The music business all over the world has been growing by leaps and bounds. The exciting year of 2018 saw major businesses in the music industry making some bold moves.
There have been high and low points throughout the year, however, the industry at large has made some progressive gestures which all hope will only benefit the creative industry. Picking the big news from 2018, we’ve seen streaming platforms going public and listing themselves on the New York Stock Exchange, Apple making a debut in the world of music publishing, Music Modernization Act seeing the light of the day and more such moves for the advancement of the industry as a whole.
For a quick round-up of the eventful year, Music Plus has assembled the top international business moves by the big wigs in the world of music.
Streaming giants debut on the New York Stock Exchange (NYSE)
Spotify filed its strategies to go public on the New York Stock Exchange in 2018. Spotify will be offering a direct listing which means that its shares can be operated on the open market sooner with a more predictable IPO, as Spotify doesn’t intend to raise a large amount of capital with its IPO. According to CNBC, the price of Spotify shares traded on private markets indicate the company could be worth as much as $23 billion. The music streaming giant claimed that it has paid more than $9.7 billion in royalties to artists, music labels and publishers since it launched in 2006. The streaming giant had 71 million paying subscribers and 159 million monthly active listeners as of December 2017.
Also, going public was China’s Tencent Music which filed a much-anticipated request to list its shares in the US. According to an F-1 filing uploaded to the Securities and Exchange Commission the music arm of Chinese tech giant Tencent plans to raise as much as $1 billion, in what could be one of the largest U.S. IPO’s by a Chinese company since Alibaba raised over $20 billion in 2014. Tencent says its services have more than 800 million users, including 23.3 million subscribers who pay to listen to its music library. It is also profitable, having earned $199 million on revenue of $1.66 billion last year.
Apple Music ventured into music publishing
The music and video streaming service, Apple Music expanded into publishing. Opening up to all sorts of possibilities for the future, this would make it less demanding for Apple Music to licence music. It could similarly make a channel for the organisation to establish and coordinate development with new artists. In order to ease the associations with music distributors, Apple has stepped in another music distributing division that will be driven and long-lasting. The new music publishing team at Apple will likely have sub-divisions dedicated to operations, commercial, publisher relations and A&R.
US President Donald Trump sanctions Music Modernization Act into law
The Music Modernisation Act received the signature of US President Donald Trump on 11th October, 2018 which makes it the law of the land. The reformatory bill, supported by labels, musicians and politicians, was unanimously voted through both the US House of Representatives and the Senate, before President Trump signed it. The journey of the 185-page bill into an act was a rather long one starting from the first time it was introduced in the House in December 2017.
The landmark bill is a reformation of Section 115 of the US Copyright Act which will make it relevant in the streaming era. The bill proposed streamlining the music licensing process which will make it easier for copyright owners to receive compensation whenever their music is played online. In the wake of which, the mechanical licensing created by the Mechanical Licensing Collective (MLC) will offer a blanket license to digital streaming platforms that’ll aid in better payments to songwriters and copyright owners. The cost of creating and maintaining a database will be paid for by digital streaming services such Spotify, Apple Music and others.
With Warner Music Group, Facebook has now signed content deals with all three major labels
Facebook signed a wide-ranging licensing deal that covers all of Warner Music’s recorded and published music catalogues in 2018. Music from Warner Music Group can be used in social experiences on Facebook, Instagram, Messenger and Occulus.
Facebook’s agreement with the giant label will allow both Facebook and Instagram users to post videos or send messages with music by artists who are signed to Warner Music Group. Their striking roster includes such artists as Ed Sheeran, Gorillaz and Cardi B.
The agreement trails a few months after Facebook struck a similar deal with the Universal Music Group (UMG), with the agreement seeing UMG license its music and publishing catalogues for video on Facebook and its affiliated platforms. Facebook also recently agreed to a similar deal with Sony/ATV, one of the world’s biggest music publishers.
SiriusXM acquires Pandora, creating world’s largest audio entertainment company
SiriusXM, which previously invested $480 million in the Pandora, has acquired the music streaming service in an all-stock transaction valued at approximately $3.5 billion.
The transaction has been unanimously approved by both the independent directors of Pandora and by the board of directors of SiriusXM. The transaction is expected to close in the first quarter of 2019. This strategic deal builds on SiriusXM’s position as the leader in subscription radio and a critically-acclaimed curator of exclusive audio programming with the addition of the largest U.S. audio streaming platform. Pandora’s influential music platform will enable SiriusXM to expressively expand its presence beyond cars into home and other mobile areas.
EU Parliament adopted new copyright directive which focuses on Article 11 & 13
While the new EU Copyright Directive which intends to update copyright in the ‘Digital Single Market’ across the EU has been pending for about 2 years now, just last July it seemed it would never pass. However, on 12th September, the EU Parliament adopted the new (amended) Directive with a majority of votes cast in favour of the Directive signalling to the rest of the world that the EU has decided to prioritise copyrights and remuneration to artistes, creators and content businesses. Most of the discussion and criticism around the directive focused on two Articles namely Articles 11 and 13.
Article 11 which has also been derisively called the ‘link tax’ will require technology platforms like Google to pay news publishers for displaying or linking to news snippets. This has been a long-standing demand by the news publishers. Opponents of the Directive have argued that the Directive will have a chilling effect on small startups, arguments interestingly amplified by tech companies like Google. Artists like US based musician and music business professor David Lowery famously uncovered and called out ‘astroturfing’ campaigns which employed bots to send messages and place robocalls to EU MPs opposing the change prior to the vote.
Article 13 also derisively referred to as the “upload filter” positively impacts artistes and music businesses as well as the broadcast and other content sectors. This change will mean that technology platforms will have to take steps by installing ‘content filters’ to prevent users from uploading infringing content.