CMU Digest

CMU Digest 07.06.21: Spotify, Universal, festivals, YouTube, Believe

By | Published on Sunday 6 June 2021


The key stories from the last week in the music business…

Two members of US Congress wrote to Spotify boss Daniel Ek expressing concerns about the streaming service’s new Discovery Mode option. That’s the scheme currently being piloted whereby artists and labels can influence the Spotify algorithm in return for accepting a lower royalty. Many in the music community have criticised Discovery Mode, comparing it to the old and often illegal practice of payola, where labels paid to secure radio airplay. Congress members Jerry Nadler and Hank Johnson said the scheme raised “significant policy issues” and requested that Ek answer a number of specific questions about how it all works. [READ MORE]

Vivendi confirmed that the US entity interested in buying 10% of Universal Music is a fund run by activist investor and hedge fund manager Bill Ackman. The Ackman-led Pershing Square Tontine Holdings could buy 10% of the Universal Music Group before Vivendi spins its music division off as a standalone company and lists it on the Dutch stock exchange. It was originally thought that Vivendi would retain 20% of the shares in the standalone UMG, but last month it said it might actually sell half of those shares to a US investor prior to the stock market listing. If that deal goes through, both Vivendi and PSTH would have 10% each of UMG, with 20% controlled by a consortium led by Tencent. The other 60% will be distributed to Vivendi’s current shareholders. [READ MORE]

The culture select committee in the UK Parliament again called on ministers to offer government-backed insurance to music festivals. MPs made the call in a new report summarising its recent inquiry into the UK festival sector. Cancellation insurance isn’t currently available on the commercial market, meaning festivals planning 2021 editions face big losses if the planned schedule for lifting COVID restrictions ends up slipping, meaning July or August events have to be called off at the last minute. Many independent promoters can’t afford to take that risk, so are cancelling 2021 editions even though COVID restrictions may well be lifted before their dates. Committee Chair Julian Knight said: “If the commercial insurance market won’t step in, ministers must, and urgently”. [READ MORE]

YouTube’s music boss Lyor Cohen said that the Google division had paid over $4 billion to the music industry over the last year. He said the company had also signed up more premium subscribers in the first quarter of this year than in any previous quarter. YouTube’s relationship with the music industry has improved a lot in the last couple of years, partly since the launch of the YouTube Music premium service, and partly because ad revenues on the main platform have also increased. Cohen talked up the importance of YouTube offering paid-for and free music options, as well as generating royalties for the industry via user-generated content. He also mentioned the other ways artists can make money via YouTube including merch sales, channel memberships and digital gifting. [READ MORE]

Believe formally launched its IPO. The music distribution and label services firm is listing on the French stock exchange. The company is now seeking to raise about 300 million euro via the IPO, having previously said it might go for as much as 500 million. Shares are expected to be priced between 19.50 and 22.50 euros, giving the business a valuation of between 1.9 billion and 2.1 billion euros. Founder and CEO Denis Ladegaillerie revealed that Fonds Stratégique de Participations has already committed to participate in the IPO to the tune of 60 million euros. [READ MORE]

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