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Takes on the major moves in the music industry - WR #190
Weekly Roundups
December 1, 2023

Takes on the major moves in the music industry - WR #190

It’s time to take a look at what’s changing and hear from the main music industry players. Nearing the end of the year, it’s starting to feel like looking back on the main changes we’ve witnessed and have a few afterthoughts.

#1. Thoughts following the sale of BMI

Among other festivities nearing the end of the year, the music industry is currently immersed in discussions surrounding the notable sale of BMI. The company’s recent transition from a not-for-profit model to a for-profit entity has been a focal point of industry discourse throughout the year, culminating in its acquisition by a shareholder consortium led by private equity firm New Mountain Capital. The financial intricacies of the deal, estimated to fall within the range of $1.2 billion to $1.5 billion, have attracted considerable attention, particularly due to the allocation of a substantial portion of the proceeds to music broadcasters, notably iHeartMedia. Equally significant is the unexpected entry of Alphabet Inc., the parent company of Google, into the domain of music rights management through its investment arm, CapitalG, which will hold a passive minority stake in BMI. This development has prompted speculation within industry circles concerning the potential ramifications of Google's foray into the music landscape and its implications for the autonomy of songwriters and publishers.

Noteworthy in BMI's announcement is the earmarking of $100 million for its songwriter, composer, and publisher clientele. However, this financial gesture has not fully calmed the concerns, including the Artists Rights Alliance and SAG-AFTRA. MBW goes through the nuances surrounding the distribution of proceeds, potential conflicts of interest arising from Alphabet's strategic involvement, and the broader implications for the commercial music landscape in the United States.

#2. IMPALA’s take on EU legislation

Several organizations, including IMPALA, are urging the European Union to enact legislation addressing a court ruling that ended the principle of "material reciprocity" in recorded performance payments to non-EU nations. The court decision has impacted the compensation for recordings used on U.S. radio, where royalties are paid only for the use of underlying compositions, not recordings themselves. The EU's Court of Justice ruling in 2020 is seen as bringing an end to material reciprocity, affecting European performers and producers.

The organizations are calling for the restoration of material reciprocity in EU legislation to prevent potential revenue loss for European artists and producers. They emphasize the need for a balanced solution that addresses concerns and safeguards cultural diversity and European sovereignty.

#3. TikTok takes one more step towards streaming

In a strategic move to strengthen its stand on streaming, TikTok has introduced artist accounts, offering musicians a platform to boost fan engagement and broaden their reach. These accounts, accessible to any musician, gathers various tools designed to elevate discoverability and interaction. A notable feature, the Music tab, compiles artist catalogs and automatically updates with new releases, facilitating seamless discovery for fans.

Additionally, features like "Behind the Song" provide insights into the creative process, unraveling the inspiration and narrative behind each track. The accounts also empower artists to showcase their work more effectively, allowing them to pin preferred posts to the discovery page and utilize tags like "Artist" and "New Release" for enhanced visibility.

TikTok's foray into artist accounts appears to mirror certain elements from Spotify (for a change!), signaling the platform's broader commitment to streaming, evident in its earlier launch of TikTok Music, a subscription-driven streaming service. The move aligns with TikTok's recent endeavors, such as the "Add to Music app" feature, showcasing its dedication to fostering unique opportunities for fans to connect with their favorite artists.

#4. Europe’s artists and labels could lose $137M annually

A coalition of European artists' organizations, including IMPALA and Adami, has sounded the alarm over a potential threat to artists' incomes due to a legal anomaly in EU legislation. The issue concerns the discrepancy between the European Union and the United States when it comes to artists' remuneration for terrestrial radio broadcasts and public performances. While EU payments cover artists, labels, songwriters and publishers, a 2020 ruling by the Court of Justice of the European Union called into question the principle of reciprocity. 

This discrepancy could result in a substantial loss of revenue of up to 40% for European artists, as payments are redirected to their US-based counterparts. The coalition urges the EU to address this issue swiftly and take action to protect the income of European artists.

#5. Spotify re-positions two-tier licensing

Spotify has announced a two-tier royalty system alongside measures to reduce fraud and "noise" on the platform. The new system aims to drive an additional $1 billion towards emerging and professional artists while addressing issues related to stream manipulation. However, the tiered structure may impact smaller labels, especially those unable to pay advances, as royalties for tracks with fewer than 1,000 streams could be withheld. Spotify suggests that consolidating these revenues would better benefit artists dependent on streaming revenue, but concerns arise regarding the potential impact on smaller labels. The industry is urged to explore alternatives, such as directing these funds into an artist development fund.

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