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Business News CMU Digest
CMU Digest 23.04.23: Spotify, AI, SM Entertainment, Dr Luke, BMG
By Chris Cooke | Published on Sunday 23 April 2023
The key stories from the last week in the music business…
Spotify boss Daniel Ek went to Washington to urge US lawmakers to back the Open App Markets Act, which would force Google and Apple to relax their app store rules. It’s part of Spotify’s long-running bid to tackle what it sees as anti-competitive behaviour on the part of Google and especially Apple. The app store rules most opposed by Spotify and other app makers relate to in-app payments. For many apps on iOS devices, the app maker must use Apple’s commission-charging transactions system and can’t sign-post alternative payment options elsewhere on the internet. Regulators in multiple jurisdictions have been investigating and in some cases intervening in Apple’s rules. The Open App Markets Act – first proposed in 2021 – would force Google and Apple to allow app makers to use and sign-post alternative payment options. For Spotify, the need to force a change in this domain is now even more urgent because the current restrictions are negatively impacting on its big move into the audio-books business. [READ MORE]
Universal Music again urged the streaming services to help the music industry regulate the creation and distribution of AI-generated music. The latest statement came as fake Drake tracks went viral. The major was mainly responding to a track uploaded by someone going by the name of Ghostwriter who had used generative AI to create a song and vocals in the style of Drake and The Weeknd. That track, called ‘Heart On My Sleeve’, initially went viral on TikTok and subsequently popped up on the streaming services. Universal previously called on Spotify et al to ensure that music-making AI technologies are not trained by scraping the music stored on their platforms. The music industry insists that anyone training an AI technology by mining data connected to existing songs and recordings must get a licence from whoever controls the copyright in that existing music. Adding to that, this week the major also said that the streaming services should remove any tracks that have been created by AI technologies which mined existing music files without licence, such as ‘Heart On My Sleeve’. The fake Drake track was subsequently removed from the streaming platforms. [READ MORE]
The HQ of K-pop company SM Entertainment was raided by the financial regulator in South Korea. Sources told news agency Yonhap that the raid was part of an investigation into allegations that South Korean internet company Kakao manipulated stock prices as part of its recent bid to take control of the SM business. For a brief time Kakao was in competition with another K-pop powerhouse, Hybe, as both sought to buy up enough SM shares to get a 40% controlling stake. Kakao’s bid was supported by the SM management team, while Hybe was backed by SM founder Lee Soo-man. Hybe ultimately abandoned its SM ambitions after Kakao offered a higher price for SM shares. But before that, it seemingly filed a complaint with South Korea’s Financial Supervisory Service prompting this investigation. Subsequently, SM, Kakao and Hybe announced a truce, and – as part of that – this week it was confirmed that a number of SM-signed artists will start using Hybe’s direct-to-fan platform Weverse from later this year. [READ MORE]
Appeal judges in New York indicated that they might classify producer Dr Luke as a public figure. Doing so would have an impact on his defamation case against Kesha. She accused Luke of rape, an allegation he denies and which, he claims, had a negative impact on his career. Under New York law, if Luke is deemed a public figure he will have to prove Kesha acted with actual malice when she made her allegations, increasing his burden of proof in court. However, the judge hearing the case decided that Luke was not famous enough to be deemed a public figure. Kesha’s lawyers took that decision to the New York Court Of Appeals, where one judge noted that if Luke offered a music magazine an interview, “they’d show up – in this industry, he [is] in essence a household name”. Luke’s lawyer countered that the producer being well known within the music industry does not mean he is a public figure. Kesha’s team also want the Court Of Appeals to rule that a new free speech law that was introduced in New York state when this defamation battle was already underway should be applied to this case, because doing so would also require Luke to prove actual malice. [READ MORE]
BMG said that it had become the “first global music company to abandon the outdated industry distinction between new ‘frontline’ and older catalogue recordings”. Basically, the music firm is more closely integrating the management of its new releases and its recordings catalogue. BMG boss Hartwig Masuch said that: “Music fans demonstrate on a daily basis that they reject the music industry’s outdated privileging of new music over older music. Music is music regardless of its age. Great artists and great music have no expiry date and we believe it is time for the music industry to reflect that”. The new rejig of the company’s operations, he added, “makes good on our long-term plan to create the world’s first fully integrated music company. It empowers local leaders, it shortens reporting lines and it makes us more responsive for our artist and songwriter clients”. [READ MORE]
