FRIDAY 1 APRIL 2022 COMPLETEMUSICUPDATE.COM
TODAY'S TOP STORY: Universal Music has, as expected, confirmed it is following the lead of its major label rivals, who in turn followed the lead of certain independent labels, in committing to pay through royalties to unrecouped heritage artists. The mega-major includes its commitment in this domain within its 2021 annual report, which was published yesterday... [READ MORE]

TOP STORIES Universal Music confirms it will start paying royalties to unrecouped heritage artists
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LEGAL Spotify fails to block Daniel Ek deposition in dispute with Eminem publisher
Superfly co-founder sues after being pushed out of the business

VPN ordered to pay $14 million in damages to movie producers in copyright dispute

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LABELS & PUBLISHERS National Album Day to put the spotlight on debut albums this year
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LIVE BUSINESS Sheffield Leadmill landlord says building will remain a music venue, despite eviction notice
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MEDIA Global announces spring changes to schedules at Capital stations
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AND FINALLY... John Lydon denounces new Sex Pistols compilation
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Universal Music confirms it will start paying royalties to unrecouped heritage artists
Universal Music has, as expected, confirmed it is following the lead of its major label rivals, who in turn followed the lead of certain independent labels, in committing to pay through royalties to unrecouped heritage artists. The mega-major includes its commitment in this domain within its 2021 annual report, which was published yesterday.

When artists sign to labels they usually receive a cash advance which is then recoupable out of any royalties they are subsequently due under their record deal. Depending on the specifics of that deal, some of the other upfront costs covered by the label may be recoupable too. This means that when the artist's records start making money, the artist's share of that money - which is often a minority share - initially pays off any unrecouped balance.

It can takes years for that unrecouped balance to be paid off. Indeed, in many cases the artist never 'recoups', which means the artist's tangible income from those recordings is any cash the label advanced and any remuneration the artist is directly due under copyright law via the collective licensing system (which is linked to the broadcast and public performance of music).

Of course, a label would argue that the artist's wider business also benefits from its investment and marketing, unlocking a load of other revenue streams, and that's a valid argument.

Nevertheless, unrecouped heritage artists are often aggrieved when they see their label earning from their catalogues while their cut of any money is still paying off old debts. And all the more so in the streaming age, where catalogue has become super valuable, mainly as a quirk of the business model.

That led to calls from the artist community that unrecouped balances should be written off after a period of time. Not least, because, a label usually goes into profit on any one artist investment long before the artist actually recoups, because on a conventional deal the label gets the majority of recordings income. Certain indies led the charge in this domain, with Beggars in particular known for writing off unrecouped balances after fifteen years.

Sony Music was the first major to make a commitment regarding unrecouped heritage artists, cleverly announcing its intent as the UK Parliament's culture select committee was still working on its big old report about the economics of streaming. It hasn't actually technically written off unrecouped balances like Beggars, but it is paying royalties through to unrecouped heritage artists whose deals pre-date 2000.

This was welcomed by the select committee, which wrote in its final report: "In a positive move, Sony recently announced that it would 'pay through on existing unrecouped balances to increase the ability of those who qualify to receive more money from uses of their music' for deals made before 2000, though at the time of writing Universal and Warner have not similarly followed suit".

"We urge Universal and Warner", the report went on, "to look again at the issue of unrecouped balances with a view to enabling more of their legacy artists to receive payments when their music is streamed".

Warner Music then announced that it was basically making the same commitment as Sony via an Environment Social Governance Report that it published in February. At that time, Universal insiders indicated that a similar commitment would appear in the Environment Social Governance section of its then still being compiled annual report.

And, indeed, it does. In a section all about Universal's environmental, diversity and artist welfare initiatives, the mega-major also announces it is launching a "goodwill programme" that will see it pay through royalties to "certain" legacy artists with unrecouped balances.

"Continuing to build on an industry-leading tradition of support programmes for legacy artists", the annual report states, "in 2022, UMG is proud to initiate a worldwide goodwill programme for certain legacy featured recording artists and songwriters with unrecouped balances".

"By not applying their unrecouped advances to royalty statements for any period beginning 1 Jan, 2022", it goes on, "eligible creators and their immediate heirs who have not received any payments since 1 Jan, 2000, will begin receiving royalties, subject to certain conditions. Within the coming months, UMG will contact eligible artists and songwriters".

If you're wondering how Universal is an "industry leader" when it comes to supporting legacy artists, despite it being pretty late to the party on paying royalties through to unrecouped heritage acts, the major's annual report then brags about its previous artist support initiatives. Well, one initiative in particular, really.

"Among its previous artist support efforts", the annual report continues, "in 2001, UMG donated $2 million to the R&B Foundation, establishing the Motown/Universal Music Group Fund - making possible long-term continuity for the Foundation's financial assistance programmes, such as grants to artists in need of financial and medical assistance".

Although, obviously, the devil is in the detail regarding these commitments to pay royalties through to unrecouped heritage artists, the commitments have nevertheless been welcomed by artists, songwriters and their managers.

Although, those artists, songwriters and managers generally also point out that this is just one of various things they have been calling for in recent years to make the music industry more artist friendly.

Responding to Universal's announcement, the CEOs of the UK's Music Managers Forum and Featured Artists Coalition - Annabella Coldrick and David Martin respectively - said this morning: "The FAC and MMF welcome this positive announcement from Universal Music Group".

"Writing off unrecouped balances should benefit many artists and songwriters who signed deals in a pre-digital era", they added. "We look forward to seeing the full detail of these proposals, as well as discussing progress on other much needed reforms of the recorded music market".

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Spotify fails to block Daniel Ek deposition in dispute with Eminem publisher
A US court has said that Spotify chief Daniel Ek must participate in a deposition as part of the streaming firm's ongoing legal battle with Eminem's music publisher Eight Mile Style.

Legal reps for Spotify had tried to block an Ek deposition on the basis that he's super busy and wasn't hands-on involved in the licensing specifics this case centres on. They also implied that the plaintiffs were mainly pushing for the deposition just to piss Ek off.

Eight Mile Style sued Spotify in 2019 over allegations the streaming firm hadn't properly licensed the rapper's music for its US service and was therefore liable for copyright infringement.

The dispute specifically relates to the licensing of the mechanical rights in Eminem's songs, which are subject to a compulsory licence under US copyright rules, which means the rates are set in law. However, for the compulsory licence to apply a streaming service must meet certain admin requirements.

Spotify and other digital firms were repeatedly accused of not meeting those requirements as streaming became the primary recorded music revenue stream in the US. As a result, there were a flurry of lawsuits over unpaid mechanical royalties in the mid-2010s, but the 2018 Music Modernization Act was meant to bring all that to an end.

It introduced a new mechanical rights collecting society - the MLC - which administers mechanical royalties in the absence of a direct deal between a service and a publisher. The services cover the costs of running the MLC in return for no longer being liable for any gaps in their song licences caused by admin screw ups, past or present.

However, that didn't stop Eight Mile Style going legal over Spotify's alleged past streaming of Eminem's music without licence. Among other things, the publisher argued that Spotify hadn't fulfilled its obligations under the MMA to avoid any new lawsuits over unlicensed songs. And also that the MMA stopping publishers from suing over past unpaid mechanical royalties was unconstitutional.

The case continues to go through the motions, and is currently due to arrive in court in September 2023. In the meantime, the plaintiffs want this deposition with Ek, which would see the Spotify chief have to answer their questions under oath.

Spotify have presented various arguments as to why that deposition should not take place. And the judge overseeing the case, Jeffery S Frensley, summarised those arguments in his ruling yesterday.

He wrote: "Spotify contends that [the Ek deposition should be blocked] because Mr Ek lacks personal knowledge of the issues in this case, deposing Mr Ek would result in annoyance, harassment, and undue burden and expense, and testimony on the topics that plaintiffs have identified is available from other witnesses".

Countering, Eight Mile Style's legal reps noted that Ek has spoken in the past about his personal involvement in launching Spotify in the US and the licensing deals required to achieve that, which included setting up the system for administering mechanical royalties that led to this dispute. And, in particular, the decision to work with the Harry Fox Agency on meeting all the administrative requirements of the mechanical rights compulsory licence.

Eight Mile Style has argued that HFA wasn't actually equipped to do that work and - its lawyers insist - "no one else can testify to whether Mr Ek knew from the outset that HFA was not up to the task of securing mechanical licences at the scale Spotify required, and thus was not a commercially reasonable vendor".

Generally speaking, Frensley is sympathetic to Eight Mile Style's arguments on this point. And as for Spotify's claim that an Ek deposition constitutes an "undue burden", the judge wrote in his ruling: "The court is inclined to agree with plaintiffs that 'Mr Ek's entire argument for burden is, essentially, that he is busy'".

"The court credits Spotify's assertion that [Ek] is very busy indeed", the ruling went on. "Yet, the issue of proper licensing relationships with the artists whose work comprises the entirety of Spotify's business and its sole product is surely also a matter of importance to Spotify, worthy of some of Mr Ek's time and attention".

With all that in mind, Frensley has rejected Spotify's motion to block the Ek deposition, although he did restrict the length of said deposition and added that Ek can answer any questions the plaintiffs want to ask remotely.

Spotify's motion "is denied", he stated, but "in recognition of the fact that Mr Ek has denied having personal knowledge of many areas of potential inquiry, and to minimise the likely annoyance to Mr Ek and the disruption of his schedule, plaintiffs may take the deposition of Mr Ek by remote means only for a maximum of three hours".

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Superfly co-founder sues after being pushed out of the business
One of the founders of US events and marketing agency Superfly - a company perhaps best known in the music industry as co-promoter of the Bonnaroo festival up until 2019 - has sued his co-founders after seemingly being pushed out of the business last summer.

According to Billboard, Jonathan Mayers was basically fired by Superfly last August and he has been seeking to agree a settlement with his former business partners ever since. With no settlement reached, the whole thing has now gone legal.

Mayers founded Superfly with Kerry Black, Rick Farman and Rich Goodstone back in 1996, initially as a concert promoter, before moving into festivals and later event-based marketing. In terms of Bonnaroo, Live Nation came on board as a partner in 2015, subsequently buying Superfly out of the festival in 2019. Meanwhile, a private equity outfit called Virgo Investment Group started backing the wider Superfly business in 2018.

In more recent years, Mayers was seemingly leading a new division at the company backed by Virgo's money which was working on creating events and interactive experiences around TV comedy franchises, initially 'Friends'. However, Mayers' own work in that domain was halted last August when he was pushed out of the company entirely.

According to legal papers seen by Billboard, it was Virgo that informed Mayers his services were no longer required, and since then he has never actually had the opportunity to speak with his co-founders about that decision.

But Mayer still has a 22% stake in the Superfly business which Virgo is now required to buy. The legal dispute centres on the valuation of that stake. Both sides have done some maths and have come up with significantly different valuations, Virgo valuing Mayer's stake at about a quarter of what he thinks it's worth. Hence the litigation.

Commenting on the legal dispute with its founder, Superfly told Billboard: "Superfly's board of directors made the decision to part ways with co-founder Jonathan Mayers in August of 2021. As company policy, we do not discuss ongoing litigation. Since that time, Superfly has seen robust growth with current and new projects, licences and clients. Our business is healthier than ever as we wrap up Q1 2022".

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VPN ordered to pay $14 million in damages to movie producers in copyright dispute
A court in the US has ordered VPN provider LiquidVPN to pay a group of independent movie producers over $14 million in damages for facilitating copyright infringement.

It's an interesting case in that it makes another entity in the digital supply chain liable for the accessing and sharing of unlicensed content, although LiquidVPN failed to defend itself, so the copyright owners' arguments weren't properly tested in court.

The movie producers - many of which are affiliates of Millennium Media - have been busy of late targeted a plethora of internet companies with copyright lawsuits.

They began with internet service providers, following the lead of BMG and the major record companies in arguing that ISPs that do not do enough to deal with repeat infringers among their customer bases cannot rely on the copyright safe harbour in the US Digital Millennium Copyright Act to avoid liability for the copyright infringement of those customers.

However, the film firms have also gone after virtual private networks - or VPNs - which can be used to circumvent anti-piracy measures employed by the ISPs, such as web-blocks.

Although VPNs have entirely legitimate uses too, some copyright owners reckon that the companies that run VPNs should do more to ensure that their services are not used to circumvent anti-piracy measures. Indeed, some VPNs are accused of implying to their customers that they should specifically use their services for that very purpose.

Movie companies, in particular, are more prone to diss VPNs because they can also be used to circumvent the geo-blocking systems that are much more widely used in the film and TV space - so, for example, there are plenty of movies and programmes available on Netflix in the US that are not available to Netflix users in the UK.

And while higher profile VPNs might not seek to imply that their services should be used to circumvent ISP anti-piracy measures, they do often brag about how using a VPN can unlock a load of content on Netflix that is not currently accessible to users in Europe.

So, the movie producers have also sued - or threatened to sue - some VPN companies. Some of those VPNs have reached out of court settlement deals with the producers, at least some of which include a commitment to block certain piracy websites. However, LiquidVPN hasn't sought to reach any sort of settlement, or even defend itself in court.

The whole legal case was held up for a while because the film firms were also seeking to hold a server hosting company used by LiquidVPN - Quadranet - liable for the infringement, extending liability even further down the supply chain. However, the judge overseeing the case recently ruled that Quadranet was too far removed from the infringement to be held liable.

With Quadranet removed as a defendant on the lawsuit, the movie producers then requested a default judgement in their favour against LiquidVPN, seeking the $14 million in damages.

Earlier this week that request was honoured, with the judge noting that "LiquidVPN defendants have no safe harbour from liability because they fail to implement a policy for terminating repeat infringers and have not registered a DMCA agent with the Copyright Office".

It's not clear whether the movie producers will be able to actually get their damages, because the current status of LiquidVPN isn't clear. Torrentfreak notes that LiquidVPN's home page has been offline for a few months now, but that "the user panel where people can place new orders still appears to be operational".

Either way, it's an interesting development as copyright owners continue to seek to force a wider range of internet companies to take responsibility for restricting and blocking piracy services.

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National Album Day to put the spotlight on debut albums this year
Sync your diaries everybody, this is no April fools joke, the UK's National Album Day really is returning on Saturday 15 Oct with 'debut albums' the theme for the proceedings. It's the fifth year that record industry trade group BPI and the Entertainment Retailers Association have staged the annual event to celebrate the album format, with support from sponsor Bowers & Wilkins and media partner BBC Sounds.

BPI boss Geoff Taylor and ERA chief Kim Bayley say in a joint statement: "Artists love telling their stories through the artform of the album and fans love to listen, but in a world where there is more streaming of individual songs, we take the appeal of the album format for granted. National Album Day is about celebrating the continuing vitality and cultural relevance of the long player, in particular with the next generation of fans, and we invite everyone who loves the format to join in and enjoy this year's National Album Day".

Meanwhile, focusing on this year's specific theme, Giles Pocock, VP Brand Marketing at Bowers & Wilkins, adds: "The debut album is an important milestone for any artist and remains such a pure form of storytelling. Everything from the track order and artwork, through to the arrangements and choice of recording studio can feel like a big decision. We are pleased to continue our support for National Album Day, helping to celebrate those truly great debut albums that made their own rules and brought something truly unique into the world".

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Sheffield Leadmill landlord says building will remain a music venue, despite eviction notice
Sheffield's The Leadmill music venue has announced that it has been served an eviction notice by its landlord, giving the current management team a deadline of one year to vacate the premises. However, the building's owner has insisted that it will continue to operate as a music venue, but with new management.

In a statement, the venue's current operators said yesterday: "Today we have received some devastating news that in one year's time, our landlord is trying to evict us, forcing us to close. Since 1980, The Leadmill has spent millions of pounds on what was a derelict warehouse, transforming it into one of the UK's most respected venues where countless acts from across the globe have performed over the years".

Concerns about the future of the venue were previously raised in 2014, when the building that houses it was put up for sale. However, at the time the venue said in a tweet: "Just putting rumours to rest, The Leadmill is NOT for sale - only the building. We have the lease until 2023 so we're here for a long while!"

The freehold of the building is owned by Electric Group, which also owns several other music venues around the UK, including Electric Brixton, SWX in Bristol, and Newcastle Academy.

In a tweet this morning, its CEO Dominic Madden said: "I'll be making a statement regarding The Leadmill shortly. For avoidance of doubt, we are music people, we spend our lives running independent music venues and The Leadmill will continue to operate as a special music venue. The management may change but the song stays the same".

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Global announces spring changes to schedules at Capital stations
Radio firm Global has announced that a number of DJs from the dance, hip hop and R&B spin offs of its Capital network will now also have shows on the main Capital FM station. The new shows start airing from tomorrow.

The host of the weekday breakfast show on Capital Dance, Rio Fredrika, will now also front a Saturday morning show on Capital FM. Meanwhile, Jay London and Kemi Rogers from hip hop and R&B centric Capital Xtra also get shows on the main station, the former a weekend afternoon show, the latter a new overnight show during the week.

Those additions to the Capital FM line-up accompany a number of other schedule changes at the Capital branded stations. That includes a new overnight show on Capital Xtra hosted by Dynamic, aka D'angelo Briscoe, who began his career in radio as an apprentice at Capital after graduating from the Global Academy, the media firm's educational programme that seeks to reduce the barriers for those considering a career in broadcasting.

Commenting on the schedule changes, Brent Tobin, Managing Editor of the Capital brand, said: "It's an exciting time for Capital and Capital Xtra as we launch a refreshed schedule across both stations. We have some incredibly talented rising stars within the team who've proved hugely popular with our listeners".

"It's particularly rewarding to see Dynamic secure his own show on Capital Xtra", he added. "He's been a highly valued member of the team since he graduated from Global Academy four years ago, as well as a brilliantly talented DJ, so it's fantastic to see him land a new show. I'm delighted to welcome everyone on board as Capital and Capital Xtra brings a big new sound for the spring".

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Sound + Vision and ThisWeek Culture present the Comedy Conference
CMU's sister website ThisWeek Culture has teamed up with the Sound + Vision festival and conference in Cambridge to present a series of conversations and panels later this month all about the business of comedy in 2022.

CMU's Chris Cooke will lead the conversations, interviewing comedy industry experts galore about the ins and outs of building a career in comedy today; how digital platforms and livestreaming fit into the comedy business; and the ongoing and future role of the Edinburgh Fringe, which has long been a key showcasing platform for comedy performers.

Across the day, Cooke will be joined by Hils Jago from Amused Moose, Lee Griffiths from Soho Theatre, Darrell Martin from Just The Tonic, Lola Oyewole from TikTok, John Harris from Acast, Tom Brandt and Jason Wolfe from NextUp Comedy, Kaiya Milan from The Floor, comedy PR experts Gaby Jerrard and Flick Morris, media and entertainment lawyer Raffaella De Santis, and comedy creators and performers Jay Foreman, Robyn Perkins, Pete Heat and Kate Smurthwaite.

This all takes place on Friday 22 Apr at Cambridge Junction - get more info here.

The comedy conversations and panels sit within the wider Cambridge Sound + Vision event, which also features a music conference, plus music and comedy showcases in venues across Cambridge. Get all the info and tickets here.

John Lydon denounces new Sex Pistols compilation
With Danny Boyle's Sex Pistols biopic TV series 'Pistol' set to arrive on Disney+ next month, Universal Music has announced a new compilation to coincide with it. And everyone's happy about that. Well, everyone except John Lydon, of course.

A statement on Lydon's Facebook page reads: "Universal Music Group have announced the release of a new Sex Pistols compilation entitled 'The Original Recordings'. For the avoidance of any doubt, John Lydon has not approved this compilation and does not endorse or support it. He has not approved the artwork or tracklisting".

"[Lydon] and his team were not involved in producing this compilation and consider it substandard compared to previous Universal releases since 2012", it concludes.

The 20 track compilation includes the bulk of The Sex Pistol's one and only album 'Never Mind The Bollocks... Here's The Sex Pistols' - one notable exception being 'EMI', the album's closing track that hurls insults at the former major label which is now owned by, oh yes, Universal Music.

Bulking it out are tracks from 'The Great Rock & Roll Swindle' soundtrack - including covers of The Monkees' '(I'm Not Your) Stepping Stone' and Eddie Cochrane's 'C'Mon Everybody' - and a few b-sides.

It's perhaps unsurprising that Lydon has come out against the compilation, given its close association with 'Pistol'. Last year, the vocalist attempted to block the TV show - which is based on the autobiography of guitarist Steve Jones - from using the band's music.

The dispute between Lydon and his former bandmates - heard by the high court in London -centred on whether or not any one member of the Sex Pistols had the power to veto a sync deal.

Jones, backed by drummer Paul Cook, said that an old band agreement meant that sync deals could be issued if a majority of band members agreed. Lydon argued that the band had always operated on the assumption that unanimous consent was required for such deals. However, the court confirmed the old band agreement was nevertheless still in force, depriving Lydon of any veto right.

Following the ruling, Lydon issued a statement on his website, claiming that - despite the fact that he was "the creative force of the Sex Pistols" - he "was asked to allow the Sex Pistols works to be used without any prior consultation or involvement in the ['Pistol'] project". Therefore he "took a stand on principle for what he sees as the integrity of the Sex Pistols legacy and fought for what he believed and continues to believe was right".

In their own statement responding to Lydon's, Jones and Cook said: "Despite John Lydon's comments on his website, we reiterate that he was informed of the 'Pistol' TV series, offered meetings with the director and to be involved in the show months before principal photography began. He refused these offers and we were saddened he would not engage and at least have a conversation with the director Danny Boyle and co-showrunner Craig Pearce".

"John Lydon sold his rights to control the use of these songs in the 1990s in return for money", they went on. "The majority rule agreement existed as a result - so no outside party could dictate the use of the band's music. And to have a mechanism in place if one member was unfairly blocking the decision making process - which is what happened in this instance".

'Sex Pistols: The Original Recordings' is set for release on 27 May. Meanwhile, 'Pistol' will arrive on Disney+ on 31 May.

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ANDY MALT | Editor
Andy heads up the team, overseeing the CMU Daily, website and Setlist podcast, managing social channels, reporting on artist and business stories, and writing the CMU Approved column.
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CHRIS COOKE | Co-Founder & MD
Chris provides music business coverage, writing key business news and CMU Trends. He also leads the CMU Insights consultancy unit and the CMU:DIY future talent programme, as well as heading up CMU publisher 3CM UnLimited.
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