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Platforms and music industry rules - WR #204
Weekly Roundups
March 8, 2024

Platforms and music industry rules - WR #204

Who is playing by whose rules? This week saw a lot of strong armed discussions in the industry, from Music industry players trying to step in as one in front of TikTok to dropping projects due to the drowning of some trends, let’s see what happened in detail.

#1. What the Universal vs. TikTok feud highlights for publishing

The recent fallout between UMG and TikTok underscores the growing importance of music publishing in the post-streaming era, with UMG's withdrawal impacting artists. This highlights the power of music rights, as publishers wield ownership to influence competitors' hits. Platforms have such an impact on discoverability but also on music consumption itself.

Indeed, the rise of remix culture emphasizes the significance of publishing in enabling audience interaction and creativity. However, while artist services thrive, songwriter services receive less attention, presenting a significant opportunity for innovation and monetization. Companies that develop better business and creative services for songwriters stand to capitalize on this growing market.

#2. More on the balance of power between music and platforms

Staying on that topic for a bit, several major music publishers, including the National Music Publishers’ Association (NMPA), are now saying it’s pretty unlikely for them to renew their licensing deals with TikTok beyond April 30. This statement is of course directly related to their concerns over the platform's licensing practices. The NMPA's decision follows Universal Music Group's boycott of TikTok's licensing deals, emphasizing the growing rift between music rights holders and the platform.

Additionally, federal lawmakers are considering bipartisan legislation that could compel TikTok's parent company, ByteDance, to divest the platform due to concerns over user data security. If it rings a bell, it’s because we’ve heard about a potential ban of TikTok in the US a while back, based on the same issue of data privacy. These developments suggest increasing regulatory and industry pressure on TikTok, potentially impacting its future operations and licensing agreements.

#3. TikTok is not the only one in difficult position, take a look at X/Twitter

Twitter, through Elon Musk’s X, still faces a multi-million dollar copyright infringement lawsuit from 17 music publishers. While certain elements of the lawsuit have been dismissed, a Tennessee court has allowed claims related to contributory infringement practices to proceed. 

There’s potential liability for Twitter's handling of copyright infringement and response to takedown notices. The NMPA emphasized the need to hold Twitter accountable for music piracy and secure fair compensation for affected songwriters. This case underscores Twitter's lack of licensing agreements with major music companies and ongoing industry concerns regarding alleged infringement on the platform.

#4. Virtual artists are definitely not the hype anymore

Sony Music Japan is closing its Prism Project, a virtual talent management agency, due to shifting industry trends. Launched in 2021 to explore the virtual talent space, Prism will cease operations by the end of March. The decision reflects the cooling interest in non-fungible tokens and virtual artists. The shutdown allows the 18 digital entities managed by Prism to pursue independent activities.

This development sheds light on the challenges facing virtual projects amidst the rise of AI-generated content and the discerning preferences of audiences.

#5. Warner is making eyes at Believe

The jig is up; ​​Warner Music Group has unveiled its interest in acquiring Believe, initiating discussions with the French company's board for a potential deal valued at $1.8 billion. Warner emphasizes the strategic support it could offer Believe, envisioning accelerated growth into new markets.

Despite no formal offer yet, Warner is actively engaging with Believe's board, seeking access to key due diligence information to finalize its proposal. However, challenges may arise from the Ladegaillerie consortium's existing agreements to acquire a significant portion of Believe's stock, prompting regulatory scrutiny and potential obstacles in the acquisition process.

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