In today's CMU Daily: SoundCloud mulls sale; New York Times lawsuit slams OpenAI; Lythgoe out after sexual assault allegations; HMV might grow number of stores.

CMU's virtual masterclass Music + AI In 2024 takes place on Tuesday 20 Feb. Attendees can access the session live on Zoom and then on-demand via the CMU learning platform. Click here for information on all of the upcoming CMU online masterclasses and to book your place. 

SoundCloud private equity owners mulling $1 billion sale

The current owners of SoundCloud are reportedly preparing to sell the company in a deal that could top $1 billion. That is according to sources who have spoken to Sky News.

According to those sources, Raine Group and Temasek Holdings have started talks with various investment banks about them working on a possible sale. Though any actual sales process isn't likely to get underway for at least a few months.

Raine Group and Temasek Holdings - the latter the Singaporean state investment fund - basically rescued SoundCloud when it was on the brink of collapse back in 2017.

Having originally launched to provide hosting and other services to independent creators, SoundCloud also became a licensed subscription streaming service in the mid-2010s. That was mainly to placate a music industry that had become increasingly tetchy about the amount of unlicensed music being uploaded by users to the SoundCloud platform.

By becoming a licensed subscription service, SoundCloud could provide record labels and music publishers with a new revenue stream. However, running a licensed music service is a risky business, and by 2017 SoundCloud seemed to be running out of cash, resulting in significant job losses.

The cash injection from Raine Group and Temasek Holdings was accompanied by a change in senior management, who subsequently began putting the focus of the business back on providing services for independent creators, although with the subscription streaming service still operating.

SoundCloud has enjoyed some success in growing that creator services business, although there were still financial challenges to deal with. In August 2022 it cut its workforce by about 20%, with another round of downsizing following in May 2023, impacting approximately 8% of employees.

When confirming those cutbacks to staff, CEO Eliah Seton said that the job cuts were necessary to “ensure the health of our business and get SoundCloud to profitability this year”.

That seemed to work, with the company reportedly making a small profit last year for the first time in its sixteen year history. With a slimmed down business that may have a track to onward profitability and growth, it would not be a surprise if Raine Group and Temasek Holdings feel the time is now right to recoup their investment via a sale after holding the company for six years.

Assuming a sale does indeed go ahead, it will be interesting to see who ends up owning SoundCloud in the future - and what that means for the future focus of the platform. With a billion dollar price tag for the company, the list of potential acquirers may be somewhat limited.

At the time of the 2017 investment, Axios - citing a circular sent to existing shareholders - said that the new investment totalled “$169.5 million at a $150 million pre-money enterprise valuation”. In February 2020, Sirius XM pumped another $75 million into the company, taking a minority stake.

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ONE LINERS

Ed Sheeran, Record Store Day, The Last Dinner Party + more

DEALS

Universal Music has acquired Oriental Star Agencies, the Birmingham-based label specialising in South Asian music. The major label said that the deal was "another demonstration of UMG’s strategy to accelerate its growth in high potential music markets around the world".

Universal Music's Virgin Music Group has announced a deal with Saban Music Latin. Under the deal, Virgin will both acquire the Latin-focused label’s catalogue and "release future albums by selected Saban Music Latin's artists". The catalogue acquisition is interesting given Virgin is Universal's artist and label services division, rather than being a frontline label.

APPOINTMENTS

Ticketing firm Dice has appointed Piper McCoy as VP Communications. She joins from Buzzfeed, where she held the same title.

EVENTS

This year’s Record Store Day will take place on 20 Apr, it has been announced.

ARTIST NEWS

Hey, remember when you were a teenager and you dreamed of playing guitar in The Smashing Pumpkins? Well, now you can! It will be The Smashing Pumpkins in 2024, not The Smashing Pumpkins in 1995, but beggars can’t be choosers. All you need do is respond to this online ad for a replacement for Jeff Schroeder, who left the group in October after fifteen years.

RELEASES

Liam Gallagher and John Squire have released ‘Just Another Rainbow’, the first track from their upcoming collaborative album, details of which are yet to be announced. “To me the most obvious take on ‘Just Another Rainbow’ is that it's about disappointment, and the sentiment is that you never get what you really want”, says Squire. “It's also one of the most uplifting tracks we’ve made together, which is weird”.

Green Day have released new single ‘One Eyed Bastard’. Their new album ‘Saviors’ is out on 19 Jan.

Bring Me The Horizon have released new single ‘Kool-Aid’.

Cast have released new single ‘Far Away’. New album ‘Love Is The Call’ is out on 16 Feb.

Mykki Blanco provides vocals on new Astrit Ismaili track ‘Miss Kosovo’. Ismaili’s new album ‘The First Flower’ is out on 23 Feb.

Bob Vylan have released new single ‘Hunger Games’. Their new album ‘Humble The Sun’ is out on 5 Apr.

Mall Girl are back with new single ‘Emo Shred’. Their new album ‘Pure Love’ is out on 26 Jan.

The Miserable Rich have released a new double A-side single featuring the songs ‘Quietly’ and ‘We All Know’. Their first album in over thirteen years, ‘Overcome’, is out on 2 Feb.

Yasosobi have released new single ‘Heart Beat’.

LuLa of recently disbanded J-pop duo FEMM has released her first solo single ‘Butterfly To The Moon’.

GIGS & TOURS

Rage Against The Machine have officially retired from touring, according to drummer Brad Wilk. The band postponed a reunion tour in 2020 due to COVID. They managed to play a handful of shows in 2022 before frontman Zach de la Rocha tore his Achilles tendon, forcing another postponement and now, seemingly, full cancellation.

AWARDS

Ed Sheeran, Max Martin and Foy Vance have won this year’s Emmy for Outstanding Music And Lyrics for the song ‘A Beautiful Game’, which they wrote for the third series of ‘Ted Lasso’.

The Last Dinner Party have been named winners of this year’s BBC Sound Of 2024 poll. So get ready to be listening to them pretty much constantly for the next twelve months, I guess. “We are overjoyed to have won BBC Radio 1’s Sound Of Award for 2024”, say they. “We predict amazing things happening in music this year and it is truly an honour to even be a part of it”.

New York Times journalist slams OpenAI as "no different than any other thief" in latest copyright lawsuit

Two American journalists have filed the latest lawsuit accusing OpenAI of copyright infringement for training its ChatGPT model with copyright protected works without getting permission. Their litigation follows the filing of a similar lawsuit by the publisher of the New York Times over the Christmas break.

Nicholas A Basbanes and Nicholas Gage, the latter of whom previously wrote for the New York Times, say that OpenAI and its backer Microsoft "threaten the very existence of writers because, without permission or payment, defendants copied plaintiffs’ work to build a massive commercial enterprise that is now valued at billions of dollars".

Their lawsuit - which seeks class action status - adds that, given the investment raised by and current valuations of companies like OpenAI, it is "absurd" to suggest that getting licences from copyright owners for training AI models would be "cost prohibitive" and therefore "preclude the development of this nascent industry".

The AI company could have explored profit sharing licensing deals to reduce its upfront costs, they add, "but instead defendants just decided to steal. They’re no different than any other thief".

Copyright industries, including the music industry, are adamant that AI companies must seek permission from copyright owners before using existing content for training their generative AI models. Most AI companies, however, argue that such use of content constitutes 'fair use' under American law, meaning permission is not required.

There are now numerous lawsuits working their way through the US courts that will put that argument to the test. Only one of those is directly music related, with a group of music publishers suing Anthropic. However, given the potential impact of the AI companies’ fair use defence, all the cases are important to all the copyright industries.

In its lawsuit against OpenAI, filed late last month, the New York Times stated: "Independent journalism is vital to our democracy. Since our nation’s founding, strong copyright protection has empowered those who gather and report news to secure the fruits of their labour and investment”.

However, it went on, “defendants have refused to recognise this protection", adding: "Because the outputs of defendants’ GenAI models compete with and closely mimic the inputs used to train them, copying Times works for that purpose is not fair use".

In a recent blog post, renowned intellectual property lawyer Kate Downing says that the NYT case against Open AI seems particularly strong. "The complaint includes multiple extremely clear-cut examples of [OpenAI's models] spitting out The Times' content nearly verbatim", she notes.

"Other plaintiffs also weren’t able to argue that their specific content, out of the trillions of pieces of training data in the datasets, was particularly important for creating quality AIs", she goes on. "Here, The Times convincingly argues that its content was extremely valuable for training the AIs, both because of the quantity involved as well as the fact that the training process involved instructing the AI to prioritise The Times’s content".

She also adds: “The other really interesting thing about this complaint is the extent to which it describes the business of The Times – how much work the journalists put in to create the articles, the physical risks they take during reporting, the value of good journalism in general, and The Times’s struggle with adjusting to an online world”.

CMU GUIDE: AI + MUSIC

Artificial intelligence + the music business: CMU's guide to (nearly) everything that mattered in 2023

There was no shortage of news about AI in CMU in 2023. 

With AI technologies getting ever more sophisticated, with more tools to employ and opportunities to pursue, and with many of the important legal questions yet to be answered, it's important to understand what happened with AI and music in 2023 to be fully prepared for 2024. 

As with society at large, artificial intelligence became a much bigger talking point within the music industry during 2023, as music creators and music companies explored how AI can enhance their work and enable new creative and commercial opportunities.

Of course, the recent attention is simply the latest chapter in the ongoing story of AI. Artificial intelligence technology has been in development for decades and the impact of AI on the music industry has been discussed in some quarters for years. 

Nevertheless, AI is now much more in the public consciousness, partly because the sophistication of AI is increasing fast, and partly because lawmakers are now giving much more serious consideration to how they should regulate it. 

With increased interest in AI - and increased access to AI platforms and products - 2023 has seen many music-makers and music companies explore how generative AI can be used as part of the music creation process. This includes what possible new products and experiences AI can facilitate; and to what extent the AI models that generate music from scratch are a threat or an opportunity for the music industry.

There was a lot of discussion in 2023 within the music community about how AI will impact on music creation, music marketing, and the music business more generally.

There are clearly opportunities created by AI, and many ways that AI technologies will enhance the business.

An increasing number of music creators and music companies are exploring and identifying way to capitalise on those opportunities, and figuring out which AI products and services may offer ways to enhance their work.

Read CMU's (very) deep dive guide to the deals, disputes and debates, lawsuits and lobbying, and innovation and exploration that informed the conversation.

Lythgoe out at ‘So You Think You Can Dance’ after Paula Abdul sexual assault allegations

TV executive and talent show judge Nigel Lythgoe has announced he won't appear on the judging panel for the next series of 'So You Think You Can Dance' in the US after he was accused of sexual assault in a new lawsuit filed by Paula Abdul.

He said in a statement: "I have informed the producers of 'So You Think You Can Dance' of my decision to step back from participating in this year's series. I did so with a heavy heart but entirely voluntarily because this great programme has always been about dance and dancers, and that's where its focus needs to remain. In the meantime, I am dedicating myself to clearing my name and restoring my reputation".

After appearing as the obligatory nasty judge on the 'Popstars' talent show in the UK back in 2001, long-time TV exec Lythgoe formed an alliance with Simon Fuller's 19 Entertainment, working as an executive producer on 'American Idol' and the US version of 'So You Think You Can Dance', on which he was also a judge.

Abdul had stints as a judge on both programmes. And in a lawsuit filed late last month, she alleges that Lythgoe sexually assaulted her in the early 2000s while she worked on 'Idol' and again in the mid-2010s when she was a judge on the dancing talent show.

According to the New York Times, Abdul alleges that, during one of the early seasons of 'Idol', Lythgoe "shoved her against the wall of a hotel elevator, grabbed her genitals and breasts and began 'shoving his tongue down her throat'". She tried to push Lythgoe away and then "when the elevator doors opened, she ran to her hotel room and called one of her representatives in tears".

When subsequently working on 'So You Think You Can Dance', she had a meeting with Lythgoe at this home during which, her lawsuit claims, he “forced himself on top of Abdul while she was seated on his couch and attempted to kiss her while proclaiming that the two would make an excellent ‘power couple’. Abdul pushed [him] off of her, explaining that she was not interested in his advances, and immediately left [his] home".

Responding to Abdul's legal filing, Lythgoe said: “To say that I am shocked and saddened by the allegations made against me by Paula Abdul is a wild understatement. For more than two decades, Paula and I have interacted as dear - and entirely platonic - friends and colleagues. Yesterday, however, out of the blue, I learned of these claims in the press and I want to be clear: Not only are they false, they are deeply offensive to me and to everything I stand for".

According to US media reports, Lythgoe has also been sued over allegations of sexual assault by two former contestants on another talent show he worked on, a short-lived 2003 series called 'All American Girl'.

Both lawsuits have been instigated under California's Sexual Abuse And Cover Up Accountability Act which - like New York's Adult Survivors Act - allows new litigation to be filed over alleged incidents of sexual abuse that would usually be barred by the statute of limitations. The deadline for submitting lawsuits under the Californian law was the end of last month.

Buoyed by positive physical stats, HMV considers expansion

HMV is considering further expansion in the UK and beyond to capitalise on the continuing vinyl revival and some renewed interest in CDs. Although, Managing Director Phil Halliday confirms in a new interview with the Daily Mail, "the timing and the economics have to be right" whenever considering opening a new shop.

The HMV MD was talking to the Mail following the recent re-opening of the retail chain's Oxford Street store in London, and the end-of-year figures from record industry trade group BPI which confirmed that vinyl sales continued to grow in 2023, while the decline in CD sales has slowed somewhat.

Noting those positive vinyl stats, Halliday says: "Based on the numbers of customers buying turntables, we don't expect that to fall any time soon as new fans build their collections". And CD sales, he adds, have been strengthened by "the rise in interest in J-pop and K-pop fandom in the UK, because it's the main physical format for both genres".

HMV is now owned by Canadian company Sunrise Records, which rescued the UK entertainment retailer from its second big collapse in 2019. Perhaps unsurprisingly, therefore, HMV’s renewed interest in international expansion has begun with some concessions in Canada.

Though it also has plans in Continental Europe. "We opened a first store in Antwerp to test the market in October last year", Halliday explains, "and that's been going well, so we will look at growth".

In the UK, HMV is already operating around 120 stores, which is pretty extensive, suggesting there isn’t much room for further growth. Although Halliday nevertheless insists, "there are definitely some cities that we want to be in where there isn't yet an HMV but the timing and the economics have to be right".

Of course, although physical sales are healthier today than most people would have expected ten years ago, physical discs are still a minority revenue stream for the record industry. And while, for some artists and labels, vinyl and CDs are still an important part of the mix, for others they simply aren’t a priority.

And HMV still has work to do to safeguard its long-term future, reckons Dr Michael Heller at Brunel Business School, who also spoke to the Mail.

HMV’s downfall, he says, wasn’t just because of the shift to streaming, it also failed “to capture and hold on to a young demographic … which I'm not sure it has resolved". So, while older consumers may visit HMV's all-new Oxford Street store as "a form of nostalgia", there's a risk "young people continue to shun it".

Therefore, Heller reckons, HMV needs a strategy to connect with younger consumers. Though he says that likely requires some experiential marketing, providing "a reason for visiting the store which goes beyond the mere transactional". Which does seem to be HMV's current strategy, it increasing the number of in-store events.

Elsewhere in music retailers expanding news, Rough Trade has announced it will open a new store in Liverpool in the first quarter of this year. The independent retailer's sixth UK store will also be its largest and will include its biggest venue space.