Fri 2 Feb 2024

In today's CMU Daily: Dodgy distributor 3tone has sent an email to customers covering up for the fact that it can no longer distribute music; Hipgnosis Song Management rejig sees Mercuriadis move from CEO role to Chair; YouTube hits 100 million premium subscribers

One Liners: Music Reports buys Blokur; Primary Wave partners with Nas Nuvens; Joeboy label; Armada signs Will Clarke; Bucks signs John Murphy; UMG rejig; Hjelmstedt out at Utopia; DEAG halts IPO; BRITs voting; new music from Don Toliver, Tones And I, Arya Starr, Blessed Madonna, Wes Nelson, Bombay Bicycle Club, Shaznay Lewis, Starsailor

Also today: House Of Lords committee publishes report on regulation of AI; AIF sounds alarm for festivals and calls for VAT reduction

Plus: CMU sits down with Sam Shemtob, director of FEAT, to discuss the organisation’s work across Europe to combat for-profit ticket touting

Dodgy distributor 3tone has lost its ability to distribute music

Bristol-based distributor 3tone - run by Dean Roberts and Christoffer Borud - has emailed customers to explain that “over the next few days we will be performing necessary maintenance across our network and platform” and that customers should expect “temporary outages” as the company works to “migrate data”.

However, CMU understands that the email is simply an attempt to cover up the fact that 3tone no longer has any ability to deliver or manage content on behalf of its label and artist customers. This comes after the company was terminated by its previous “backend” distribution partner, and lost a potential new partner with which it had started discussions

Without such a partner in place, the company - which has no distribution infrastructure itself - is unable to deliver music to streaming services such as Spotify and Apple Music. 

Assuming that is the case, this email is just the latest in a string of lies put out by Dean Roberts, the founder of 3tone.

Roberts has repeatedly lied to customers and to staff. Those lies have included promises that royalties would be paid, that salaries would be paid, and that investment had been secured by his business. He lied about his involvement with artists like Amy Winehouse and John Newman - lies which formed a key part of his narrative to engage both customers and staff at 3tone. And since CMU’s investigation was published, he’s lied to suppliers, staff and customers about 3tone’s ability to operate. 

After CMU’s exclusive investigation into 3tone showed that the company had left artists and staff unpaid for months, Newman tweeted saying that “Dean Roberts did not discover, manage or have any involvement in my career bar being a very disruptive tour manager that went on to steal from me”. Staff have still not been paid - and while there has been a small flurry of payments to some artists this week - there are still many who have not received the money they are owed. 

Sources told CMU some time ago that 3tone was “shopping around” to find a new backend distribution partner to allow it to continue to deliver content to Spotify, Apple Music and other streaming services - knowing that the distributor it was working with was going to terminate its contract. Those sources have also revealed that while 3tone had begun conversations with a new backend provider, that distributor was then alerted to 3tone’s track record. This has now resulted in that distribution partner pulling out of those negotiations.

As things currently stand, we understand that it’s highly unlikely 3tone has been able to integrate with a new distribution partner in the few days since the potential new provider pulling out, and is now unable to deliver content to streaming services. In addition, it’s likely that any tracks that had been delivered through 3tone will have been taken down at the point the previous distribution agreement was terminated. 

While many artists and labels had been able to remove their music from 3tone over the past few months in order to switch to another distributor, others had not - and CMU has been contacted since the new year by artists who have only become aware of problems at 3tone, having been directed to our coverage.

The fact that 3tone has been able to operate for so long, despite significant issues being raised early on by many people, is something that prompts a number of questions about the current way “third party distributors” - who do not have the ability to deliver content directly into music services - conduct themselves, and the standards their upstream partners should apply. 

That another distributor was close to entering into an agreement with a company with such a poor track record raises additional questions - and highlights the need for higher standards of due diligence undertaken by some service providers in the music industry.

The Royal Albert Hall // Programming Manager, Hire (London)

The Royal Albert Hall // Engagement Executive (London)

SJM Concerts // PR Coordinator (Manchester)

ICE // Netsuite (ERP), Functionality/System Tester (London)

AEG Presents // Marketing Manager (London)

AEG Presents // Touring Manager (London)

ATG // Senior Regional Programmer - Music & Comedy (London)

Ninja Tune // Product Manager (London/Hybrid)

ONE LINERS

Universal Music, Don Toliver, BRIT Awards + more

DEALS

Music rights administration firm Music Reports has acquired licensing and data platform Blokur. Commenting on the deal, Music Reports’ Vice President Michael Shanley says, “Blokur will help Music Reports accelerate our matching, registrations and reporting to enhance our industry-leading platform and surpass our customers’ expectations”.

Primary Wave Music has partnered with Brazilian music company Nas Nuvens Catalog. “The transaction shows not only the confidence Primary Wave has in Nas Nuvens Catalog and its team but also in Brazilian and Latin Music, its quality, and its potential to be appreciated worldwide regardless of language”, says Nas Nuvens CEO Liminha. 

Joeboy has partnered with Warner Music to launch his own record label Young Legend. "I've been blessed in my work so far and I want to give back to the artistic community by scouting, nurturing and promoting the next generation of talent”, says the Nigerian musician. “Music today can quickly connect with fans around the world, so it makes sense to work with a global partner that can help me build my artists' international careers”.

Armada Music has signed a new record deal with Will Clarke. “I’m at a pivotal moment as an artist where my writing and production is my priority and deepest passion, and I feel ready to take things to the next level”, he says. “With the Armada team behind me, who understand my sound and my vision, I know that my new music can reach its full potential”.

Bucks Music Group has signed film composer John Murphy. “I’ve known and worked with John for over 20 years and so I’m pleased for him to join us here”, says Bucks Music’s Howard Price. “John’s career arc is incredible, with many stories along the way. We will match his energy and creativity, working with and bringing new opportunities to his catalogue”.

APPOINTMENTS 

Universal Music has announced an executive restructure, which will see Interscope Geffen A&M’s John Janick and Republic’s Monte Lipman take broader control of the company’s US record labels. “John and Monte bring to UMG unique and complementary skills in how they lead their organisations and how they envision positioning them for success in the future”, says CEO Lucian Grainge in a memo to staff. “To accelerate those strategies and maximise their effect, today I am appointing Monte and John to lead a broader part of our US recorded music business”.

Utopia Music co-founder Mattias Hjelmstedt has resigned from the company’s board and stepped down from all other Utopia commitments.

LIVE BUSINESS 

Germany-based live music company DEAG - which, in the UK, owns Kilimanjaro, Belladrum, Gigantic and MyTicket.co.uk - has halted plans to return to the Frankfurt Stock Exchange in the first quarter of this year. Instead, the company says, it is “currently in advanced conversations with several acquisition targets in accordance with its growth strategy, particularly in the ticketing segment”.

AWARDS 

Public voting for the five genre categories at this year’s BRIT Awards is now open. This year the only way to vote is by commenting on or creating your own Instagram Reels. #engagement Find out more here. 

RELEASES

Don Toliver has released new single ‘Bandit’. 

Tones And I Is back with new single ‘Dreaming’. 

Ayra Starr has released new single ‘Commas’. 

The Blessed Madonna has released new track ‘Happier’ featuring Clementine Douglas. 

Wes Nelson has teamed up with Craig David for new single ‘Abracadabra’.

Bombay Bicycle Club have released new single ‘Willow’ featuring Lucy Rose. The band’s new EP ‘Fantasies’ is out on 23 Feb. 

Shaznay Lewis will release her first solo album for 20 years, ‘Pages’, on 17 May. Out now is new single ‘Kiss Of Life’. 

Starsailor have released new single ‘Dead On The Money’. Their new album ‘Where The Wild Things Grow’ is out on 22 Mar.

Merck Mercuriadis moves to Chair role at Hipgnosis Song Management amid war of words with Hipgnosis Songs Fund

Hipgnosis founder Merck Mercuriadis is moving from CEO to the role of Chair at the Hipgnosis Song Management company. The change in role comes amid, and may well have been motivated by, the very public war of words between HSM and the Hipgnosis Songs Fund - or SONG - the London Stock Exchange listed entity, also founded by Mercuriadis, which owns numerous music rights and is advised by HSM. 

According to an official statement, as HSM Chair, Mercuriadis will "continue to lead engagement with songwriters, artists and the music industry, generate opportunities to increase consumption and enhance the value of HSM’s client’s portfolios, lead acquisitions and advocate on behalf of songwriters, artists and HSM". 

That is a pretty big to-do list and, we are told, Mercuriadis will continue to devote the majority of his time to the company. As he becomes Chair, he will be replaced as CEO by Ben Katovsky, who joined HSM from BMG in 2022 and is currently COO.

Katovsky will "assume responsibility for executive management of the business, implementing HSM’s strategy to build on the company’s position as the premiere platform for acquiring and managing song assets. He will ensure HSM delivers a high quality, value adding service to HSM’s clients and their shareholders".

The building tensions between HSM and SONG over the last year have been very public. Investors in SONG initially became vocal around concerns about the fund’s share price. As part of a plan to boost the share price, HSM proposed selling a number of SONG's catalogues to Hipgnosis Song Capital, a separate entity also advised by HSM, which is majority owned by funds managed and/or advised by private equity giant Blackstone. 

That proposed deal proved controversial with SONG's investors, in part because HSM is also majority owned by Blackstone. Investors ultimately rejected the plan. The SONG board was then replaced and a strategic review of its operations, including its relationship with HSM, was announced. 

The new board of SONG has since publicly criticised HSM a number of times, including over its role in the proposed sale of catalogues to HSC and in advising SONG on the value of its assets. There is also a dispute over a “call option” in the deal between SONG and HSM, which means that - if SONG terminates its contract with HSM - then that company has the right to acquire the portfolio of music rights owned by the fund. 

It remains to be seen what the board of SONG makes of the change in roles for Mercuriadis and Katovsky. The official statement of the rejig also notes that, "as a matter of prudence, we have requested the board of Hipgnosis Songs Fund Ltd to approve the planned transition of Merck’s role".

AIF sounds alarm for VAT reduction on festival tickets with '5% For Festivals' campaign

The UK’s Association Of Independent Festivals launched a campaign called '5% For Festivals' at its Festival Congress in Bristol yesterday, urgently calling for a reduction in VAT on festival tickets. This move comes in the wake of a growing crisis in the UK festival sector, with numerous events facing cancellation due to rising economic pressures.

John Rostron, CEO of AIF, underscored the severity of the situation, stating, "We lost 36 festivals last year, and with six festivals having postponed activity in 2024 or closed the gates for good, we are on track to see well over double the number of casualties this year”. 

With AIF and other music industry groups having been calling for a cut to the VAT charged on tickets for some time, the new campaign aims to inform festival-goers about the challenges facing promoters and encourage them to lobby their MPs for a VAT reduction. 

Rostron also highlighted the resilience of festival promoters, who have absorbed increased costs due to the pandemic, Brexit, inflation and the energy crisis, without raising ticket prices. However, this has led to financial losses and the risk of more festival cancellations.

He added, “a reduction in VAT on festival tickets from 20% to 5% for three years is an evidence-based, simple, sensible remedy that would ease the financial burden on promoters enough for them to return to health. We need this action now”.

The '5% For Festivals' campaign includes a dedicated website offering insights into the promoter's struggles and resources for festival-goers to support the VAT reduction initiative.

Music industry celebrates YouTube passing 100 million premium subscribers 

YouTube now has more than 100 million paying subscribers across YouTube Music and YouTube Premium. 

It's a landmark that has been heralded by Universal Music, Warner Music, Kobalt, BMG, Believe, TuneCore, ONErpm, YG Entertainment, T-Series, Beggars, IMPALA and SACEM. I guess that proves that - just because you're enemy number one of the music industry one day - doesn't mean you can't be its best bud another day. News that might be of interest to, I don't know, maybe TikTok? 

"In 2015, many doubted a subscription model could thrive on YouTube", the company's Global Head Of Music Lyor Cohen declares in his latest blog post. "They said the market was crowded and our platform was too different. Today – 100 million subscribers later – our distinctiveness is precisely what drives our success and why I still see so much room for growth". 

The 100 million stat relates to people who have either signed up to YouTube's standalone music service or its wider premium product. Most people subscribe to YouTube Premium in order to access videos on the main YouTube platform without adverts. However, a YouTube Premium subscription also provides access to YouTube Music, although it's not clear how many subscribers utilise that access. The 100 million also includes those currently on a free trial. 

Elsewhere in his new blog post, Cohen lists the ways in which he reckons music on YouTube is distinct from other music streaming services. "YouTube Premium is the only service where social engagement, music streaming and all video formats converge seamlessly – all without interruption", he writes. 

“The YouTube Music app has become unrecognisable from its first launch, now seamlessly integrating music streaming with long-form video and short-form video”, he adds. “Connecting these experiences and innovating new ones are critical in making YouTube the best place to be a music fan". 

The official announcement of that 100 million subscriber landmark comes with words of praise and adoration from an assortment of music industry bigwigs. 

"There are limitless opportunities" if you "start from a foundation of respect for artists and songwriters", muses Universal chief Lucian Grainge. 

Warner Music boss - and former YouTube exec - Robert Kyncl chips in, "The fact that YouTube continues to go from strength to strength isn’t just good for them, it’s healthy for the entire music ecosystem".

"Hitting 100 million subscribers and continuing to build on it will further bolster the strong relationship between YouTube and the industry for years to come", reckons Kobalt EVP Global Digital Business Bob Bruderman. 

"YouTube Music is one of BMG’s most engaging and effective subscription partners", declares BMG CEO Thomas Coesfeld. “Congratulations to YouTube for this fantastic milestone!" says Believe founder Denis Ladegaillerie. 

And, in case you wondered, TuneCore CEO Andreea Gleeson and YG Entertainment CEO Min-Suk Yang are both "THRILLED" about the 100 million subscriber achievement. 

All of this is a far cry from the statements being put out by the music industry in the mid-2010s. Back then record labels, music publishers and collecting societies felt that YouTube and its owner Google was exploiting the copyright safe harbour to force them into unfair licensing deals that undervalued music and created a 'value gap' in the wider digital music market. 

Record industry veteran Cohen was hired in part to build some bridges between YouTube and an increasingly tetchy and vocal music community. Though when he wrote a blog post in his first year at the company, bigging up what YouTube had planned in music, the industry's response was pretty sceptical.

“Subscription revenue is still in its infancy”, Cohen wrote in August 2017, “yet it’s already reaping billions for the music industry. My time at YouTube has me convinced that advertising is another powerful source of growth for the industry. Combined with YouTube’s growing subscription service, they’ve now got two engines taking the industry to a more lucrative place than it’s ever been before”.

Responding, the Recording Industry Association Of America said that Cohen's optimism "is encouraging", but "we’ve heard pretty much the same claims and arguments from YouTube before. So while Lyor’s heart may be in the right place, the numbers and YouTube’s actions tell a different story”. The BPI added "there is little if any growth in advertising revenues from YouTube" and “YouTube isn’t helping to grow our subscriptions business, it’s undermining it". 

To be fair, this was before the surge in YouTube's advertising business. And the video site's initial dabblings with premium subscriptions were decidedly lacklustre. And YouTube never seemed to do much to drive users to the music service already operated by Google. 

Then YouTube really got behind its premium products and started selling significantly more advertising. This addressed the key concerns of the music industry and, more importantly, resulted in much more cash flowing from YouTube to the labels and publishers. 

Can TikTok - now at war with the biggest music rights company in the world - stage a similar turnaround in the next few years? We will see.

The Year Ahead: Sam Shemtob, Director of FEAT

Since the start of the year, CMU has been sitting down with key people from across the music industry to discuss their work, key trends and challenges, and what to expect in the year ahead.

Today, Sam Shemtob, Director of the Face-value European Alliance For Ticketing - a coalition of companies from across the European live sector that seeks to encourage face-value ticket resale - discusses the organisation’s work across Europe to combat for-profit ticket touting. 

Lords committee calls on government to clarify copyright obligations of AI companies 

A committee in the House Of Lords has said that AI companies should get permission before using existing content to train generative AI models. And the UK government should, it says, act now to decide if laws need to be updated to provide adequate protection for copyright owners, rather than waiting for the outcome of complicated legal disputes.

AI "may offer immense value to society", the Lords Communications And Digital Committee writes, "but that does not warrant the violation of copyright law or its underpinning principles. We do not believe it is fair for tech firms to use rightsholder data for commercial purposes without permission or compensation, and to gain vast financial rewards in the process". 

The copyright industries - including the music industry - are adamant that AI companies must get permission before training models with existing content. However, many in the tech sector argue that AI training is covered by copyright exceptions in at least some countries. 

In their report, the Lords write that, while the application of copyright law in the context of AI may be complex, "the principles remain clear. The point of copyright is to reward creators for their efforts, prevent others from using works without permission and incentivise innovation. The current legal framework is failing to ensure these outcomes occur and the government has a duty to act. It cannot sit on its hands for the next decade until sufficient case law has emerged". 

The copyright obligations of AI companies under current law are being tested via a number of lawsuits filed with the courts, mainly in the US, although in the UK too. However, the Lords say they are "not convinced that waiting for the courts to provide clarity is practical", because those legal battles are likely to drag on for years and "in the meantime rightsholders would lose out and contested business practices would become normalised". 

Last year, the UK government proposed introducing a new data mining exception into UK law that would benefit AI companies. That plan, unsurprisingly, resulted in a major backlash from the copyright industries and, as a result, was dropped. Ministers then said they would bring together copyright owners and tech companies to agree a code of practice, with the aim of having something in place by the end of 2023. Work on the code now seems to have stalled. 

Although the big data mining exception that was proposed is definitely off the table, the tech sector continues to lobby hard on this issue, and some in the copyright industries now worry that an albeit narrower exception may as yet be put forward by ministers as a compromise. Keen to stop that from happening, copyright owners will be pleased at the boldness of the committee's report regarding the need for permission and compensation. 

The Lords conclude by saying that government "should publish its view on whether copyright law provides sufficient protections to rightsholders" given the recent advancements in AI. "If this identifies major uncertainty", they add, "the government should set out options for updating legislation to ensure copyright principles remain future proof and technologically neutral".

AND FINALLY...

Swift Swiftie breaks record for shouting out song titles really fast

CMU's Andy Malt takes a look at this week’s funniest, weirdest or just plain ridiculous music news stories.

This week: A Taylor Swift fan has broken the record for identifying her songs only by excerpts of their lyrics. In a minute, Bilal Ilyas Jhandi named more than 30 Swift tracks just by having lines from them read out to him, earning him the title of Swiftest Swiftie

How many Taylor Swift songs can you name? 22? Or are you staring into a blank space? Well, a man named Bilal Ilyas Jhandi has just broken the Guinness world record for naming the most Taylor Swift songs in a minute. He got 34 in total. Also, he wasn’t just naming the songs randomly, he had to identify each song from a lyric. 

I don’t know if you’ve ever sat down and watched a video of a man in a blindfold shouting out the names of Taylor Swift songs at a rate of more than one every two seconds. It’s a strangely unfulfilling experience. Even though what happens in the video is apparently a great human achievement. It is, to use the Guinness World Records tagline, “officially amazing”.

👉 Watch the video of the world record and then click through to read this week's And Finally in full...