|WEDNESDAY 28 AUGUST 2019||COMPLETEMUSICUPDATE.COM|
|TODAY'S TOP STORY: Tencent Music is under investigation by China's competition regulator over those exclusivity deals it has with the majors, according to a report by Bloomberg... [READ MORE]|
Chinese regulator investigating Tencent's exclusivity deals with the majors
The exclusivity deals have been an unusual feature of the Chinese digital market for years. Record companies often do a deal with a single digital firm which then not only gets access to that label's music for its own service (or services in Tencent's case) but also becomes the exclusive distributor of that catalogue in the Chinese market.
Which means that when new companies enter the streaming market in the country, rather than going around the labels to negotiate licensing deals, for a large slice of the catalogue they must go and negotiate with their competitors. Which, needless to say, has proven tricky.
Tencent was the pioneer of this approach and has exclusivity arrangements with all three majors. The original motivation for the global music firms was that, by getting into bed with one big web company, they could incentivise said company to do what was necessary to kickstart the then still flagging Chinese digital music market. And that strategy basically worked. Of course, the mega-advance cheques Tencent handed over also made this strategy attractive.
Some of Tencent's rivals - and in particular NetEase Cloud Music - started negotiating their own exclusivity deals with other labels. Partly to give their services an edge from a consumer perspective. And partly to increase their negotiating power when trying to access the catalogues Tencent controlled (basically "you give us X or we won't give you access to Y").
The exclusivity deals became more of a problem as the Chinese digital market started to evolve and newer services - particularly the NetEase service - started to gain momentum.
It meant each service had gaps in its catalogue. This meant many users installed multiple music services on their devices. That then arguably makes it harder to persuade users to upgrade to premium, because no one premium service has all the music. And for the record companies in the West, upgrading users to premium has been the priority for some time.
In most other countries, arrangements of this kind would immediately set off competition law alarm bells. Two years ago the Chinese authorities did put pressure on the streaming firms to more proactively license to their competitors the catalogues they distributed in the market. But Tencent competitors complain that licensing music from its rival is more expensive, partly because it is passing on the cost of securing the exclusivity deals in the first place.
According to Bloomberg, China's markets regulator launched an investigation into Tencent's exclusivity deals at the start of the year. Investigators have reportedly spoken to Tencent's digital music rivals, as well as the labels who have struck up exclusivity arrangements. Some sources are suggesting that the outcome of all this could be new regulations that basically end the exclusivity deal system.
Of course, Sony Music and Warner Music might be having second thoughts about renewing their exclusivity deals with Tencent Music anyway, given that the Tencent parent company is in the process of buying 10% of the Universal Music Group. Though that doesn't mean they wouldn't consider an advance-heavy exclusivity arrangement with another Chinese web firm.
That said, even some of the beneficiaries of the exclusivity deals have admitted that, while the big Tencent alliance may have made sense when it when it was first negotiated, the Chinese industry would be wise to move on from these kinds of deals in the next few years. And when indie label repping Merlin entered the Chinese market last year it made much of the fact it had negotiated deals with all the key streaming services, avoiding the temptation to take the big advance cheque an exclusivity deal with just one might have offered.
But for others, saying "no" to those big advance cheques is still tricky. So maybe a bit of government intervention is needed to push the Chinese market onto the next phase deals wise. Though an end to exclusivity arrangements could negatively impact the ambitious Tencent and its New York Stock Exchange listed music business, in the short term at least.
Universal gives Soundgarden 24 hours to withdraw from class action over 2008 fire
Despite the lawsuit's claim that Universal has never informed any artists of the status of their masters after the fire, the company says it told Soundgarden about said statuses four whole years ago. To that end, in a legal filing yesterday Universal gave Soundgarden a 24 hour deadline to withdraw from the case. If they do not, it says, it will ask the court to order that the band reimburse the label's attorney fees and other costs incurred defending the lawsuit.
Soundgarden, however, are having none of it, saying that they're not about to start accepting the label's claims about their masters at "face value" at this stage.
The band are part of a group of Universal-signed acts who went legal after the publication of two New York Times articles earlier this year all about the 2008 fire. In them, the newspaper claimed that there had been a cover-up at the music firm over the extent of the damage caused by that fire more than a decade ago.
In 2008, the major record company said publicly that the fire in a warehouse on the Universal Studios backlot had caused minimal damage to its archive of master recordings. It no longer being in common ownership with the Universal film company by then, the label said most of its archive had already been moved elsewhere. However, it later received tens of millions of dollars from a settlement with the film studio and an insurance payout.
One other act involved in the lawsuit, Hole, dropped out earlier this month, after accepting that they had not lost masters in the fire. Universal followed this up last week by saying that Steve Earle, Tom Petty and Tupac Shakur (or the estates of the latter two) also had no grounds to sue because no masters had been lost. In the case of Shakur, it conceded that one "generic" master of a compilation had been destroyed, but said that it had an alternative copy.
This left only Soundgarden in the list of artists specifically named on the class action. In their case, the label admits that it did lose two compiled analogue tape masters for 1991 album 'Badmotorfinger'. However, a 25th anniversary remastered edition of that record was subsequently produced using a "digital audio tape safety copy". And, the label says, in 2015, while preparing the anniversary edition, it informed the band that some of the analogue masters for the album had been lost. It also adds that the original multi-track recordings remain safe.
According to Billboard, the label says that it wrote to the band's main contact, lead guitarist Kim Thayil, as well as its own Director Of A&R, Jeff Fura, four years ago, informing them that "1301 assets in the [Hollywood] vault related to Soundgarden, but that only 21 were impacted by the fire, none of which were multi-track masters". It also cites emails from the band as proof that they were aware of this at the time, and therefore now have no grounds to claim that they were never informed.
With all that in mind, Universal's new legal filing yesterday demands that the band "immediately dismiss their case against UMG within 24 hours".
However - like Earle and the estates of Shakur and Petty - Soundgarden remain listed as plaintiffs on the case. Their attorney Howard King told Billboard: "For ten years, UMG concealed from artists the damage the fire inflicted on their life's works. Why would we accept anything they say at face value now, especially since they refuse to provide us with their actual testimony given - under seal - detailing losses of masters they claimed in their $100 million damage lawsuits against [Universal Studios] and their own insurance company?"
The attorney leading the class action, Ed McPherson, added: "[Universal] keep talking about all of the masters that were supposedly saved, but they won't let anyone see any of them! They can tell every band on the planet that their masters are safe, but that doesn't mean it is true. It is interesting that nobody from UMG has actually testified under oath that any particular master was not destroyed!"
Soundgarden's 24 hour deadline is not yet up, so it is feasible that they will still back down. Although King's bullish statement implies a firm intention to fight on. The next hearing in the case is currently scheduled for 4 Nov.
US publishers question how Spotify and Amazon are applying America's compulsory licence on their discounted services
The mechanical copying of songs in the US is covered by a compulsory licence, of course, and as streaming services exploit the mechanical rights in songs (as well as the performing rights) that licence is relevant to how streaming sets ups pay publishers and songwriters.
When chatting about the compulsory licence, we tend to talk most about the top line revenue share rate. That's the rate that the Copyright Royalty Board, which oversees the compulsory licence, recently decided to increase, from 10.5% to - ultimately, 15.1%. Though, of course, Spotify, Amazon et al are currently appealing that decision.
But this is music licensing and applying a simple fixed rate across the board would be far too simple. So there are plenty of complexities in the compulsory licence (indeed, Spotify insists it's changes to those rather than the rate rise that it has problems with).
First of all, there are various minimum guarantees to be applied. Then there is the matter of taking performing rights royalties - paid under separate licences - out of the top line statutory rate revenue share. And then there are all sorts of extra rules regarding what to do when services offer discount packages or bundle music in with other services, mainly to stop digital firms ultimately paying publishers and writers a 15.1% share of nothing.
It's on the latter that the NMPA is now challenging Spotify and Amazon. The publisher trade group questions whether the two services qualify for the new discounts provided by the revamped compulsory licence. After all, Spotify's family plan is also a flatmate plan, in that non-family members that co-habit also qualify. And on what basis has Amazon decided that the music element of its Prime membership scheme is worth $2.99 a month?
Back in June, Spotify told the already angry music publishers that it had been overpaying them in 2018, because of the new family plan discount. Last year it was paying royalties under the old system, but - once passed - the new licence applied to 2018 as well.
This obviously annoyed the publishers even more, given that Spotify was already appealing the new compulsory licence it was now applying in order to justify clawing money back from the publishers. Though the streaming service stressed that it was also abiding by the bits of the new licence it didn't like while its appeal was still pending.
The NMPA now says that maybe Spotify didn't quality for that discount in 2018 anyway. With that in mind, the trade body has sent Spotify - and Amazon - a series of loaded questions, seeking to force both companies to justify why they should benefit from service-friendly elements of the compulsory licence.
According to Billboard, NMPA boss David Israelite says: "Spotify has made a faulty reading of its family plan discount and without explanation sent music publishers and songwriters the bill. The service did this while simultaneously launching an unprecedented appeal of the CRB ruling which granted writers their first real raise in decades".
"Meanwhile", he went on, "Amazon has concocted a scheme where its Prime Music service is priced so low, songwriters will reap almost no royalties from its platform. This violates the law that protects songwriters work from being bundled with other offerings and essentially used for free".
Setting out his main demand, Israelite went on: "These services, which continue to be valued in the billions, must make their calculations and rationale transparent and show how they can justify continuing to undervalue the work that makes their services possible".
US senators want justice department review of competition in the American ticketing market
Senators Richard Blumenthal and Amy Klobuchar do specifically mention Live Nation in their letter to Makan Delrahim, who is Assistant Attorney General for the antitrust division of the justice department.
In particular, they talk about the consent decree that Live Nation agreed with the DoJ when it merged with Ticketmaster back in 2010. That consent decree aimed to counter competition concerns raised in relation to a deal that brought the prolific tour promoter and venue operator into common ownership with the market-leading ticketing platform.
Live Nation's critics have argued that that consent decree has proven pretty ineffective in stopping the live giant from exploiting its market dominance. Some have also accused Live Nation of not being fully compliant with the agreement. But the consent decree is due to expire next year anyway. Blumenthal and Klobuchar think it should probably be kept in place.
Hence why they want Delrahim to investigate competition in the ticketing market now, including looking at the effectiveness of the Live Nation consent decree and whether it should be extended beyond July 2020. According to Billboard, Blumenthal says the justice department should also consider "the effects of past consolidation and an assessment of how the available anti-trust enforcement tools may be used to help restore competition".
Possible new regulation of the ticketing market Stateside is very much on the agenda in Washington at the moment. Blumenthal is also among those backing congressman Bill Pascrell in his latest attempt to introduce new federal laws in the US that would provide new regulation of both the primary and secondary ticketing markets.
Isobel Campbell announces return with new album
The hiatus was not supposed to be so long. Campbell recorded 'There Is No Other' in 2014, but the sudden closure of the label she was working with at the time, before it could be released, held the record in legal limbo as she worked to claw the rights back.
"It felt like I'd retired", she says. "Or I was in prison. To be told I could not release the record completely broke me and I started questioning everything, feeling very reluctant and shying away from everything. But if you're lucky to live long enough, there are always going to be peaks and troughs".
28 Jan: Leeds, Brudenell Social Club
Jim Perkins announces new album, Pools
Continuing to develop his approach of combining classical composition with modern studio production and sound design, Perkins aims not to be too rigid in the creative process. "A relaxed compositional framework leaves room for the serendipity of improvisation", he says. "It facilitates a beautiful balance; music with purpose, music that breathes".
As for the final result, he adds: "I want the listener to feel as if they are in the room with these instruments and surrounded by sound".
The album is out on 3 Oct. Listen to first single, 'Held', here.
Yusuf/Cat Stevens has signed to booking agency UTA, which will now handle all kinds of bookings for the musician.
MARKETING & PR
Classical-skewed PR firm WildKat has expanded into the US, following investment from Edition Capital. Tim McKeough and Liza Prijatel Thors will oversee operations in New York and LA respectively. "I am overjoyed that WildKat PR will be working in the American performing arts market", says founder Kathleen Alder. There are also plans to open a Hong Kong office.
LABELS & PUBLISHERS
The Hipgnosis Songs Fund has raised new funding, totalling £51.1 million. The company plans to put 48,429,541 new shares on the London Stock Exchange later this week. "We are delighted to continue giving our shareholders exposure to music royalties via new acquisitions of some of the most iconic songs of all time", says founder Merck Mercuriadis. "I'm very grateful for the constant enthusiasm and support that the finest institutional investors in the world have given us to establish songs as an asset class. This is not only great for the investors but the songwriting and artistic community as well".
Mark Fry has been appointed Vice President of Warner Music Nordics. "I'm honoured", says Fry.
Music rights firm Reservoir has hired James Cheney as VP Creative & A&R. He joins from Spirit Music Group. His first signing is Rami Dawod, continuing their existing three year relationship. "I am excited", Cheney. "We're excited", adds Reservoir COO Rell Lafargue.
Universal-owned distributor INgrooves has appointed Jen Bontusa as VP Label & Artist Partnerships. She returns to the company after a year at Centric Entertainment. "We're THRILLED to have her back", says EVP Amy Dietz.
Bauer Media has created the new role of Podcast Editor and appointed former BBC and Wise Buddah programme maker Maria Williams into the job. She'll oversee podcast spin-offs from Bauer's magazines and radio shows, and the creation of new original podcast formats.
Oasis have released a lyric video for 'Fade Away' - originally the b-side to 'Cigarettes & Alcohol' 25 years ago. This precedes the 25th anniversary re-release of the band's debut album 'Definitely Maybe', which is out later this week.
Talking of anniversaries, it's now ten years to the day since Oasis split, and Liam Gallagher has released the video for 'One Of Us', a new song reflecting on the fall out. His second solo album, 'Why Me? Why Not', is out on 20 Sep.
The Mark Lanegan Band have released new single 'Night Flight To Kabul'. New album 'Somebody's Knocking' is out on 18 Oct.
The Futureheads have released the video for 'Good Night Out'. The track is taken from their new album 'Powers', which is out on Friday.
GIGS & TOURS
Giggs has announced that he will tour the UK at the end of the year, finishing the run of dates with a show at London's Wembley Arena on 6 Dec.
Nadine Shah will host this year's Q Awards, it has been announced. "It's a huge honour to be presenting the Q Awards this year", she says. "Especially as their first ever female presenter - have they even had a Geordie do it before?!". The ceremony will take place at The Roundhouse in Camden on 16 Oct.
Check out our weekly Spotify playlist of new music featured in the CMU Daily - updated every Friday.
Bucks Fizz singer set to stand as Brexit Party MP
Aston will stand in the London borough of Kensington, currently held by Labour, and is one of 635 "approved candidates" unveiled by Brexit Party leader Nigel Farage yesterday.
"I want to stand for the Brexit Party and fight to uphold democracy for the sake of the people", she says. "As an MP, I will work to rebuild trust and help the Brexit Party make the necessary reforms to unite the country after we break free of the European Union".
Quite how she plans to do all that reforming and uniting via a party with no actual policies and which stands for just one thing - something at least half the country opposes - remains unclear. Sing them a nice song? That said, given how much success Farage has had to date without having any concrete plans about anything, maybe she'll win in a landslide. I mean, in London it's unlikely. Except nothing is unlikely in British politics anymore.
Bucks Fizz - or The Fizz, rather - have an association with Brexit that dates back to before the referendum. Then going by the name Formerly Of Bucks Fizz, Aston - along with Cheryl Baker and Mike Nolan - were one of the few groups willing to be associated with pro-Brexit pop concert B Pop Live. An event that was cancelled because it wasn't possible to find enough acts willing to be associated with it (they did manage to book an Elvis impersonator though).
The UK, of course, is currently scheduled to plop out of the European Union for reasons no one can quite remember on 31 Oct - with Johnson now planning to shut down parliament for a bit so that no one can do anything about it.
When there might be a General Election for Aston to stand in remains unknown. Some think it may be as early as 1 Nov, which could be a problem for her, as she's got tour dates with The Fizz booked in from next month until May next year. Still, her buddy Farage has made a career out of cashing the cheques while not really doing much actual work as a politician, so perhaps that's her plan too.