This Week In Royalties: Magna/Loud & Proud, Mass Appeal/Pulse Music JV, and SACEM Revenues

May 26, 2017

Benom Plumb, Assistant Professor of Music Industry Studies at the University of Colorado Denver, reviews the biggest stories of the week affecting music royalties. He is a music industry professional, not an attorney.

France’s SACEM Posts Record Revenues of $1.5 Billion (Billboard)
Benom’s Take: Stop me if you’ve heard this one before on “This Week In Royalties,” but yes, another major royalty producing territory (France) has posted record revenues. The worldwide pattern is encouraging and shows, once again, that the music industry is on the upswing.

PledgeMusic's Lead Investor Magna Funds Indie Label Loud & Proud (Hypebot)
Benom’s Take: Loud and Proud Records has an incredibly impressive roster of current and former artists. With names like Lynyrd Skynyrd, Lenny Kravitz, Steve Miller Band, Rush, Blues Traveler, String Cheese Incident and Rick Springfield--who wouldn’t want an opportunity to invest in an indie label with major artist assets and star power? Though the details of the deal are not disclosed, Magna’s investment will “...support Loud & Proud Records’ ambitious expansion plan over the next several years” while focusing on intellectual property and artist development opportunities.

The risk here for Magna is not so much with the legacy artists on the label, but under the label’s artist development expansion. The uncertainty of whether or not a new artist is going to “hit” is the cause of many sleepless nights for music industry professionals. One solution to this conundrum is to look at industry leader and executive track records for making wise and proven creative choices. As long as Loud & Proud’s Owner & President, Tom Lipsky, stays the course like he has over his multi-decade tenure in the music business, Magna’s investment should pay off.

Mass Appeal Expands Into Music Publishing After Striking Joint Venture Deal With Pulse Music Group (Music Business Worldwide)
Benom’s Take: Mass Appeal is a “graffiti magazine,” media company, and urban record label. The company recently received $6 million in funding via Universal Music Group, which included funding from famous artist investors such as Usher and NaS. I’m actually surprised the company didn’t expand into music publishing earlier. Nevertheless, the expansion is a natural and necessary progression for a company the caliber of Mass Appeal. As some of us in the music industry say: “Music publishing is the real estate of the music industry.”

However, I think it’s important to mention that urban/hip-hop songs can often be the most complicated and legally challenging copyrights to work with. This is typically due to the fact that most are oversaturated with collaborators who wrote and produced the track. In addition to this, the songs usually incorporate samples from other songs and recordings. This causes the percentage splits of the copyright to get out of control.

For example, one time I was working on a license for a hip-hop track that had somewhere in the ballpark of 17 writers and 20+ music publishers. Someone literally had a 1.17% share of the song, while all of the publishing shares added up to over 100%. If all of the publishing shares add up to over 100%, guess what? No one is getting paid! Last weekend’s Saturday Night Live sketch puts this in hilarious perspective. Enjoy.

Spotify Acquires 4th Company in Past 3 Months - Artificial Intelligence Startup, Niland (Music Business Worldwide)
Benom’s Take: The hits just keep coming. Spotify’s acquisition of AI technology is going to give the company even more of an edge in music searches and recommendation abilities. Incorporating this AI technology, along with the Niland team, is a big R&D move for Spotify. If Spotify gets this right, it could make Pandora’s algorithm look like it came from the stone age. Even though the company is expected to post over $300 million in operating losses for 2016, developments like these make Spotify’s case for an IPO stronger by the week.