we’ve had a positive early sign in terms of streaming volume. The UK recorded music market saw 179.6 billion audio streams of music in 2023, according to new British Phonographic Industry (BPI) data. That was up by approximately 12.8% YoY, said the trade body today (January 3). The BPI has previously confirmed that there were 159.3 billion audio streams in the UK in 2022. The 179.6 billion audio streams seen in 2023 were also roughly double the size of the equivalent figure from five years before (90.9 billion, in 2018). Obviously these numbers don’t necessarily give us much indication of the UK’s YoY growth across two vital streaming metrics in 2023, namely: (i) Growth in the total number of UK music streaming subscribers; and (ii) Growth in the total revenue that streaming platforms generated for the industry. Regardless, a 12.8% YoY uplift in audio streaming volume potentially points to positive news, particularly as it’s a larger YoY percentage rise in total annual audio streams than the UK saw in 2022 (+12.1%) and 2021 (+7.9%) – though it’s some way off the percentage YoY increase we saw in 2020 (+25.1%) and 2019 (+23.3%). Elsewhere in the BPI’s latest numbers – analysis of the UK’s Official Charts data – UK vinyl sales rose 11.8% YoY in 2023, up to 6.1 million sales (from 5.5 million in 2022). CD sales fell 6.9% YoY in the UK in 2023, down to 10.8 million (from 11.6 million in 2022).

Spotify Pulls Its Support From Two French Music Festivals

Plans to introduce a ‘streaming tax’ in France have already drawn protests from music streaming services, particularly Spotify. Before Christmas, its boss in France threatened that the plans would cause Spotify to ‘dis-invest in France’. Now his company is following through on that warning. “Following the announcement of the implementation of a tax on music streaming in France, we regret to announce that Spotify France will stop supporting Les Francofolies de la Rochelle and Le Printemps de Bourges financially, and through activations on the ground in favor of emerging artists,” announced Antoine Moine in a post on X (formerly Twitter). He was referring to two music festivals: Les Francofolies de la Rochelle takes place in La Rochelle in July, while Le Printemps de Bourges is an April event in Bourges. It’s the latest example of Spotify flexing its corporate muscles in response to legislation that it doesn’t like: see also its threat to pull out of Uruguay altogether last year, successfully forcing the government there to clarify a new ‘equitable remuneration’ measure in its favor. In France, there are risks to this kind of brinkmanship, with two festivals, the fans attending them and the emerging artists who would have benefited from Spotify’s support losing out because of a government budget that they did not devise. Note, Spotify is part of a coalition of streaming services and industry bodies who had agreed an alternative model for funding France’s Centre National de la Musique – the entity which the streaming tax is intended to support. Perhaps there is a path to an amicable resolution in France, but for now it’s very much a stand-off with music fans and artists caught in the middle.

Anghami Reports Double-Digit Subscriber Growth — and a Revenue Decrease — in Newly Posted Financials

The Middle Eastern streaming service, which has since late November been partnered with film and television streaming platform OSN+, just recently posted a snapshot of the nine-month financials as well as an in-depth account of its showing through 2023’s opening half. According to the former source, SRMG-backed Anghami had 1.73 million subscribers as of September 30th, reflecting the noted 17 percent year-over-year (YoY) spike. Additionally, the business identified an eight percent YoY boost in adjusted revenue ($30 million) and a 22 percent YoY hike in gross profit margin. (Adjusted revenue refers to “revenues excluding barter advertising transactions which involve non-cash equal exchange of services.”) Addressing the results in a statement, Anghami co-founder and CEO Eddy Maroun touted the quarter – meaning “the third quarter of 2023, the 9-month period ending September 30, 2023,” the release emphasizes – as “transformative…both strategically and financially.” “With the securing of key strategic anchor investors such as OSN Group and SRMG, we have achieved a significant milestone in our growth journey,” proceeded Maroun, whose service is available in Europe and North America as well. “Our growth has been concentrated in high-margin segments, aligning perfectly with our strategic focus. Moving forward, integrating video streaming capabilities is a strategic move, promising significant enhancements to our platform and broadening our service offerings,” he concluded. Notwithstanding this optimistic outlook, the mentioned performance analysis for the six months ended June 30th, filed on the same day as the nine-month earnings preview, paints a somewhat less encouraging picture.

India’s Music Publishing Business Held Back By Lack of Copyright Compliance, Legal Uncertainty

India’s music business has become a global cultural force, but it’s being held back by poor copyright compliance, a lack of awareness of music rights and a lack of legal clarity. That according to professional services company EY, via an in-depth report published in the past few weeks. The report from EY India found that music publishing revenues in the country grew 2.5-fold in three years, rising from INR 3.4 billion (USD $40.8 million at current exchange rates) in 2019-2020 to INR 8.84 billion ($106.1 million) in 2022-2023. And the industry could potentially see another doubling of music publishing revenues by 2026-27, to INR 16.9 billion ($202.8 million) – if the industry is able to address the issues holding it back, EY said. One key to this is addressing the “abysmally low” copyright compliance rate of just 1.2%, the report said. Only 71% of music DSPs in the country have a license from the Indian Performing Right Society (IPRS), while 56% of short video platforms have a license. Fewer than 1% of retail establishments, hotels and restaurants have a license Among TV channels, 796 out of 905 aren’t licensed with IPRS, while 1,033 of 1,035 radio stations have not taken a license from the copyright society, “some citing the lack of legal clarity, others believing that their payment for the use of sound recordings includes the payment of publishing right,” the report said. “Consequently, while India generates a majority of its publishing revenues from digital media, it lags other developed markets as regards broadcast, public performance, etc.,” the report stated. It said copyright compliance is “a major pain point for music publishing because the question of whether publishing rights need to be paid is still up for debate in the courts (in the case of radio broadcasters) or is being contested by some major Indian users. We are given to understand that most Indian companies who operate in international markets, and international players who operate in India, have fully complied and are paying the publishing royalties.”

Zayn Malik ‘Better’ Infringement Suit Defendants Push for Dismissal

Multiple defendants, among them Sony Music Entertainment as well as “Better” (2020) songwriters, recently submitted the motion to dismiss along with a related motion to strike certain parts of the lawsuit. As first reported, the underlying suit, levied by a company called Formal Entertainment, accuses the mocktail maker Malik and others of borrowing components of a 2018 track entitled “Somebody Tonight” sans authorization. In brief, Formal Entertainment’s “managing member,” Havyn (real name Patrick Simmons, of no relation to The Doobie Brothers’ Patrick Simmons) maintains that parties including 30-year-old Zayn lifted elements of “Somebody Tonight” to create “Better.” “This action centers on the intentional and actionable copying of numerous significant compositional elements of ‘Somebody Tonight’, without which blatant copying, Zayn’s ‘Better’ would never have come to exist in its present form or become a massive worldwide success,” spells out the original filing, which the plaintiff and the associated legal team followed with an amended complaint. Regarding how the alleged infringement came to fruition, Havyn had tapped a company called Modern Music Marketing (MMM) to promote the work, per the suit. The artist’s main contact at this marketing firm is said to have identified “Somebody Tonight” as Havyn’s “best song” and offered to promote it (without an upfront payment) in exchange for a “finder’s fee” should the work lead to a bigger agreement. During this purported promotion process, the MMM contact forwarded “Somebody Tonight” to each “person in his contact list that works in the music industry in order to make some type of deal happen,” the suit explains. And it’s as a result of this effort that a portion of the defendants allegedly learned of and then helped themselves to parts of the relevant song. Predictably, given the initially noted move for dismissal, the defendants don’t feel the same way, claiming in the corresponding motion that the plaintiff’s complaint fails to “even mention, let alone plausibly allege, striking similarity that can only be the result of copying.”

Random Ramblings

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