Business Frame Weekly – Major Labels Have the Fight of Their Lives Against AI Tech Giants/ Spotify Lays Off 17% of Workforce

Major Labels Have the Fight of Their Lives Against AI Tech Giants

Spotify Lays Off 17% of Workforce Amid Profitability Push

BMG unveils growth plan including global catalogue set-up alongside local campaign management

In this newsletter:

• Major Labels Have the Fight of Their Lives Against AI Tech Giants — Elon Musk Says It’s Already Too Late
• Spotify Lays Off 17% of Workforce Amid Profitability Push: ‘We Have to Become Relentlessly Resourcefuls
• BMG unveils growth plan including global catalogue set-up alongside local campaign management
• Retail investors can now bet on music royalties: 'We want people to have access'
• New Mountain Capital to lead acquisition of BMI, affiliates to receive $100m payout
• Music manager Kwame Kwaten on a new model to power campaigns for emerging artists

December 5, 2023

Major Labels Have the Fight of Their Lives Against AI Tech Giants — Elon Musk Says It’s Already Too Late

The biggest threat facing major labels as they lock horns with AI behemoths like Google, Meta, Amazon, OpenAI, and Microsoft — time is. For those who believe that AI giants like OpenAI are treating copyrighted content ethically, Elon Musk has a wake-up call. “That’s a huge lie,” Musk bluntly stated during a recent interview at DealBook Summit 2023 while addressing claims by AI platforms that copyrighted materials are not being used to train algorithms. “These AIs are all training on copyrighted data, obviously. It’s a straight-up lie, 100%.” That’s hardly shocking to those within the music industry, though the more difficult pill involves the lengthy legal and legislative battles that lie ahead. Despite a string of early legislative victories surrounding human authorship and copyrights, a far bigger set of lawsuits will determine whether training on copyrighted content constitutes fair use.

Spotify Lays Off 17% of Workforce Amid Profitability Push: ‘We Have to Become Relentlessly Resourceful’

About 10 months after laying off 6% of its workforce, Spotify is trimming another 17% of team members amid a broader push for enhanced efficiency and profitability. Spotify head Daniel Ek announced the layoffs in a publicly published message today, after signing off on a number of other cutbacks throughout 2022’s second half and this year’s initial 11 months. Citing “dramatically” slowed economic growth as well as a desire to “consistently drive profitability” at Spotify, the 40-year-old disclosed that the latest personnel reduction will specifically decrease “total headcount by approximately 17% across the company.”

BMG unveils growth plan including global catalogue set-up alongside local campaign management

BMG has outlined a new structure designed to further develop its ability to deliver for artists and songwriters on a global scale. It is understood that a small number of positions are affected across each of BMG’s offices, including London. The company will focus on its key areas of music publishing and recordings, having cut back on areas including film commissioning and theatrical productions. The plan involves: Doubling down on its presence in the US with a new global catalogue function based in Los Angeles. Recalibrating its presence in Continental Europe, and renewing its frontline recorded business in a new ‘hub-and-spoke’ structure. Further strengthening its services to artists with substantial investments in technology and its myBMG ecosystem. BMG will also be clarifying roles and structures to make the company more accountable to its artist and songwriter clients.

Retail investors can now bet on music royalties: 'We want people to have access'

There's a new way to make money in the music industry — and it involves betting on your favorite songs. Earlier this month, investing platform Public offered retail investors the opportunity to own a piece of the rights to the "Shrek" soundtrack for the same price as an expensive cup of coffee. The company purchased the 768-track catalog outright, put it into an LLC, and then had that LLC go public so investors could buy shares for as little as $10 — something that's become known as "fractionalized royalty investing."

New Mountain Capital to lead acquisition of BMI, affiliates to receive $100m payout

New Mountain Capital will lead a shareholder group to acquire BMI. The investment firm, which has more than $45 billion in assets under management, confirmed the move for BMI today. Terms were not disclosed. Headquartered in New York, BMI is the largest performing rights organisation globally. It protects the rights of and advocates for more than 1.4 million songwriters, composers and music publishers. BMI licenses the performing rights in 22.4 million musical works to businesses. Mike O’Neill, BMI’s president & CEO, will continue to lead the company, along with his leadership team, following the closing. BMI moved to a for-profit model last year. New Mountain will acquire the company from the shareholders who own BMI today. The investment firm has also reserved additional capital to fund growth investments, new ventures and technology enhancements to help accelerate BMI’s long-term plan to maximise distributions for its members and improve the service it provides to songwriters, composers and publishers. As part of the agreement, BMI’s current shareholders will allocate $100 million of the proceeds of the sale to affiliates shortly after the transaction closes. The decision was based on the “recognition of the creativity of the songwriters, composers and publishers they have had the privilege to represent,” according to a statement.

Music manager Kwame Kwaten on a new model to power campaigns for emerging artists

Kwame Kwaten has spoken about the evolution of management and label services that led him to launch a new model to back emerging talent. Kwaten has teamed with PR Elspeth Merry, founder of Artists’ Way, and Dave Rajan, director at promotions firm Got Your Back (formerly Never Say Die), on a new approach to artist campaigns christened the FAN Deal. The initiative allows them to take a chance on a new act by providing their expertise and a route to market. Under the terms of the partnership, rather than charging for services to promote and release music, the three companies will take a deferred payment as a share of an artist’s single or album. The arrangement, similar to points on a record for a producer, will be limited to master recording revenue for an individual release. “It’s a different type of deal among many deals – it gives an artist the choice,” said Kwaten. “It’s not replacing anything. The major label deal is still there and all hail to it, the indie deal and the label services deal are still there. But the FAN deal is now born.”

Random Ramblings

• Which Artist Has the Most Valuable Music Catalog?
• WIPO and Music Rights Awareness Foundation launch creators' rights education platform
• 8 Musicians Who Sold Their Music Catalog and Won Big
• Can You Make Money From Live Streaming?
• 5 Music Tech Predictions to help artists prepare for 2024