CMU Digest is our weekly round-up of the most interesting music business news stories from the last seven days. 

This week: The Hong Kong government is considering a new copyright exception for AI companies which the music industry won’t like; Universal Music UK announces a restructure with two new frontline label groups; music and video platforms go legal over the new Canadian streaming levy; Blackstone’s deal to buy Hipgnosis Songs Fund is approved by shareholders; creators welcome US Copyright Office ruling on how the MLC handles streaming royalties after a songwriter has exercised a termination right.

ICMYI: Delaware court sides with execs in Prince estate dispute; Coldplay settle manager dispute; BBC's new golden oldies service delayed by OfCom; YouTube allows the removal of unapproved deepfakes and vocal clones; recent lawsuits demonstrate the importance of meticulously tracking and always clarifying ownership of any beats, stems or loops featured in a new recording.

Also this week: The world is big enough for two musical Jellyrolls.

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Hong Kong is considering a new copyright exception for AI companies

A public consultation is underway following the publication of a white paper by the Hong Kong government. It says that a new text and data mining exception in the region’s copyright laws would be “justifiable” in order to “foster the growth of the AI industry” and help develop “an international innovation and technology centre which lies at the heart of sustainable economic growth of Hong Kong”. 

The copyright industries, including the music industry, will be opposed to any new data mining exception which means AI companies can train their models with existing content without getting permission from relevant copyright owners. Although the Hong Kong government says those concerns can be addressed with ‘safeguards’, such as an opt out like that which applies to the data mining exception in the European Union.

Universal Music UK announced a significant restructure

From October, most of the major’s UK frontline labels will be reorganised into two big groups, the Island EMI Label Group led by current Island boss Louis Bloom and the Polydor Group headed up by Ben Mortimer. Only classical and jazz label Decca will remain outside these two groups. 

A new Audience & Media division is also being launched bringing together media, marketing and data teams, described by Universal Music UK boss David Joseph as “an industry first where every type of media is seamlessly integrated”. 

The restructure follows similar changes to Universal Music in the US, which is also now structured around two big label groups. There will be job losses as part of the revamp, with Joseph stating, “it saddens me that we will have to part ways with some incredible colleagues who have been instrumental in our journey”.

The streaming services have launched legal challenges against Canada's new streaming levy

The Canadian Radio-Television And Telecommunications Commission last month announced a plan that will force streaming services in the country to pay 5% of their revenues to various schemes that support Canadian music, radio and TV content. Music services Spotify, Apple Music and Amazon Music are now hoping to block that plan by filing legal challenges in Canada's Federal Court Of Appeal. The Motion Picture Association Canada has also begun legal proceedings on behalf of video services like Disney+, Paramount+ and Netflix.

Speaking for the music services, DiMA said the 5% levy was “backward-looking” and “unsustainable”, and would increase subscription costs for Canadian consumers. MPA Canada is particularly offended that some of the levy will be used to fund local news content. “Our members’ streaming services do not produce local news”, it said, “nor are they granted the significant legal privileges and protections enjoyed by Canadian broadcasters in exchange for the responsibility to provide local news”.

Blackstone's Hipgnosis deal was approved

A shareholder vote this week approved Blackstone’s bid to buy the Hipgnosis Songs Fund, or SONG. It brings to an end nearly a year of dramas between the different Hipgnosis businesses, and especially SONG and the Merck Mercuriadis-led and Blackstone-owned Hipgnosis Song Management, which advised the fund and managed its rights. 

The board of SONG was critical of HSM and proposed selling the fund to Concord. However, HSM had a ‘call option’ in its deal with SONG, meaning if Concord wanted to get rid of HSM after acquiring SONG it would have to pay off HSM to the tune of £20 million. So when Blackstone put in its own higher bid for SONG, Concord stepped back. 

There were more dramas in the final weeks, with various hedge funds buying up lots of shares, only 59.21% of the total shares then voting on Blackstone’s bid, and the result of that vote being announced 24 hours later than planned. But the deal was approved by shareholders and should now go through, subject to a court hearing at the end of July. As that happens, Mercuriadis will leave the Hipgnosis empire he founded.

Songwriters welcomed a change to the way the MLC deals with the termination right

Under US copyright law, songwriters who assign copyrights to music publishers can reclaim their rights after 35 years. However, because of a technicality in the termination right to do with derivative works, collecting society MLC previously paid any streaming royalties due on a song to the publisher that controlled the copyright when a track was uploaded to a streaming service, even if the writer had subsquently reclaimed the rights in that song. 

The music publishers argued that in doing so the MLC was following industry convention, but the US Copyright Office has ruled that that approach is not compliant with copyright law. The Copyright Office said as much in a provisional ruling in 2022, but this week that position was confirmed. It means that, where a writer has terminated an old publishing deal, streaming royalties connected to their songs should be paid to the writer. Organisations like Music Artists Coalition and Songwriters Of North America welcomed the ruling.