Apr 7, 2024 7 min read

📑 CMU Digest: Don't stop Believing

But after all is said and done, is Warner going to be the lonely one?

📑 CMU Digest: Don't stop Believing

This week: Warner Music Group decided it was better to stay a small town girl, and has turned down the opportunity to take a midnight train to Believe-ville: maybe the price was just trop cher; US Artist Rights Alliance and IMPALA both take potshots at TikTok; Spotify will be putting up prices again - but audiobooks become optional; Pharrell's trademark spat; and Vivendi flogs off See Tickets.

In case you missed it: Shot Tower's damning Hipgnosis report; TikTok's $2 million ad splurge; Napster photo lawsuit; AI comedy lawsuit settled; plus Kanye's Hitler-praising vulgar lashing of former staffer.

Warner Music Group announced that it would not, after all, be making an offer to buy French label and artist services company Believe

Yesterday Warner Music Group issued a brief statement saying that it would not be going ahead with a bid to acquire Believe. Believe IPO’d back in June 2021 on the Paris Euronext exchange but - like many companies which listed on European markets - the share price struggled to perform, despite a consistent track record of growth. In February this year Believe founder and CEO Denis Ladegaillerie announced that he had formed a consortium with long-term Believe shareholder TCV and Swedish private equity giants EQT to take the company private. Part of this required a commitment of shares from other early investors, including Ventech and Xange. With that all thrashed out, Ladegaillerie announced his deal to buy the company at €15 a share - which saw the share price rocket up, settling to just under that offer price. 

By many measures it looked like Ladegaillerie’s deal was a dead cert. His consortium controlled, or had commitments for, more than 70% of the equity - and voting rights - in the company. All that was needed was board approval for the transfer of various shares into the consortium, and approval of the deal by the French regulators. With both equity and voting rights in the bag, the consortium unilaterally waived the requirement for board approval, accelerating its bid. 

But then Warner Music Group released a regulatory statement saying that it would also be interested in acquiring Believe, and at €17 a share. It said that if it wasn’t allowed to put in an offer because of the consortium’s accelerated process, it would complain to the French financial markets regulator the AMF. Believe called in the AMF itself to adjudicate, and the AMF swiftly ruled that Warner needed a fair shot at its bid - and access to the data required to prepare a formal offer. 

The independent directors on Believe’s board who were not involved in the consortium bid then invited Warner to submit a binding, unconditional and fully financed bid by 7 Apr. With a cash shortfall for its offer that would require WMG to take on additional debt, as well as significant regulatory hurdles to clear, it would have seemed remarkable if the smallest of the majors had followed through with an offer - and on Saturday, the day before the deadline, it announced that it would not be proceeding. That may now open the door to a future BMG x Believe combo - though that prospect remains, for the moment, highly speculative.

Two more industry bodies have hit out - either directly, or implied - at TikTok

200+ musicians signed a letter about music and AI organised by the US Artist Rights Alliance. It repeated previous demands that AI companies respect the rights of human creators, and specifically referenced uses of AI-generated music that will "undermine or replace the human artistry of songwriters and artists” or that would “substantially dilute the royalty pools that are paid out to artists". That was interpreted by some as alluding to concerns that user-generated content platforms - in particular TikTok - are developing AI tools that will give content creators the option to use music in their videos that won’t need licences from labels and publishers. Universal Music has criticised TikTok’s AI strategy as part of its dispute with the short-form video platform.

IMPALA, the pan-European trade group for independent labels, also issued a statement about TikTok this week, stating that it shares the concerns of Universal Music that TikTok is simply not paying enough through to the music industry. Although the indies are not yet boycotting the platform, IMPALA said there was "an urgent need to secure fair revenues" as TikTok negotiates its new music deals, rejecting arguments that the labels should accept lower payments in return for the promo benefits. Mark Kitcatt, Chair of IMPALA's Streaming Group, said “We reject arguments equating the use of music on TikTok to promotion - there is a huge value gap that must be addressed". 

Bloomberg reported that Spotify is planning another price hike

Sources said that Spotify will increase its premium subscription price by $1 - and its family plan by $2 - in five key markets, including the UK, Australia and Pakistan, later this month. The US won't be affected this time, but prices will increase there too later in the year. The streaming service's baseline 9.99 price point had been in place ever since it launched in the late 2000s, but finally increased to 10.99 last year under pressure from both the music industry and investors, who wanted to see an increase in the average revenue per premium subscriber in more mature markets. 

This next price increase seems to be connected to Spotify's ambitions in the audiobook space. Bloomberg's sources said that users will be able to avoid the price rise by opting for a new subscription tier that will provide music and podcasts, but not the fifteen hours of audiobook access that is currently bundled into Spotify’s premium subscriptions. This might be an indication that Spotify intends the extra pound to go to a specific royalty pool that will be shared with audiobook publishers and not the music industry. It may also make it easier for Spotify to vary its audiobook pricing ongoing or scrap the add-on altogether if audiobooks do not present the commercial advantage that it hopes for.

Pharrell Williams faces a trademark battle with his long-time musical collaborator

Williams has been registering trademarks for the brand The Neptunes, the name of his music production partnership with Chad Hugo. However, it emerged this week that Hugo is formally opposing those registrations on the basis he co-owns the brand and has not been consulted by Williams regarding the trademarks. In his own filing with the US Trademark Office, Hugo said Williams "has committed fraud in securing the trademarks and acted in bad faith". 

Hugo's filing also revealed that he and Williams have always split all the rights and revenues that stemmed from The Neptunes 50/50. But Williams' company PW IP Holdings has claimed complete ownership of the trademarks via the registrations. In a back and forth with Williams' lawyer, there was seemingly a proposal that the trademark registrations should be amended to show Hugo's co-ownership, but only if he agreed to "onerous business terms”.

Vivendi announced a deal to sell See Tickets to CTS Eventim

The French conglomerate, and former parent company of Universal Music, revealed last year that it was looking into selling its interests in the live music sector. That includes a number of festivals, although the main revenue generator at its live music division is See Tickets, which began as a ticketing spin-off to a Nottingham record shop, and was owned by Andrew Lloyd Webber's Really Useful Group before being acquired by Vivendi in 2011. 

CTS Eventim, the German live and ticketing group, is set to acquire both the festivals and See Tickets. Its CEO Klaus-Peter Schulenberg said the deal, which should close in the coming months, "supports our internationalisation strategy". It will significantly increase Eventim's presence in the UK, where See Tickets is the second biggest primary ticketing service. 


😱 Excessive spending, poor systems, missing documents and misleading statements: Shot Tower Capital’s blistering assessment of Hipgnosis Song Management couldn’t be much worse. The firm presented its findings to the Hipgnosis Songs Fund board in a document that also alleges significant mismanagement by Hipgnosis Song Management. HSM immediately issued a statement saying that key parts of the STC report are “factually inaccurate and misleading”.

💸 TikTok has spent more than $2 million on an ad campaign against the proposed sell-or-be-banned law. The China-owned short form video platform last week began airing ads in the US that urge the public to tell their Senators to oppose a bill that would force owner ByteDance to sell the app or face a ban. The social media firm urges voters to consider the impact of a ban on small business owners, as well as American teachers and moms.

📸 A legal dispute between Napster and a British photographer over a photo of reggae artist Sugar Minott was in court last week. It raises some interesting questions about the licences record labels secure around artwork images and what they allow digital platforms to do with those photos.

🎭 George Carlin's daughter calls for "appropriate safeguards" after settling a lawsuit over an AI-generated fake comedy special. Commenting on the legal battle, Carlin’s daughter said the case should “serve as a warning” and that “appropriate safeguards” are needed to allow people to protect their likeness and voice

🤬 Kanye praised Hitler, “attempted to destroy” Donda Academy employee and gave “vulgar lashing” in front of kids, says a new lawsuit. West is being sued by another former employee who says the rapper “treated the black staff considerably worse than white employees”, made antisemitic comments in front of students at his Donda Academy school, and was sometimes violent in the workplace

And Finally... Expert needed to lead Harry Styles walking tours around his hometown

An exciting job opportunity popped up this week for anyone who can bring two buckets of knowledge to the table: first, fascinating facts aplenty about the Cheshire village of Holmes Chapel; and second, everything there is to know about Harry Styles

If you happen to tick both those boxes, the Holmes Chapel Partnership is currently recruiting a person to lead an all new official Harry Styles walking tour around his hometown. 

“Do you have a flair for storytelling and enjoy meeting new people?”, the official job ad asks. “Do you have a genuine interest in Holmes Chapel with a good knowledge of its history, including Harry Styles and his roots here? If so, we have the perfect job for you!”

Check out this, and some of the week's other strange or funny music stories, in this week's And Finally... 

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