|MONDAY 6 JANUARY 2020||COMPLETEMUSICUPDATE.COM|
|Happy new year and welcome back!
Welcome to the first CMU Daily of the new year and the new decade! The last ten years was a period of significant change in the music industry - the record industry's return to growth, the streaming boom, all that 'value gap' shouting, the fightback against secondary ticketing and a tidal wave of data.
What will the next ten years bring? China becoming a music industry superpower? The live business having to find new ways to reach people who don't want to go out? The return of Jedward? You'll be able to read about it all in our daily updates.
Right now though, here's a round up of some of the significant music business stories that happened during the Christmas break.
Lots of questions posed by Tencent's end-of-year Universal deal
But first, a quick recap. Vivendi formally announced its intent to sell a slice of Universal Music back in 2018, seemingly keen to capitalise on the renewed interest in music rights in investment circles caused by the streaming boom. Tencent was rumoured as a possible buyer from the off, and then in August 2019 Vivendi confirmed that a deal was being finalised that would see the Chinese firm take 10% of Universal upfront, with the option to buy another 10% down the line.
However, Tencent was actually leading a consortium of investors interested in buying a slice of Universal, and sources say that some of those other financial backers got cold feet at the final stage, for a time jeopardising the whole deal. Tencent managed to get new backers on board just in time to sign on the dotted line before the end of 2019. Albeit with just hours to spare.
Just before 2020 began Tencent and Vivendi confirmed that a deal had been done that sees the consortium led by the former take 10% of Universal Music now, with the option to buy another 10% at the same valuation up to 15 Jan 2021.
Tencent, of course, is already the leading player in digital music in China through its standalone Tencent Music business, which operates three streaming services and a leading karaoke service in the country, and exclusively represents the catalogues of various global music companies within the Chinese market, including all three majors.
It also has other interests in music beyond China too, operating the service Joox in certain other territories, having a formal alliance with Spotify, and being an investor in Indian streaming platform Gaana.
How taking a minority stake in Universal fits into all that is anyone's guess. But there'll be plenty of speculating and gossiping about the deal when the music industry returns from its Christmas break this week, with the following among the questions being asked...
1. Will the Tencent deal crossing the line speed up talks with other bidders interested in taking a slice of Universal Music? Vivendi has previously said it could sell up to 50% of its music business.
2. Will the indie music community in Europe succeed in persuading competition regulators to investigate the Tencent transaction? Pan-European indie label trade group IMPALA has already called for such an investigation.
3. Will Tencent owning a slice of Universal impact on the ongoing music licensing investigations by competition regulators in China? Concerns continue to be expressed about the way Tencent Music manages the major label catalogues that it exclusively represents in the Chinese market.
4. Will Tencent owning a slice of Universal impact on Tencent Music's distribution alliances with Sony Music and Warner Music in China? Could the other majors seek to enter into direct deals with all the Chinese streaming services or look to do an exclusivity deal with someone else?
5. Will the deal have any impact on the day-to-day operations of Universal Music? It seems likely that the first noticeable impact will be through new projects and ventures in Tencent's home market.
6. Finally, was the valuation of Universal Music used in the deal the right one? Could on-going lawsuits over the reach of the termination right in US copyright law, the strengthening negotiating hand of the artist within the music rights sector, and ongoing uncertainty about the long-term viability of the current streaming music business model all mean that Tencent et al ultimately overpaid for their Universal slice?
Questions, questions. But in the short-term Vivendi's own investors - some of whom were getting frustrated with how long the Universal share sale was taking - should be pleased that 2019 ended with a seemingly positive deal for them. Now let the gossiping begin!
Spinnin Records founder welcomes ruling in Martin Garrix dispute, though management say he's the winner
Garrix announced in August 2015 that he was parting company with Spinnin Records and its sister management firm MusicAllstars, which were both then led by Eelko Van Kooten. In subsequent legal action, Garrix accused his ex-manager of having provided "false and misleading information" back when, as a teenager, he'd signed deals with both of Van Kooten's companies.
One of the allegations in the lawsuit was that Van Kooten had a conflict of interest in first becoming Garrix's manager and then signing the producer to his own label. The subsequent label deal, Garrix argued, was unfairly skewed in his manager's favour.
The producer sought to reclaim his master rights and secure multi-million damages via his litigation. Meanwhile, a countersuit from the label argued that it had incurred significant losses as a result of Garrix bailing on his record deal, and that therefore it should receive multi-million damages from him.
Some elements of the legal battle were subsequently settled, but the dispute that remained went to a Dutch court in 2017 which basically ruled in Garrix's favour, by agreeing that Van Kooten had indeed had a conflict of interest when he signed an artist he managed to his own record company.
That judgement came less than two weeks after the announcement that Van Kooten had sold his business - including Spinnin Records and MusicAllstars - to Warner Music. Nevertheless, the label chose to appeal the ruling, with the latest judgement being made last month on Christmas Eve.
Although no longer involved in Spinnin Records, it was Van Kooten who first issued a statement about that judgement. It read: "Today the higher court in [the Dutch city of] Leeuwarden ruled on appeal that Martin Garrix had no legal right to break his agreements prematurely with Spinnin Records and MusicAllstars Management".
It went on: "The ruling confirms that the production and management agreements with Martin Garrix were established correctly and properly complied with by Spinnin' Records and MusicAllstars Management. The accusation by Garrix that agreements were unreasonable has also been rejected".
Van Kooten himself told reporters: "I am delighted with the ruling of the higher court that we made valid agreements with Martin at the time, which should have been respected. This statement confirms that the accusation of deception or fraud was unjustified".
Noting that he is no longer involved with Spinnin or MusicAllstars since selling them to Warner, he added that, nevertheless, "those accusations were also aimed at me personally. I look back with pride on a successful collaboration with Martin and wish him the best in his further career".
However, Garrix quickly responded on Twitter insisting that "the media [have] twisted the statement from the court wrong", while insisting that he was still in control of his master recordings, one of the key aims of his original legal action.
The producer's current management team then issued their own lengthy statement, arguing that - while the appeals court may have ruled differently on the conflict of interest point - Garrix had still pretty much got all he wanted out of the litigation. Mainly in relation to rights ownership and whether or not the producer had the right to terminate his deal with MusicAllstars in 2015, or whether he had been obligated to work with the firm until 2017.
The management team's statement said that "the Court Of Appeals confirmed the judgment that ... all rights to his tracks belong to [Garrix]". And while the conflict of interest argument may have been rejected on appeal, the higher court "ruled on other grounds that Martin had put forward, that Martin was entitled to terminate his contracts per 30 Jul 2015 and that they did not continue until 30 Jul 2017 as Music Allstars and Spinnin claimed".
"The Court Of Appeals has ruled that Music Allstars will be compensated for some outstanding items for their work from January 2015 to 30 Jul 2015", the statement conceded. But it then played down the significance of that compensation, while adding "Spinnin Records will not receive any compensation".
It then sternly stated: "Music Allstars and Spinnin did ... not gain anything with these cases except that they have incurred enormous costs for themselves and Martin. If they had agreed back in 2015 with the reasonable requests of Martin, this could all have been prevented".
With artists owning their master rights having become such a big talking point in 2019 thanks to Taylor Swift, the Garrix management's statement also stressed that - for the producer - retaining ownership of those rights was always the most important thing.
It added: "[Garrix] hopes that other young artists will realise what their rights are. Already four years ago, Martin stated that the protection of fellow musicians was an important reason for him to take up this fight, and in that sense, Martin is pleased with the outcome".
Unison welcomes latest Spanish court ruling against SGAE
2019 was a particularly eventful year for SGAE. Years of controversy around governance and royalty distribution policies resulted in the Spanish rights organisation finally being kicked out of global collecting society grouping CISAC. Then Spain's competition regulator fined it 2.95 million euros for anti-competitive conduct.
Unison is utilising new collective licensing regulations across the European Union to launch an alternative option for both Spanish and international songwriters and music publishers who no longer have any confidence in SGAE to effectively manage their rights within Spain. Perhaps unsurprisingly, SGAE has been seeking to frustrate those efforts.
In its May ruling, the Spanish competition regulator said that, in frustrating Unison's launch, SGAE had breached competition law, in particular by putting restrictions on its members who were seeking to withdraw rights. Hence the 2.95 million euro fine.
Since that ruling, Unison has begun new legal proceedings against SGAE over those anti-competitive practices. The new society also sought an 'interim measures decision' in relation to SGAE's efforts to hinder those members seeking to withdraw rights, basically asking that May's regulator ruling be urgently enforced.
Just before Christmas Barcelona's Commercial Court issued that interim measures decision meaning that, even though the wider legal dispute between SGAE and Unison continues, in the meantime the former must allow its members to withdraw, or partially withdraw, rights so to ally with the latter.
According to Unison: "In its resolution of 20 Dec 2019, Barcelona Commercial Court No 3 upheld the urgent measures requested by Unison, on the understanding that, despite the [competition regulator's May] resolution, acts of abuse of dominant position and unfair competition by SGAE continue to occur in the marketplace".
"The decision means", Unison adds, "that, until the main proceedings are resolved, SGAE must allow its members to withdraw their rights without unnecessary and unjustified restrictions, including the right to withdraw repertoire and works in a segmented or individualised manner". To allow that to happen, "the decision [also] requires SGAE to withdraw the corresponding clauses from its model management contract".
Unison's CEO Jordi Puy welcomed both the ruling and the timing of it, noting that many of the rightsholders who began the process of withdrawing their rights from SGAE last year are hoping to be able to place those works with his organisation at the start of 2020.
This latest judgement, Puy then added, further demonstrates that the notion of collecting societies enjoying actual or quasi monopolies in any one European country was now "history".
EMI re-opens its Kanye West litigation after failing to agree a settlement
West sued EMI a year ago in a bid to get out of his ongoing contractual commitments to the publisher. He sued in the Californian courts. The location was important because key to his case is a rule under Californian state law that says that no one can be forced into a service contract that lasts longer than seven years. West started working with EMI in 2003 meaning, he argued, his commitments to the company ended in 2010.
Whether or not California's seven year rule applies to record and publishing contracts has long been debated in the US music industry. Though in a countersuit, EMI pointed out that its deals with West fall under the laws of New York State anyway, where there is no seven year rule.
Along the way West claimed that his EMI deal amounted to "servitude". However, such hyperbole didn't stop the two sides seeking an out-of-court settlement. And in September legal reps for West and EMI said that an "agreement in principle" had been reached that should be finalised "within 90 days". It looked like that settlement deal would result in both side's respective litigation being dropped.
However, last month EMI's reps filed new papers with the courts in New York stating that no final settlement had as yet been agreed, and to that end it wants its lawsuit there to be re-opened.
In its legal filing, EMI said: "Unfortunately, as of today's date, the parties have been unable to finalise the terms of a settlement agreement, or to finally resolve related issues on which a settlement agreement would be conditioned. As a result, good cause exists, and EMI hereby applies, to reopen the action".
Those of you now looking forward to the prospect of West laying into his publisher in a public court hearing may as yet be disappointed though.
The publisher had a 27 Dec deadline to re-open its case, so last month's filing could just be an attempt to buy a few more weeks to get any settlement deal across the line. But who knows? Maybe 2020 will deliver us Kanye v EMI in court. Which would at least give us all something to look forward to.
Kanye West responds in Ultralight Beam sample dispute
'Ultralight Beam' appears on West's 'The Life Of Pablo' album and opens with the voice of a young child in prayer. The sample was taken from an Instagram video uploaded by the child's mother in early 2016.
West's people did approach the mother, Alice T Johnson, about sampling the audio from her Instagram post. However, in a lawsuit filed last February, the child's adoptive parents - Andrew and Shirley Green - argued that Johnson didn't actually have the authority to allow the girl's voice to be used in the record.
Even if she did, the lawsuit went on, conversations between Team West and Johnson were only ever verbal and a fee for the use of the sample was never agreed. Meanwhile, a promised written agreement never arrived with either Johnson or the Greens. Further talks with the West camp did subsequently occur, but without any agreement being reached.
West's response, filed with the court just before the Christmas break, deals with various elements of the case.
Firstly, the Green's claim for statutory damages and attorney fees, which could greatly increase their pay out if they were ultimately successful in their legal claim. His lawyers argue that because the Greens had not registered the original Instagram recording with the US Copyright Office at the time West sampled it in 'Ultralight Beam', they can't claim statutory damages or attorney fees in this case.
Elsewhere Team West seek to have an additional plaintiff, Andreia Green, removed from the lawsuit entirely. She is the adult voice also heard in the recording sampled by West. However, the rapper's lawyers argue, she was not listed on the aforementioned registration with the US Copyright Office as a co-owner of the recording, and so therefore has no grounds to sue for infringement.
It now remains to be seen how the Greens and the court respond to West's motion.
Music consumption continued to grow during the year of Lewis Capaldi
If you mash together streams, downloads and physical sales - as the BPI and Official Charts Company routinely do - consumption levels were up 7.5% last year to the equivalent of 154 million album units. Streaming now accounts for three quarters of that consumption.
Of course in the streaming age consumption data isn't quite as insightful as the equivalent stats we used to get in the discs and downloads era, where units shifted were more tangibly linked to money going through the till.
Regarding how things performed last year revenues wise, the Entertainment Retailers Association has already released some financial data for 2019 (more on which in a moment), while additional data from BPI regarding label income will follow in due course.
But what the BPI's initial 2019 data dump confirms is that the streaming boom continues, meaning ever more people are listening to ever more music through Spotify, Apple Music, et al.
And fans of random stats might like to know that 2019 was the first time more than a 100 billion plays occurred on the streaming services in the UK within one year, with 114 billion plays being racked up by the year's end.
Meanwhile, in December there was one week where 2.7 billion plays were counted, the highest weekly total to date.
All that said, the BPI would like us all to remember that many of its members are still selling plenty of physical discs alongside all that streaming nonsense.
Even rising cassette sales get a mention in the official BPI stats announcement this time round, albeit with the cautionary disclaimer that tape sales - while at their highest levels for fifteen years - still only account for 0.1% of overall music consumption. But still, cassette revival, woo!
Artists-wise, it was, of course, Lewis Capaldi's year, he having the most consumed album and single of 2019. Lil Nas X was in second place when it comes to single tracks, while Ed Sheeran and all of his collaborators had the second most consumed album.
"British music proved once again in 2019 that it has a bright future", reckons BPI boss Geoff Taylor. "Strong demand for streaming music and vinyl, fuelled by the investment and innovation of UK labels in discovering and promoting new talent, boosted music consumption to levels not seen for fifteen years".
But, of course, the UK's newly appointed government - and all the Brexit bollocks it's about to unleash - could still spectacularly fuck that all up.
Taylor adds: "The full benefits of this growth can only be unlocked if our new government takes action to make the UK more competitive and encourage further investment, to require digital platforms to pay fairly for music and filter out illegal content, and to give all our schoolchildren the opportunity to play an instrument and discover the joy of making music".
UK music streaming revenues topped £1 billion in 2019
The ongoing streaming boom was behind all that growth, of course, with the streaming services together generating over a billion in annual UK revenues for the first time last year. A 23.5% increase in the monies made by the streaming services helped to compensate for a 17% decline in physical product revenues and another 26.8% slide in download sales.
ERA points out that UK revenues for the music streaming sector have increased four-fold in the last five years, and a massive 3083.7% over the last decade. Which is a nice big number, isn't it?
Though growth is obviously slowing as the market matures, presenting new challenges for the record industry and its digital and retail partners, including: how to get more money out of existing subscribers; how to satisfy much more casual music consumers; and how to get the most out of micro-licensing user-generated content platforms.
Commenting on the 2019 figures, ERA boss Kim Bayley noted: "As more and more people sign up to streaming services, it obviously becomes a challenge to maintain the same rate of growth, but the fact is UK music fans spent £190 million more on subscription streaming services in 2019 than they did the year before - that's more than twice the value of the entire vinyl market".
That puts the vinyl revival into perspective, I suppose. Although that remains the bit of the physical product market that is still in growth. In 2019 vinyl sales grew 6.4% to £97.1 million.
Entertainment retail at large - including video and gaming - saw revenues rise 2.4% to £7.8 billion. Digital platforms were also behind that wider sector growth, especially in video where digital income was up 21.5% to £2.1 billion, as more and more people sign up to video-on-demand services like those provided by Netflix and Amazon.
In the video domain, of course, new services are now entering the market offering complementary content, which in theory could fuel further growth in the years ahead. Though it remains to be seen how many different services the average consumer will subscribe to.
Gaming, the biggest strand of entertainment retail, had a tricky 2019, with overall revenues down 3.4%, resulting in slower growth figures for the entertainment retail sector at large.
Digital saw modest growth in gaming, but physical sales were down 21.7%, partly - ERA says - because the sector is at the end of a console cycle, with disc sales slowing in anticipation of the launch of new PlayStation and Xbox consoles in 2020.
Commenting on the sector at large, Bayley continued: "The rise of digital entertainment services has created the biggest revolution in UK leisure habits in history, enabling people to access the music, video and games they love wherever and whenever they want, and transforming the fortunes of record labels, filmmakers and games developers".
"The fact that in 2019 over 80% of entertainment spending was on digital services shows the scale of that revolution", she added.
The UK music charts of 2019 - what fun!
Albums Chart Of 2019
Albums Chart Of 2019 (including compilations)
Singles Chart Of 2019
Most Streamed Tracks Of 2019
Vinyl Albums Chart Of 2019
Cassette Albums Chart Of 2019