CMU Daily 27.02.23: Kakao comments on Hybe/SM dispute, UK live sector renews call for VAT cut

Kakao issues statement in ongoing war of words with Hybe over SM deals
The CEO of the entertainment division of South Korean internet firm Kakao has defended his company's proposed deal with SM Entertainment after it was criticised on Friday by Hybe, now the biggest shareholder in SM.

The new statement by Kakao Entertainment co-CEO Kim Sung-soo is the latest to be put out in an increasingly eventful war of words between the three South Korean entertainment companies.

The proposed deal between SM and Kakao would see the latter acquire a 9% stake in the former, with the entertainment division of Kakao then handling the global distribution of music released by SM-signed artists.

The alliance is opposed by SM founder Lee Soo-man, who is trying to block the deal through the courts. An initial hearing in that legal dispute was held last week, with the court requesting more information from both sides.

Concurrent to all that, Lee agreed to sell the majority of his shares in SM to Hybe, a rival K-pop company best known as the home of BTS. That share sale gives Hybe a 14.8% stake in SM, making it the biggest single shareholder in the company.

Hybe has also expressed an interest in buying more shares with ambitions to secure a controlling 40% stake. Management at SM oppose those plans, accusing Hybe of pursuing a "hostile takeover".

Despite the mounting tensions, Hybe CEO Park Ji-won previously said that he wasn't opposed in principle to the SM/Kakao partnership, providing the deal between the two companies was in the best interest of all SM shareholders. But, on Friday, Hybe concluded that that wasn't the case.

In fact, Hybe claimed in a statement, the proposed SM/Kakao deal puts the internet firm in a more preferential position than all the other SM shareholders, including Hybe. In particular, the deal allegedly gives Kakao a priority status to buy any new shares or equity-linked securities that SM might issue in the future.

According to the Korea JoongAng Daily, Hybe stated: "Kakao Entertainment can use [this priority status] to continuously increase its shares of SM by issuing new shares through a third-party allotment". This, it added, is "unfair to other shareholders as the value of their shares can be diluted".

Hybe also took issue with the distribution element of the deal, arguing that Kakao Entertainment will basically have "exclusive rights over SM's global music distribution without a limit on the time period".

Management at SM quickly hit back at Hybe's statement. It said that restrictions already in place regarding the issuing of new shares means the scenario described by Hybe that would allow Kakao to continuously increase its shareholding is not realistic.

It also said that the claim it had granted Kakao distribution rights in perpetuity was "nonsense" and that that element of the deal was still being worked out. Plus there are plans for SM and Kakao to launch a joint venture to distribute music in the Americas, so SM isn't giving Kakao a big global opportunity it won't get to participate in.

Kakao Entertainment's co-CEO issued a statement about all this earlier today. Again according to the Korea JoongAng Daily, he said that his company "can no longer remain silent in the midst of this situation where the existence of the SM/Kakao partnership is being threatened" in a way that "fundamentally hurts the future development" of SM, Kakao and Hybe.

He also disputes Hybe's interpretation of the proposed agreement around future SM shares, which - he argues - is a pretty "run-of-the-mill" arrangement designed to protect a strategic partner without affecting the rights of other shareholders.

Kakao seems committed to completing its deal with SM, although Kim admitted that "a full-scale revision of our previous strategy is inevitable".

We await to see where this all goes next.

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PopArabia sues Anghami over allegedly unlicensed songs
Streaming service Anghami - a key player in the Middle East and North Africa region - has been sued by PopArabia and its partner Reservoir Media for allegedly streaming songs without licence.

The lawsuit was seemingly filed late last year with the courts in Abu Dhabi - where both Anghami and PopArabia are based - with Billboard seeing a copy of the legal filing and reporting on the dispute last week.

Streaming services, of course, need licences covering both recordings and the songs contained in those recordings, with the two sets of music rights generally licensed separately. The song rights are licensed by a combination of music publishers and collecting societies, with the specifics varying according to market and repertoire.

The lawsuit identifies twelve specific tracks being streamed by Anghami where PopArabia and Reservoir have an interest in the song rights and which, they claim, have not been properly licensed by the streaming service. However, it's alleged, that's just a sample that is indicative of wider issues around the licensing of song rights by the streaming service.

Anghami did previously have a licensing deal in place with French collecting society SACEM, which possibly covered a significant catalogue of songs, especially in the digital firm's core MENA markets. However, that licence expired in 2019 and talks about renewal have been ongoing ever since.

Licensing talks have also been ongoing for a few years between Anghami and PopArabia. But the latter seemingly reached a point where it felt the former was never going to actually do the deal. Its lawsuit seeks an injunction ordering Anghami to stop infringing its rights as well as lots of lovely damages.

Commenting on the litigation, Saurabh Poddar, Anghami's Head Of Licensing, told Billboard that the company was keen to secure licences from all music rights owners and not just the biggest players. However, alluding to some of the complexities around licensing song rights in particular, he added that the digital firm has certain conditions that it expects licensors to meet.

"Despite having this claim for a handful of songs, we assert that Anghami is more than willing to sign a licence with publishers no matter how small or big they are", he stated, "as long as such licence is negotiated and implemented with a scientific method with regards to identification of actual market share, legal capacity and provided representation is confirmed, especially in the case of a sub-publisher".

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Music-centric finance firm removes HarbourView from its lawsuit against Pras
An American music-centric finance firm that sued Pras and investment outfit HarbourView over a big old rights acquisition deal has requested that the latter be removed from the litigation. The amendment to the lawsuit seems to have been made because of jurisdiction issues.

HarbourView, one of those equity funds buying up music rights, announced a deal with Pras last July. It seemingly acquired the musician's royalty rights stemming from his past deals with Sony Music that covered the Fugees' output and his 1998 solo album.

However, Open On Sunday LLP - which allows artists and songwriters to access upfront cash secured on their music rights - claims that it loaned Pras money at the start of last year secured on those Sony royalties.

When he subsequently failed to meet his obligations under the loan agreement, Open On Sunday began legal proceedings which included foreclosing on the assets the loan was secured on, ie the Sony royalties. It was then that they discovered Pras had sold those assets to HarbourView.

Prior to all that, Pras had tried to persuade Open On Sunday to amend his loan agreement so that it would be secured on a book deal rather than his Sony royalties, but the finance firm declined to make any such amendment.

However, a lawsuit filed in October claimed, Pras and his legal team forged a release document showing that Open On Sunday had agreed to accept the theoretical book deal as security on the loan, and then used that to convince HarbourView that it could acquire the musician's royalty rights.

Open On Sunday's lawsuit targeted Pras and his lawyers, and also HarbourView itself which, the litigation claimed, should have done more due diligence before doing its deal with the ex-Fugee, instead of "eagerly accepting a release that they knew or should have known was forged".

According to Law360, HarbourView sought to have itself dismissed from the lawsuit last month, partly because the claims regarding what it knew or should have known about the allegedly faked documents are not supported by the facts, but also because of jurisdiction issues.

Open On Sunday filed its lawsuit in its home state of Georgia. But New Jersey-based HarbourView argued that it has no presence in Georgia, doesn't do any significant business in the state, and didn't agree its deal with Pras there.

The plaintiff has seemingly acknowledge those specific issues and that the court in Georgia likely does not have jurisdiction over HarbourView. As a result it has asked for the investment outfit to be removed as a defendant on the lawsuit.

The case against Pras and his lawyers continues. Though the targeted lawyers are also trying to get themselves dismissed from the litigation, either on jurisdiction grounds, or because of lacking evidence regarding their supposed awareness of the alleged fraud.

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Perfect Havoc partners with The Orchard
Dance music focussed indie label Perfect Havoc has signed a new global distribution deal with Sony Music's The Orchard.

The label's co-founder Robert Davies says that he, his fellow founder Adam Griffin and the Perfect Havoc team are "delighted to be joining The Orchard family worldwide".

Bigging up The Orchard's team - and specifically Orchard UK MD Ian Dutt and GM for UK & Europe Chris Manning - he goes on: "They are the perfect partner for Perfect Havoc showing unrivalled belief in our A&R vision, marketing strategy and in our ability to continue to bring through new talent whilst maximising our existing roster. We are so excited to be working together and delivering forward thinking, quality new music".

Dutt adds: "We are delighted to welcome Adam, Rob and the Perfect Havoc team to The Orchard. They have built an incredible business over the past few years and we very much look forward to helping them on their exciting journey".

In addition to distribution, say the two companies, "the deal will also focus on acquisitions and investments in playlists, media channels and catalogue".

Founded in 2015, Perfect Havoc has scored a number of hits, including a number one with 'Head & Heart' by Joel Corey and MNEK - in partnership with Warner's Atlantic.

The label will release its first album, by producer Ros T, this spring. Other releases in the pipeline will come from Lusaint, Chaney, ben Pearce, Zac Samuel, Just Kiddin, Harrison, Freejak and more.

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UK live sector again calls for cut in VAT rate on tickets
The live industry has again called on the UK government to reinstate the lower VAT rate on tickets that was put in place during the pandemic as venues, promoters and artists continue to face significant financial challenges.

Trade group LIVE said in a statement this morning that "the live music sector is a catalyst for economic activity in towns and cities right across the UK. However, after a tough couple of years during the pandemic, much of the sector is still dealing with the effects of increased costs, post-COVID changes, and a punitive, uncompetitive taxation system".

LIVE says that the government should announce it is reinstating the lower 5% VAT rate on tickets as well as cutting business rates in its upcoming budget statement, which is due to be made on 15 Mar.

"The live music sector is a catalyst for economic activity right across the UK but many businesses are still reeling from the pandemic", LIVE CEO Jon Collins says. "Combined with rising costs, an uncompetitive tax system is holding back a sector-wide resurgence".

"The government has a golden opportunity to turbo boost the industry by reintroducing the 5% rate of VAT on ticket sales in the upcoming spring budget", he adds. "This change would help return live music to full strength, protect much loved grassroots venues and mean even more amazing festivals, concerts and gigs in towns and cities across the country".

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Vernon Kay to replace Ken Bruce on Radio 2
The BBC has announced that Vernon Kay will present the mid-morning show on Radio 2 from May, taking over from the departing Ken Bruce, who is leaving the BBC station sooner than originally expected.

Kay already presents a weekly 'Dance Sounds Of The 90s' programme for Radio 2 and has filled in for various DJs on other shows, including the breakfast show.

On getting his own weekday slot on the UK's biggest radio station, he says: "I'm absolutely over the moon to be handed the microphone to present the mid-morning show on Radio 2, and what an honour to follow in the footsteps of the mighty Ken Bruce".

"I look forward to playing some of the best music in the world whilst in the company of the Radio 2 listeners who I feel I've got to know over the last eighteen months", he goes on. "It's a dream come true to join the Radio 2 family and I can't wait to start".

Head Of Radio 2 Helen Thomas adds: "Radio 2 is home to some of the UK's best loved presenters, and I'm THRILLED to welcome Vernon to mid-mornings on Radio 2".

"He's a hugely talented, warm and witty host who has already proved himself to be a firm favourite with our listeners when he's presented many and varied shows across the station", she continues. "I can't wait to hear his brilliant new show".

Long term Radio 2 DJ Bruce announced in January that he would leave the BBC when his current contract ends in March in order to join Bauer-owned commercial station Greatest Hits Radio.

It was thought that he'd carry on hosting his Radio 2 show until the end of next month, however last week he confirmed that his final show for the BBC will actually be this Friday.

"I will be presenting my last show on Radio 2 next Friday", he wrote on Twitter. "I had intended fulfilling my contract until the end of March but the BBC has decided it wants me to leave earlier. Let's enjoy the week ahead!"

Bruce's seemingly forced early departure from the Beeb has been criticised by many of his listeners on social media.

Though, given how heavily GHR has been promoting its new recruit since Bruce announced his next job last month, the BBC possibly decided that his Radio 2 show had just become one big advert for a rival station, and therefore an earlier than originally planned departure was for the best.

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Bad Bunny had the most successful album in the world in 2022
The International Federation Of The Phonographic Industry has announced another of its awards for global success in 2022, handing Bad Bunny its Global Album Award for his 'Un Verano Sin Ti' record, making him the first Latin artist to receive the prize.

"We are incredibly excited to award Bad Bunny, the first Latin American artist to win an IFPI Global Award, with the Album Of The Year Award", says IFPI chief exec Frances Moore. "His unique sound, encapsulated in his award-winning album 'Un Verano Sin Ti', has captured the world's attention on a remarkable scale over the last twelve months".

Bad Bunny's entirely Spanish language album scored more success across all the digital platforms than some strong contenders, finishing ahead of Taylor Swift's 'Midnights', Harry Styles' 'Harry's House' and the soundtrack to Disney movie 'Encanto'.

There was also a strong showing from K-pop artists, with Stray Kids, Seventeen, Blackpink, Enhyphen and Tomorrow X Together all making the IFPI's global top 20 - Stray Kids and Seventeen in fact both featuring twice.

"This year's Global Albums Chart bears testament to the incredible partnerships that exist between artists and record labels", reckons Moore. "These partnerships nurture and support artists while they write and record their music before going on to promote albums on a global level, achieving extraordinary amounts of success around the world".

The IFPI previously announced 'As It Was' by Harry Styles as Global Single Of The Year, and Taylor Swift as its Global Recording Artist Of The Year.

Here's the full top 20 biggest albums of the year across the planet in 2022:

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Dave Grohl's claim that Canadians invented American football put to the test
Earlier this month your good mate Dave Grohl rocked up during the Super Bowl in an advert for Canadian whisky brand Crown Royal in which the Foo Fighters frontman spent 60 seconds thanking Canada for all its many contributions to the world.

Although, quite how Canadian those Canadian contributions really are is possibly up for debate, or at least so concludes Canadian YouTuber JJ McCullough, who often delves into the history of Canadian and wider North American culture in his videos.

Alongside some definitely Canadian musicians and comedians, the list of things which - Grohl declared - his fellow Americans should be thanking their Canadian neighbours for included: peanut butter, paint rollers, poutine, the replay, walkie talkies, batteries, egg cartons, ironing boards, electric wheelchairs, Hawaiian pizza, instant mashed potatoes, canola oil, trash bags, whoopee cushions, hockey, basketball and even American football itself.

Now some of those things were definitely invented by Canadians. I mean, I don't think any one else is claiming to have come up with the idea of adding cheese curds to chips and gravy. But some of those things were invented by Canadians who actually spent most of their lives living in the USA, while others have much more ambiguous origin stories than Grohl's list suggested.

And that's certainly true when it comes to his boldest claim: that the Canadians invented American football. "Yeah, look it up!", Grohl declared in the ad.

McCullough did, and concludes: "In reality, most sport historians generally agree that no one person invented football per se. It is simply a unique game that evolved out of British rugby in a vague and experimental way during the mid-nineteenth century. It's not even widely agreed when we can accurately say that the first football game was played before a public audience".

"The idea that Canada invented football", he explains, "rests on this idea that the game was officially born on 14 May 1874, which was when students from Montreal's McGill University played a public game against a team from Harvard University".

"The game was played according to McGill University rules which, as the argument goes, were closer to the modern rules of football than some of the other college rules of the time", he goes on, "but even then no one today would recognise McGill rules football as being the modern game".

Various different teams, colleges and committees continued to evolve the rules in the years after that 1874 game, up until the founding of NFL predecessor the American Professional Football Association in 1920. So, McCullough concludes, while Canadians definitely contributed to the evolution of American football, "we didn't invent it".

So, there you go, even someone as likeable and trustworthy as Grohl can sometimes mislead you. Though, to be fair, I'm not sure anyone was assuming Grohl is a leading expert in Canadian cultural history, his expertise surely being in making and performing great music, and - of course - banking cheques and reading out lists handed to him by marketing execs.

You can watch McCullough's full analysis of Grohl's big list of (maybe) Canadian inventions on YouTube here.

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