Welcome to Music Business Worldwide’s weekly round-up – where we make sure you caught the five biggest stories to hit our headlines over the past seven days. MBW’s round-up is supported by Centtrip, which helps over 500 of the world’s best-selling artists maximise their income and reduce their touring costs.
This week, the music industry was shocked and saddened to hear of the passing of Michael Gudinski, the globally respected music entrepreneur and founder of Mushroom Group, who died peacefully in his sleep at home on Monday (March 1), aged 68. The music legend will be honoured at a state funeral in Melbourne, Australia.
Meanwhile, in an industry-first move, SoundCloud is introducing what it calls “fan-powered royalties” – its own branding of the user-centric model – which it says will mean “each [SoundCloud] listener’s subscription or advertising revenue is distributed among the artists that they listen to, rather than their plays being pooled”.
Elsewhere, Universal Music Group generated $8.4bn in 2020 and spent over $1.7bn on catalog acquisitions and artist advances, according to parent company Vivendi’s latest financial results.
Also, Jack Dorsey-led financial services company Square, Inc. is acquiring a majority ownership stake in music streaming platform, TIDAL for $297 million. Jay-Z is expected to join Square’s Board of Directors subject to the closing of the transaction.
Plus, Middle Eastern Spotify rival Anghami has entered into a merger agreement with publicly traded SPAC called Vistas Media Acquisition Company. The deal will result in Anghami listing on the NASDAQ in New York under the new symbol ANGH.
One of the most hotly-debated concepts in the modern music rights business is user-centric licensing. This model sees streaming royalties paid out based on individual subscriber behavior – with a percentage of each subscriber’s subscription fee being distributed only to the artists/labels they have individually listened to that month.
This model is in contrast to the current ‘pro rata’ streaming payout system, which sees all royalties on a service like Spotify pooled at the end of each payment period… after which recorded music rights-holders are paid according to their market share of total plays across the platform.
The latter model, obviously enough, most benefits global pop superstars; the former model, it’s thought, would bring more benefit to indie artists and to more niche genres such as classical and jazz.
Critics of the ‘pro rata’ model point out that it regularly leads to a proportion of an individual’s subscription fee being paid to artists whose music they haven’t even played.
SoundCloud is about to settle this debate once and for all….
3) UNIVERSAL MUSIC GROUP GENERATED $8.4BN IN 2020… AND SPENT OVER $1.7BN ON CATALOG ACQUISITIONS AND ARTIST ADVANCES
Universal Music Group rode out 2020 with a gentle, if significant, revenue uplift: total annual sales across all of its divisions (including publishing and recorded music) rose 4.7% YoY.
But the real standout story for UMG last year – perhaps music to the ears of those hoping it will hit a ginormous valuation in the coming months – was its profit performance.
In 2020, UMG posted total revenues of €7.43bn ($8.40bn), with an EBITDA of €1.49bn ($1.68bn). That represented an impressive annual EBITDA margin of 20%.
As a result, Universal was nearly $250m (€220m) more profitable on an EBITDA basis in 2020 than it was in 2019….
Jack Dorsey-led financial services company Square, Inc. has entered into a definitive agreement to acquire a majority ownership stake in music streaming platform, TIDAL.
Square expects to pay a mix of cash and stock of $297 million for a ‘significant majority’ ownership stake. Existing artist shareholders will be the remaining stakeholders.
TIDAL will operate independently within Square, alongside the Seller and Cash App ecosystems.
According to the companies, the acquisition “extends Square’s purpose of economic empowerment to a new vertical: musicians”.
The media release added: “Artists are entrepreneurs with a dream and deserve access to systems, tools, and financial freedom to reach those dreams at every stage in their career”.
Prominent Middle Eastern Spotify rival Anghami has entered into a definitive merger agreement with publicly traded special purpose acquisition company (SPAC) Vistas Media Acquisition Company Inc.
The deal will result in Anghami listing on the NASDAQ in New York, with the combined company set to operate under the Anghami name and trade under the new symbol ANGH.
The transaction implies an initial pro-forma enterprise valuation of approximately $220 million, or 2.5x 2022 estimated revenues. The transaction is expected to close in Q2 of 2021….
