William Shatner's metal album; The Jimi Hendrix High Court Experience; Recycled vinyl; The UK's ban on touting/scalping is on pause; Big Spotify numbers; and more...

0:02Steve:Hello and welcome to The Price of Music brought to you by Music Ally, the show that both looks at the finances of the music industry while also bringing you stories and comment about the past week in the pop business. I'm Steve Lemack. He's Joe Sparrow, our producer and guardian, who is being Stuart this week, while Stuart is recreating scenes from Three Men in a Boat on holiday in Norfolk. But apart from the change in personnel, it's the same caper as always. Some of this week's big stories, one or two things we thought were worth discussing at a bit more length. But as always, though, a big number to start the show, a big financial fact that you can throw into conversation in the coming week.

0:45Steve:Our big figure this week, Joe, is? Yes, it is 761 million. That's how many people are using Spotify now every month, according to its latest financial results. So, I mean, for context, if there was a graph of Spotify's expansion, what would that look like over the years? If you went back, I don't know, five years, how fast is it growing at this moment? Yeah, so, I mean, the growth has been, if you zoom out over the whole 20 years that Spotify have been around, it is that classic hockey stick shaped curve. Over the last five years, it's been very positive. It's been between 5 % and 9 % growth, depending on how you look at it each year.

1:28And a lot of that growth has been driven by expansion into new markets that didn't have Spotify before. So just new people who couldn't sign up have signed up. So the growth has been globally big and fast.

1:39Steve:Yeah. And I suppose this will be the point, I'm sure, where as soon as this becomes common knowledge, people will start saying, how much money are they making and why are they not giving some of this money back to poor, starving musicians. It's going to reopen that debate, I imagine. Well, always. I mean, look, so 761 million is a huge number, right? That's potentially about 7 % of the entire world. Wow. Like that is a massive number, yeah. Okay. It's pretty big. And, you know, nearly 300 million of that, so 293 million are premium subscribers. Those are people who are on a paid account. That doesn't necessarily mean people who are putting their hand in their pocket.

2:20They can be family members on a family account, but they're on a paid-for service. And, you know, that has grown very quickly. So five years ago, the equivalent numbers of the big number was$356 million. So it's basically doubled in that time. And, well, over that time, the way to kind of answer the money debate is, well, what is the average revenue per paying user, or ARPU? And the average revenue per paying user is hovering around for euros 50 per user per month. Now, like I said, that's global. In India, they're paying about a euro a month. Here in Europe, we're paying a lot more. And then you have family members.

3:10So it doesn't sound like a lot from an individual user perspective. And that is the crux of where people complain about it. because you've really got on average, and this is just for paying users, people paying about$450,$460 a month. Those numbers might be a little bit higher as the expansion goes on, but it's around that point.

3:29Steve:Okay. Here's our top three stories which we thought were worth bringing you this week. The first one, well, we might as well stick with Spotify because you may have seen this new green tick badge on an artist's profile to verify that they're human. So it's got everything, this story, that we always bring you on a weekly basis. It's got Spotify and, I imagine, AI. But the green tick, though. So what's it for? Why have they brought it in? What's it about? Well, it's sort of to do with AI, and I think there's a bit of a bigger play here as well. So this is what Spotify says. The new verified by Spotify badge shows an artist's profile has been reviewed by and meets Spotify's criteria for authenticity and trust.

4:19It's a little bit like the old verified tick on Twitter, as it used to be in the old days, where it gave users a sheen of authenticity. They'd been verified by the company. And of course, once it became X, that became a purchasable asset and all hell broke loose. So it's actually about that trust and connection to the artist. Yes, I guess part of that is about AI. Is this a real artist or not? But I think a lot of it is about trying to get people to believe that the artist really is who they say they are on the platform, the releases are correct, the information is correct, and that the artist is kind of using their page as a place for fans to go and find out truly interesting stuff about them.

4:58And it's maybe a slight shift towards making Spotify a go-to hub for artists. And there was a quote from the co-CEO of Spotify who was talking about the Q1 results. and fans of LinkedIn speak, this is, as you know, I am, is one of those good ones. He said that Spotify's intention was to unlock entirely new growth vectors that will enable us to climb new mountains previously unimaginable. Now, part of that is just about, you know, make the big number go up and grow the business. But some of that is also about trying to find new ways to make new money. So I wonder if they could sort of make Spotify kind of like the sort of universal fan page for artists, it would obviously have business implications.

5:45It's not entirely about verifying their humanity in the face of AI, you know. But that is happening. One of the newer streaming services called Volcana, I'm not sure, they're doing a verified human artist approach to this. So they're doing badges on the profiles to say, hey, this is an actual human. And they're doing that in quite an interesting way. They're using data from the live music website, JamBase. So if they can see that you are an artist performing regularly, they're like, well, they're probably human, which is quite a smart way to go about it.

6:19Steve:Yeah. Okay. Secondly, this is the music industry's latest mega merger, this, which I hadn't seen coming. But obviously these things, they tick along in the background for a while, and then all of a sudden BMG and Concorde are coming together. Tell us a bit about this and the players involved and what it means, because it's actually going to be a huge business, this. Yeah, it's kind of a big deal, although this is one of those company mergers with other company stories that might seem really boring on the face of it, which is not particularly perhaps well-known outside of the music industry. You might recognize their names from the back of records.

7:09But they're indie giants in a sense. You've got the big three labels, Universal, Sony, and Warner. But these two, BMG and Concord, have spent a lot of money, billions, to become the most sort of powerful alternatives for artists in the more indie space operating at the moment. and their main pitch is that it that separately was that they allow artists to have more control you can own your you can keep ownership of your rights and then we'll work with you in ways like big labels and big publishers and you'll make more money and everyone's happy um so it's sort of a combination of services and label stuff bmg um is primarily a music publisher that's they handle the rights to your compositions the writing songs but it works with recording music too and they've bought or signed big artist catalogs like Tina Turner and Paul Simon.

8:00Also, they work with Kylie Minogue at the moment, and she's had a massive resurgence under BMG. And then also modern country artists like Jelly Roll and Lainey Wilson. And then Concord is a label that's grown by buying lots of other labels, like Stacks, Fearless, labels like that. And they sort of position themselves as curators of music catalogue and music history. So they own over a million songs, and they also own a lot of theatrical rights. So if anyone's listening out there and they're at a school that's about to do a musical, if it's a Rogers and Hammerstein musical, they have to pay Concord for the privilege of doing it.

8:38They also own big catalogues, REM, for example, which would be a dream job for me to manage that catalogue. And loads of... Livia Dean, as well, who's a rising star, and a lot of jazz legends they own recordings of Miles Davis, John Coltrane, people like that anyway they are merging and that makes them into probably the leading independent music company in the world and it's going to be called BMG but it will have BMG publishing and Concord Records sitting beneath it now as you know I'm a big fan of CEO corporate ease and in their release around this to describe how big they're going to get they've outlined, quote, a midterm ambition to achieve 1.2 billion in EBITDA, building from a pro forma EBITDA base of more than 730 million, driven through organic growth, M &A, and synergies.

9:31Steve:I mean, I couldn't untangle that, even if you wrote it down and put it in front of me. Yeah. My theory is that these statements aren't written for people. They're written for algorithms to then spread the news on, by the way. But EBITDA is earnings before interest, taxes, depreciation, and amortization. So it's kind of used as an indicator of profitability of the business. So what the saying there is, we're pretty big now, and we're going to get bigger by bringing everything together. And it does have an interesting proposition, as you said. If you're an artist who doesn't want to sign away your ownership of your songwriting, which is done in a traditional publishing deal, co-signing away, and if you want to own your recordings, which traditionally the record label owns, you can go to this new hybrid entity and say, hey, work with me, and they would say, hey, I'll give you the global reach of a big corporation, but you can keep your freedom.

10:28Steve:Yeah, this is interesting, isn't it? Given how some of the major artists have been buying back their catalogue or not selling their catalogue or working with bigger labels, but only to do things like distribution or whatever, marketing or something. It really feels now that, you know, it's coming back to that thing of how important rights are. And, you know, if you own something, you can make money out of it. If you've given the ownership away to somebody else, they will make the money out of it. And if you can, as an artist, there does seem to be, and as I said, there's one or two, aren't there, major artists have started thinking along these lines.

11:07Steve:But it feels like this is an ongoing trend towards musicians wanting to be more a part of their, you know, what they do, their catalogue, to own it and have power over it. Yeah, this is an example of a sort of very modern convergence of the understanding of power and ownership and ambition and also reach and distribution. So in the past, if we rewind to 1995, sort of pre-internet times, if you were in a band and you wanted to get a song out and people to hear it, you would have to sign a record deal because you couldn't afford a studio. The label would pay for the studio, and they would then own the recordings of the songs.

11:50You'd have to sign probably a publishing deal to make money on that side from the songwriting. You sign temporarily, ownership away for a while. and then to get the record in the shops, the label pays for that and essentially all this money gets spent just to get your record in the shops and you don't really own a lot of that, if any. And now it's almost the inverse. If you can hold on to your rights around songwriting and recordings from the beginning, you can call the shops and platforms like this will say, okay, if you just want marketing, we'll do your marketing. We'll keep 10, 15 % and you'd keep the rest or we'll just do label services and act as your label, but you own it and we'll work hard for you and keep 25%, whatever.

12:32And if you speak to young artists now, they are educated. They know that. And they want to keep hold of their rights. And we've talked for a while on this podcast about this theory of the bifurcation of the music industry, where you have this one big lane over here, roughly speaking Spotify and major label music. People consume music over there. And then this other lane where all the independent stuff where people are piecing together their career and writing their own adventure. And I think that's very exciting if you get it right.

13:03Steve:Yeah. Finally, in this section, our third story of the week. Well, this is sort of rights-related. And it's been a while since we've had a proper legal wrangle over this type of rights issue. But this is a big one. So the Jimi Hendrix experience, which, of course, I mean, it's not a solo act, although Jimi Hendrix was Jimi Hendrix. But the Jimi Hendrix experience, you can argue that's a band, actually. However, the estates of Jimi's old bandmates have just lost a court case in which they were seeking a share of the rights to the albums that they made. Yeah, and this is one of those stories that follows on very nicely to describe the importance of ownership and be careful about what you sign.

13:48And, you know, like you say, the Jimi Hendrix experience was Jimi Hendrix and Noel Redding and Mitch Mitchell. And they were thrown together quite quickly and brilliantly in the mid-60s with three very talented musicians, okay? And all of those musicians are now dead.

14:09So Sony Music had faced legal action from the estates of Noel Redding and Mitch Mitchell, and they were seeking copyright and performance rights on 40 studio recordings made in the 60s. So probably the albums and the songs you know. And they wanted some of the money from that, particularly from streaming income that had been generated since then. But the judges ruled that the recordings copyrights were actually owned by the producers of the albums, that's Sony, and not the musicians. And it was the three classic albums that you know from the Jimi Hendrix experience. And it was dismissed on three main grounds.

14:43The one is that in the original contract that they signed in 1966, it said the producers of the record, again, that's the label, own the copyrights through the entire world with no time limit. Kind of standard, you know, label practice for the time, kind of contract from back then. There was an argument around new technology, and the estate said, well, hey, when they signed this, they couldn't have envisioned streaming happening and a total full-scale change of how the music industry works. And the judge said, well, the contract actually had a clause to say that the owners could exploit the music by any method now known or hereafter to be known.

15:20So it was covered. And we're sort of veering into that sort of legendary first Stone Roses record that covered the entire universe in the wording here. And then also when the ban dissolved in 1970, Mitch Mitchell and Noel Redding signed a release form. And there was legal chaos. So to settle the disputes at the time, both of them signed documents that permanently barred them from future legal claims. And they both, I mean, yeah, and apparently they signed them away for different sums as well. Noel Redding got about£100 ,000. Mitch Mitchell got about a quarter of a million. And that was all finalized in the sort of early 70s.

16:07And this is, well, the court acknowledged that it was kind of unfair for those families that they, you know, Redding and Mitchell died relatively poor, particularly compared to the Jimi Hendrix estate, which the catalog has generated billions. But the judge said that they have to follow the clear text, unequivocal, he said, text of the contracts that they signed. And that's how contracts work. It's not fair maybe and it feels difficult in hindsight and also it tells you how important ownership of the rights are. If you sign it away, if things change, you've got nothing. Yeah.

16:45Steve:Okay. Any other business? Actually, can I start us off for any other business? Because this is hugely disappointing, this bit of news, or at least I guess it's speculation at the moment. But yeah, this is, I mean, both on a personal level and also in my role representing live music in the UK. And in fact, this is not great for fans either. But you might remember that the UK government promised last November to bring forward legislation to clamp down on ticket touting. And the recommendation was that you wouldn't be able to resell tickets above face value. Thus, in theory, putting an end to the practice of people being able to capitalise on demand for big gigs by reselling tickets way above the original cost.

17:37Steve:And I mean, I won't say it was, you know, dancing in the street. There were street parties, people doing a victory lap around, you know, the offices of Live Nation or wherever. but I mean it was a victory for the industry and for fans really but it's now emerged or it's at least it's the the rumor on the grapevine is that this piece of legislation may now be delayed for well until at least next year I think and the industry Joe as you can imagine it's not very happy. No, and if anything, the timeline here is looking until 27, 28 parliamentary sessions, so we're looking two years into the future now in terms of it becoming law.

18:23We were expecting this legislation to feature in the King's speech coming up soon, and the King's speech, for those of you who don't know, it's when the King reads it out, but it's essentially the government's wishes of the kind of legislation they want to push through in each year, and it's sort of been nudged out of off the slate, you know, because there's competing aims and restricted space, apparently. And yeah, people aren't thrilled by this. I will open the floor to you to explain this a little bit later, perhaps, in the lock-in. But for instance, you know, well, let's talk about who is happy.

19:01StubHub and ViaGogo, which are these secondary ticket platforms, are probably pretty happy with this being delayed. But I've got some quotes here. Annabella Coldrick, who's chief executive of the MMF, the Music Managers Forum, said that these are widely supported pro-growth measures, banning touting, that all deliver tangible benefits to the British public. She's saying, why is this not happening? Adam Webb, who leads up the Fanfare Alliance, which is an anti-touting organization, said that a failure to deliver on the manifesto commitment would be devastating, encouraging exploitative touts and under-regulated offshore resale websites, which will continue fleeting British audiences.

19:43And it is one of those things where you look at this news story and say, well, who wants this? Who wants secondary ticketing, really? And it's hard to answer that question, because obviously people do want to be able to buy and sell tickets, because sometimes you can't go to a gig or whatever. But it's that feeling, I think, in the public of the unfairness of seeing tickets being bought before they can get them and then immediately appearing for multiples on websites.

20:10Steve:Yeah, and it leads to all sorts of misleading stories in the press, I think. A big tour goes on sale and then one of the tabloid papers the next day will say it's going to cost you£1 ,000 to see Harry Styles or something. Well, it will if you buy a ticket which is being resold probably by someone who's bought the ticket purely to sell it on for profit. And I think that the other thing, it's just I think what I'm so aggrieved is, I mean, the government got the round of applause for saying, yep, we've listened to the live music industry. We've considered this. there was a point where we thought they might cap resale at 20 % above face value or 10 % above face value.

21:00Steve:But no, they came with what was, it seemed like the ideal solution. Right, you cannot sell resale tickets above face value. So they take the round of applause for that. And a lot of people, I think, you know, there are people not in the industry who think, oh, well, that's obviously happening then. But it doesn't happen, obviously, until the legislation is passed. And so here we are now kicking our heels. And I mean, the other thing that Annabella Coldrick said was that, look, the Labour Party had two music-related promises in their manifesto. One, sort out EU touring. Two, clamp down on touts.

21:36Steve:And when you look at those, I mean, sorting out the complications around the regulation, what you can and can't do, going on tour in Europe is so complicated now because of all the paperwork and all the post -Brexit rules. That's really different. It's a hard one to unpick. The secondary ticketing bill is the easiest one to push through. And everyone apart from the resale companies is a winner. Fans don't get ripped off or even priced out of going to big shows. And also money doesn't leak out of the industry to the touts. But obviously it's not in the list of the government's priorities. And I'm sure they do have a very busy legislative program.

22:28Steve:but as I say, if you're going to talk up your commitment to growth and the arts, then you have to back that up with some action. You can't take the credit and then not see it through. Yeah, and like you say, you wonder how difficult it would be to get traction around this issue because it's hard to point to a large number of people who don't want this to happen. I mean, even if they sort of said, well, you know what, we're going to give the ticket companies two years to sort their act out and then we're going to cap it at 20 % as a compromise, as a resale. You go, okay, that's better than nothing, you know.

23:06But to sort of let it sort of punt it into the future and say, oh, we'll come back to that. It's something that's such an obvious crowd pleaser. I don't understand.

23:17Steve:You're not even going to get much pushback, I don't think, within government after the year. You know what? We remember when the Oasis tickets went on sale. And there was a lot of furore around, you know, the issues with the price of the tickets and stuff. But, you know, there were at least three or four MPs there going, well, I tried to buy Oasis tickets. Well, they were priced at this. And then, you know, a lot of them obviously ended up on resale sites. And that was, it put it right in front of the politicians there and then, didn't it? Well, one of the issues and one of the reasons that it's expensive and one of the reasons why they've sold out is because of people who are purely motivated by the profit involved of buying a ticket and then reselling it for a profit.

24:09Steve:But we shall say, I mean, there will be a lot of pressure in the last few days, I think, to try and persuade the government otherwise. but otherwise there will be some unhappy people in the industry. Can I just say, really looking forward to the live board meeting which takes place in two days' time. What else this week? Oh, here's a warning. Now, listen, if Taylor Swift or Rihanna are on TikTok trying to get you to sign up to an online service you've never heard of, well, shock. Here's some shock news. it's not really them. Yeah, who'd have thought? It reminds me of one of those stories you occasionally see in the press of someone who's been defrauded for a few hundred quid because someone's used an AI-generated image of Jennifer Aniston, who apparently is madly in love with them, and then they start requesting money, things like that.

25:06But we spoke, I think, last week about how Taylor Swift had filed a trademark for her voice saying, hi, it's Taylor, which is one of those things that doesn't really make sense until you bring in AI manipulations. So there are these AI-manipulated ads circulating on TikTok, which are deepfakes of celebrities like Taylor Swift, Rihanna, Kim Kardashian, promoting essentially fraudulent services or suspicious services. And they appear to have been filmed on the red carpet. So it looks kind of legitimate, particularly on a small screen. And in several ads, they even have TikTok's branding in the corner.

25:42So it looks very official. But when you click on them, and they're redirected to a third-party service, and it's trying to get your personal information. And this is one of those unforeseeable issues that artists are now having to deal with, which is they've quite carefully protected their image for many years, but now the level of duplicity that's possible with AI is really high. And these artists have spent many, many years building up a loyal fan base who will do whatever they say. And so it's kind of no surprise. Taylor Swift has got a fan base who, when she says, hey, I'd really like you to consider buying all five color variants of this new album on vinyl, and a lot of them will go and do it.

26:27So that's a really, really easy attack vector for fraudsters to go, well, maybe they'll also click on this link to this crypto website as well. Yeah, yeah.