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Tech being influenced by Music - WR #192
Weekly Roundups
December 15, 2023

Tech being influenced by Music - WR #192

This time, it’s not all about how tech changed music, but how the music industry is imposing their vision and boundaries to keep working and developing solutions in the right space.

#1. Apple Music rewarding Dolby Atmos

Apple Music could soon be paying artists more for songs in Spatial Audio, especially mixed in Dolby Atmos. This could mean fatter royalty checks for artists embracing the immersive format (relatively speaking).

According to Apple Music, Spatial Audio has been a hit since its launch in June 2021, with plays skyrocketing over 1,000% in 2022. The tweak in payment might not even require users to play the Spatial Audio version for artists to benefit. Apple's motivation? It could encourage artists to create more Spatial Audio content, possibly to boost sales of Apple hardware supporting the format.

#2. The EU and Tech giants are at it again

As the European Union finalizes its first AI Act and finally creates a comprehensive AI regulation, music and big tech industries clash over its implications. For instance, the AI Act includes measures that impact how tech companies, understand giants like Alphabet, Apple, Amazon, and Meta, handle copyright-protected music works using AI. Lobbying efforts from big tech aim to soften these regulations, citing potential disadvantages for European AI developers. A pretty recurrent argument made in these situations with the EU. Simultaneously, music industry representatives are advocating for transparency and record-keeping obligations to safeguard the rights of creators.

In a related development, European regulators are reportedly preparing a ruling in favor of Spotify in its longstanding antitrust battle against Apple. This ruling aims to prevent Apple from blocking music services, like Spotify, from redirecting users away from the App Store for alternative subscription options. The broader Digital Markets Act in the EU could introduce additional changes, and Apple may face fines up to 10% of annual sales in the EU. The outcome of these legislative battles will significantly influence the landscape for AI development and music streaming in Europe.

#3. By the way, do you understand Hipgnosis?

Amidst the various articles about how the company is bleeding, Hipgnosis still seems like the mammoth on their logo; huge. Thankfully, Digital Music News went over Hipgnosis group hosting many activities in many subsidiaries.

To sum it up briefly, Hipgnosis Songs Fund, once an industry starlight, has faced challenges, including a rejected $440 million catalog sale proposal and a lawsuit by the now closed Hipgnosis Music Limited. The lawsuit reveals unsettling details about Hipgnosis' past, raising concerns about its organizational complexity. With approximately a dozen entities under the 'Hipgnosis' umbrella, including Hipgnosis Songs Fund, Hipgnosis Songs Management, and Hipgnosis Songs Capital, the web of companies has left observers and investors grappling with unavoidable red flags. The ongoing legal battles and intricate structures pose challenges to investor confidence, adding a layer of complexity to the unfolding story of Hipgnosis. Fun!

#4. Spotify isn’t profitable, but SoundCloud showed that it is

Great news, SoundCloud is poised to achieve annual profitability for the first time in 16 years! The company projects a positive EBITDA for 2023, forecasting annual revenues of $310 million, up 7.5% YoY. CEO Eliah Seton emphasizes the significance of this achievement, stating it reinforces their pursuit of the right strategy.

But looking at the leader of music streaming, Spotify recently signaled a shift to prioritize profitability over growth. SoundCloud attributes its profitability to a 30% YoY increase in fan subscription revenues and more efficient spending on marketing and overhead, including an 8% global headcount reduction. The move towards profitability aligns with a potential industry shift where investors value annual income alongside ambitious growth.

#5. A few trends for 2024, starting with the right mindset

In the ever-evolving landscape of music and arts, a notable shift toward a "direct mindset" is anticipated in 2024. This is the stance taken by Music X newsletter’s team, challenging the long-tail theory as tech democratizes creation but results in consolidation, particularly in major labels and publishing. The discontent with platforms and the desire for independence has led to a resurgence in direct sales, with platforms like Bandcamp and Shopify providing alternatives.

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