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Today's music business news

TOP STORY

Spotify to make nearly one in five employees redundant as debt fears loom and Citi analysts raise red flags

Spotify this morning announced it is making about 17% of its global workforce redundant. The dramatic downsizing - which will affect around 1500 employees - is, says CEO Daniel Ek, part of a bid to build "a stronger, more efficient Spotify for the future".

"I recognise this will impact a number of individuals who have made valuable contributions”, Ek writes in a memo to his staff. “To be blunt, many smart, talented and hard-working people will be departing us". But the cutbacks are necessary, he adds, because "economic growth has slowed dramatically and capital has become more expensive".

That cost of capital is likely to be a significant issue for Spotify. Like several other major tech companies, it used surging equity markets in 2021 to raise debt financing at 0% interest. With a significantly different economic climate today, and Spotify's stock being downgraded by Citi last week, the likelihood of it being able to secure debt at those terms again is highly unlikely. Which means it may well need to pay a premium over current interest rates.

Although the company declared a small profit in its last quarterly earnings report, it also highlighted total losses of €462 million in the nine months to 30 Sep 2023, and lost €231 million in 2022 and €34 million in 2021. Unless it can find a clear track to profitably - including by cutting costs - it will have a further debt requirement and that debt will be expensive.

Noting those more favourable market conditions in 2020 and 2021, Ek admits that “we took advantage of the opportunity presented by lower cost capital and invested significantly in team expansion, content enhancement, marketing and new verticals". That resulted, he says, in a Spotify that was more resourceful but less efficient. Now it needs to be both.

It's the third round of redundancies at Spotify this year. In January, as most tech companies went through a period of downsizing, it announced that it would cut about 6% of its workforce. Then, in June, it confirmed a restructuring of its podcasting business which cut a further 2%.

Spotify pushed heavily into podcasting in 2019 - and subsequently announced a move into audiobooks as well - with ambitions to become an audio rather than music company.

It was hoped that those other content types would ultimately boost Spotify's profit margin beyond what was possible in music. However, in the short term that diversification was very expensive, with the exclusivity deal with Joe Rogan's podcast alone reportedly costing more than $200 million.

While Spotify has long prioritised growth over profitability, it has come under increased pressure from investors to demonstrate that it has a solid strategy for becoming a profitable business.

That pressure has only grown amid concerns in the investor community about Spotify's ability to maintain current growth rates and to increase average revenue per user. Analysts at Citi cited those concerns when they downgraded Spotify stock from 'buy' to 'neutral' last week.

Although still considerably below its 2021 peak, Spotify's share price has been improving this year, but those mounting investor concerns could impact on that in 2024. Ek himself has sold Spotify stock twice this year, most recently on 25 Oct when he sold 400,000 shares for $64,208,000. This followed an earlier sale of 675,000 shares on 27 Jul for $100,001,250.

In addition to investor pressure, Spotify is also facing significant competition from Apple and Amazon in big markets like the US, and TikTok's move into music streaming in emerging markets. Meanwhile, at the same time, because it is still the market leader, it gets much more public criticism than its competitors from within the music community.

Some of that is really criticism of the streaming business model more generally framed as a Spotify problem. Though some of the criticism is more Spotify specific and more justified, such as when the streaming firm splashes $310 million on a sponsorship deal with FC Barcelona, or when it unilaterally decides to implement a threshold so to divert money away from grassroots artists to the superstars and major record companies.

Elsewhere in Ek's memo, he explains the process for making so many people redundant and the support the company will offer affected employees. He also admits that the downsizing will impact on those who remain, because "a reduction of this size will make it necessary to change the way we work".

He then concludes: "Today is a difficult but important day for the company. To be very clear, my commitment to our mission and belief in our ability to achieve it has never been stronger. Just as 2023 marked a new chapter for us, so will 2024 as we build an even stronger Spotify".

ONE LINERS

One Liners: Flo Milli, Tencent, Eurosonic + more

DEALS

Death metal band Pathology have signed a new deal with Agonia Records to release their first album since 2021 next year. "We are excited to announce our collaboration with Agonia Records for the release of our twelfth studio album", say the band. "The label hosts an array of immensely talented and heavy bands and we're honoured to join their esteemed roster. Our latest album is fully complete and we can't wait to unleash this powerful creation to our fans”.

Live event security company Controlled Solutions Group is under new leadership following a management buyout by CEO Jeff Lee and COO Chris Cowell. “This MBO heralds a new era for the business”, says Lee. “We are delighted to have the opportunity to build on CSG’s fantastic legacy and bring our vision for the next chapter to life”.

APPOINTMENTS

Claudia Winkleman has announced that she will step down from her BBC Radio 2 show on Saturday mornings in March next year. She will be replaced by Romesh Ranganathan. “It’s going to be fun”, he says. “Probably”.

Lixue Shi has stepped down as Vice President of Tencent Music Entertainment. “On behalf of the company, we would like to express our sincere appreciation to Lixue for his contributions to our achievements throughout his tenure”, says Executive Chair Cussion Pang. “His dedicated efforts in advancing the development of Kuwo Music and long-form audio business have greatly enhanced our ability to offer users an enriched user experience. We are grateful for Lixue’s hard work and wish him the best in his future endeavours”.

Music data platform Musixmatch has appointed Rio Caraeff as Chief Business Officer. “Rio is deeply passionate about the entire music ecosystem and his energy and excitement about his work has enabled his success at some of the most innovative and influential companies in our industry”, says CEO Max Ciociola.

OutdoorArtsUK, which stages outdoor performances that feature theatre, dance, music and circus at festivals and other events, has announced Sho Shibata as its new Director. He will officially take up the role in February.

 “Outdoor Arts has the power to bring diverse communities together and inspire them with joy and wonder”, he says. “I think the sector is growing in importance right now, when communities are expecting to face multiple challenges for some time yet. I am determined to help the sector carry on delivering fantastic work and play their part in lifting the spirits of communities everywhere”.

LIVE BUSINESS

The team behind Norwich-based multi-venue festival Wild Paths have announced the launch of a new festival next summer at the Raynham Estate in North Norfolk called Wild Fields. Wild Paths director Ben Street will work with Adam Driscoll - CEO of ATC Group and director of events company Vision Nine - on developing the new event, the first edition of which will take place from 15-18 Aug 2024.

EVENTS

The Eurosonic Norderslaag music conference in the Netherlands has announced keynote speakers for its 2024 edition next month. They are: ATM Artists founder and former Chief Catalogue Officer at Hipgnosis Songs Fund, Amy Thomson; outgoing Mojo Concerts CEO John Mulder; and Managing Director of MIDiA Research, Mark Mulligan.

RELEASES

Flo Milli has released new single ‘Never Lose Me’.

Empress Of has released new single ‘Femenine’.

EDUCATION

Music stars back Andrew Lloyd Webber in call for more music education funding

Dua Lipa, Liam Gallagher, Ed Sheeran, and members of Coldplay and Royal Blood were among those to co-sign a letter from Andrew Lloyd Webber last week calling for more government funding for music activities in disadvantaged schools around the UK.

In letters to both current Prime Minister Rishi Sunak and Labour Party leader Keir Starmer, Lloyd Webber wrote: "The transformative power of music for children is universally recognised. From improved cognitive development, communication skills and problem solving, to greater confidence, self-esteem and social development, music has a profound impact on young people's lives".

"Most pertinently", he added, "in a world that feels more divided than at any point in my lifetime, and with conflict raging around the world with incalculable consequences, music has a unique ability to unite. It is a universal language that can transcend borders, cultures and differences, and bring people together".

And yet, he added, funding cuts in recent years mean "music education in schools has been scaled back at a time when we have never needed it more".

The letter was principally focused on the work of one organisation that is seeking to ensure children in disadvantaged schools have the opportunity to learn to play a musical instrument, that being the the Music In Secondary Schools Trust. It is now supporting 20,000 pupils between the ages of eleven and fourteen in schools across the country, he wrote.

"Today", he went on, "we are asking the government, and all governments of the future, to scale the proven work of MISST, targeting the most disadvantaged schools in the most disadvantaged areas - and starting with the 80 disadvantaged schools on the Trust's waiting list”.

He then concluded: "Now, more than ever, we must reverse the tide on musical education and recognise the transformational impact it can have for our children, schools, communities and society at large. Music is a source of hope, opportunity and love; we implore you to embrace it".

LABELS & PUBLISHING

CISAC President Björn Ulvaeus calls on EU to keep clear transparency obligations in AI Act

CISAC is the latest music industry organisation to urge European lawmakers to ensure that clear transparency obligations remain in the final version of the European Union's AI Act. The call came on Friday ahead of crucial talks in Brussels this week.

"We are writing on behalf of more than five million creators of diverse repertoires and from different regions across the world to ask the European Union to ensure proper transparency principles are laid down in the EU AI Act", it said in a statement. CISAC’s membership includes all the song right collecting societies, plus societies representing literary and artistic works.

The EU's AI legislation is not specifically focused on generative AI - the kind of AI of most interest to the music industry - but it does include some regulation of it. In particular, transparency obligations for AI companies, something the music industry has been demanding.

The act is in the very final stage of negotiation, where the European Commission, European Parliament and EU Council try to agree on a final text.

Some EU countries are seeking to relax the rules at this final stage following fierce lobbying from the tech sector. The music industry is keen to ensure that that doesn’t happen and that the transparency obligations remain.

CISAC President Björn Ulvaeus, of Abba fame, added on Friday: "Transparency obligations are now the focus of intense discussion of the draft EU regulation. I hope it is understood what is at stake here, and that those countries with the strongest and proudest cultural traditions have the greatest interest in protecting their own creators and culture sectors in the AI-impacted future".

"I hope that those countries will understand", he concluded, "that transparency rules in the AI age will help them protect their own songwriters, artists and other creators and can be adopted without fear of stifling technology or innovation".

Last month a group of organisations representing creators from multiple art forms published a similar statement calling for clear transparency obligations to remain in the EU AI Act.

MEDIA

Bauer Media completes iRadio acquisition, unveils new corporate brand

Bauer Media has completed its acquisition of iRadio, having announced a deal to buy the youth-centric Irish radio station back in August.

Confirming the deal has now been completed, President of Bauer Media Audio, Vivian Mohr, says: “The acquisition of this top-notch business marks our expansion in Ireland and we eagerly anticipate the possibilities it presents to strengthen our connections with both listeners and commercial partners across broadcast and digital audio platforms".

It's the media firm's third acquisition in Ireland in recent years. It entered the market by buying Communicorp Group in 2021 and then acquired Cork-based Red FM last year.

Bauer Media, by the way, is another company that has caught the rebrand bug. It unveiled its new logo last week alongside the customary nonsense statement from CEO Yvonne Bauer.

“We’re extremely proud to reveal our new branding which highlights our transformation journey so far, encouraging us to continue our efforts while celebrating our heritage of almost 150 years", she says of the company's decision to go with a green play button and purple letters.

"We are driven to unleash the full potential of our business, our brands and our people", she adds. "The new corporate brand will raise our corporate profile and improve our brand credibility with a shared sense of purpose and values". Yeah, maybe.

LIVE

Kiss preview new avatar show at final human performance

Kiss played the final show of their farewell tour at New York’s Madison Square Garden on Saturday. During the show’s encore they also revealed the next evolution of the band - virtual avatars, of course. The digitised version of the group performed ‘God Gave Rock And Roll To You’, giving fans a preview of a full show that is currently in development.

The animated version of Kiss was created by the George Lucas-founded Industrial Light & Magic and Sweden-based Pophouse Entertainment Group. The two companies are also responsible for the ‘Abba Voyage’ show in London.

Creative Director of the project, Thierry Coup, says: “Collaborating with Pophouse for the Kiss avatar project aligns with my goal of redefining entertainment. Inspired by experiences like ‘Abba Voyage’ and a transformative Kiss concert, this collaboration merges professional expertise with personal passions, offering an exciting opportunity to explore new avenues in digital music experiences”.

As for what you can expect from the show, he adds: “It will be a groundbreaking show that blends the physical and digital worlds. Viewers could be able to take part in exclusive behind-the-scenes access, a time-traveling journey to Kiss’s first show, and the ability to influence the setlist; the possibilities are endless”.

“This immersive experience transcends traditional concert viewing”, he concludes, “creating a vivid sense of presence and participation, deepening the connection with the legendary music and spirit of Kiss”.

Bassist Gene Simmons recently said that he would be “totally open” for Kiss to continue touring with an entirely new line-up of younger musicians. On the plus side, that would provide an option for people who can’t afford what are likely to be very expensive tickets for the avatar show. On the downside, you have to feed real live musicians.

AWARDS

BBC Sound Of 2024 longlist revealed

The BBC’s Sound Of 2024 longlist has been revealed, giving us the ten new artists that its panel of pundits reckon will dominate our listening next year. They are Ayra Starr, Caity Baser, CMAT, Elmiene, Kenya Grace, The Last Dinner Party, Olivia Dean, Peggy Gou, Sekou and Tyla.

All three artists who appeared on last week’s BRITs Rising Star shortlist - Baser, The Last Dinner Party and Sekou - are represented. So that’s nice. But will any or all of them make the top five or even win it? Well, you’ll just have to wait until January to find out.

The five finalists will be announced in reverse order on BBC Radio 1 starting on 1 Jan, with the overall winner unveiled on 5 Jan. Then, on 8 Jan, all ten artists will perform live at Maida Vale Studios in London for a special show to be broadcast on Radio 1.

If you want to be there, tickets will be given out by ballot and you can put your name forward to receive a pair here.

AND FINALLY

Drake to open unrideable art theme park

Drake is set to open his own theme park in LA this winter. Because that’s the sort of thing Drake can do. Although, don’t expect attractions like a ‘Hotline Bling’ strength test. The rapper is actually reviving a long lost collection of rides designed by artists such as Salvador Dali, Keith Haring and Jean-Michel Basquiat.

Held in storage for 25 years, Drake’s entertainment company DreamCrew bought the collection - known as Luna Luna - last year for a reported $100 million.

“When Luna Luna first caught our attention, we knew we needed to be a driving force behind its resurrection”, says DreamCrew’s Anthony Gonzales in a statement to the Los Angeles Times.

“Not only was this a once in a lifetime opportunity to rediscover a lost history and share the story with the world, but also gave us the ability to work with the most talented partners recreating the original vision, which still held so much untapped potential”.

The park was originally put together by Austrian artist André Heller and displayed in Hamburg, Germany in 1987. It was then scheduled to be shown in San Diego, but the plans were cancelled and the entire thing ended up in storage in Texas until Drake and his company stepped in.

“I dreamt up Luna Luna with the determination that art should come in unconventional guises and be brought to those who might not ordinarily seek it out in more predictable settings”, Heller says of the original motivation for the project.

The exact opening date is yet to be announced, but it will be in the coming weeks, with the initial return of the park to run through the spring. Don’t get excited about taking a spin on the rides through - organisers note that for the most part they do not meet modern safety standards and so you’ll only be able to look at them.