Tencent share price dips as Chinese regulator confirms exclusivity deal ban
The share prices of both Tencent Music Entertainment and its parent company Tencent dipped yesterday following confirmation that the competition regulator in China is banning exclusive licensing deals in the country's digital music market. Although it seems unlikely that the new rule is going to result in too much diversification in the Chinese streaming business, in the short term at least.

Chinese web giant Tencent is the dominant player in digital music in China, of course, mainly via its standalone Tencent Music Entertainment business. That dominance was partly achieved by Tencent acquiring some key competitors to its QQ Music service in 2016 - Kugou and Kuwo - and partly by securing exclusivity deals with both domestic and global music rights companies.

The exclusivity arrangements - which included its deals with all three majors - meant that Tencent was not only the operator of three streaming services but also a music distributor controlling a significant catalogue within China. This in turn meant that competing streaming services either had to go without that catalogue or negotiate licensing deals with their biggest rival.

It's a scenario that would have raised major competition law issues from the start in most other countries, but in China that was the norm for some time, with Tencent's biggest rival in digital music, NetEase, also seeking its own exclusivity deals. That was partly to give its Cloud Music service a competitive edge and to strengthen its negotiating hand when seeking to licence catalogue controlled by Tencent.

However, even in China the competition regulator started to become critical of Tencent's big exclusivity deals. Under pressure from that regulator, rival streaming services in the Chinese music market got a little bit better at sharing catalogues they controlled, meanwhile some more recent licensing deals have not included the exclusivity element. A development which, for example, allowed NetEase to enter into direct deals with both Sony Music and Universal Music.

Then earlier this year reports circulated that China's State Administration Of Market Regulation was preparing a bigger crackdown in this domain as part of wider action against allegedly anti-competitive conduct by key players in the country's tech sector.

At one point there were rumours that, in addition to possible fines and a ban on exclusivity deals, Tencent might be forced to sell off Kugou and Kuwo. Of the three possible sanctions, that would have been the most dramatic. But by earlier this month it was clear that latter sanction was not on the table after all, and that fact was confirmed by SAMR on Saturday.

The regulator fined Tencent 500,000 yuan - or about $77,150 - in relation to its unfair practices in the digital music market, and also ordered the company to relinquish any exclusivity rights it still has over music catalogue within 30 days. That said, direct exclusivity deals it has negotiated with independent artists will not be affected by the new rules.

This move to end Tencent's exclusivity deals, says the regulator, will "reshape" the market and lower "market entry barriers", resulting in a more competitive marketplace.

SAMR's decision is probably good news for Tencent's existing competitors in digital music in China, although to what extent it will make easier for new players to enter the market is debatable, given Tencent's massive userbase and the tricky economics of music streaming. For its part, Tencent makes more money from its karaoke and livestreaming apps than anything else.

Tencent Music Entertainment's share price recovered a little yesterday after an initial dip. Although it is still down significantly compared to a spike the company enjoyed back in March when its shares were trading at nearly three times the current price.

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Britney Spears files request to remove her father from conservatorship
Britney Spears has filed new legal documents requesting that her father, Jamie Spears, be removed as conservator of her estate. She and new lawyer Mathew Rosengart have also identified accountant Jason Rubin as the person they would like to be installed in his place.

In the court papers, Rosengart describes the conservatorship that has controlled Spears' financial and personal affairs since 2008 as a "Kafkaesque nightmare".

The lawyer, of course, took over as Spears' legal representative earlier this month, following the resignation of court-appointed attorney Sam Ingham. This is the first time the musician has been able to choose here own legal rep since the conservatorship began.

Rosengart says that "serious questions abound" concerning Jamie Spears' "potential misconduct" during the conservatorship, which has seen him in charge of his daughter's financial affairs for most of the last thirteen years.

The lawyer notes that Jamie Spears takes a monthly salary from his daughter's estate, as well as costs and fees from her performance contracts. This, Rosengart says, should not be the case.

"Although it is common for managers, agents and other industry professionals to receive a percentage of an artists' earnings, Mr Spears is none of those", says Rosengart. "He is a conservator, and, as a conservator, his role is to be burdened by, rather than benefit from, the conservatorship".

If approved by the court to take over the financial conservator role, the court documents ask that Jason Rubin be given all financial authority to manage Britney's estate, along with powers of attorney to make healthcare decisions and manage real estate.

Britney, of course, has said that she wants the conservatorship to be brought to an end entirely. It is thought that this is probably the first stage of what is likely to be a long process in making that happen. In that, it's possible that removing Jamie Spears will make ending the overall arrangement easier.

In the filing, Rosengart says: "There might well come a time when the court will be called upon to consider whether the conservatorship should be terminated in its entirety".

A hearing to consider replacing Jamie Spears with Jason Rubin is set for 13 Dec.

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Bad Wolves and manager Allen Kovac hit back at lawsuit from former vocalist
The former vocalist of American metal outfit Bad Wolves, Tommy Vext has launched a lawsuit against the band's manager, Allen Kovac. Vext accuses Kovac of forcing him out of the band earlier this year due to disagreements over politics, while also making allegations of racist conduct against his ex-manager. Kovac strongly denies the allegations, calling the lawsuit "bogus and spurious".

Vext claims that his departure from the band came after he criticised the Black Lives Matter protests that took place in the US last year and then endorsed Donald Trump for re-election. In his lawsuit, Vext, who is African-American, says that he was pushed out of Bad Wolves by his bandmates and Kovac because, ultimately, he "was not black enough" for them.

According to TMZ, the lawsuit makes various claims about the lead up to Vext's exit from the band in January this year, saying that Kovac had used his "pull" in the music industry to stop radio stations and streaming services from playlisting their music. When Kovac's efforts to stop Vext from airing his political beliefs of social media failed, he adds, he was sacked.

The lawsuit also makes claims about racist conduct on Kovac's part, saying that he would use the n-word around Vext "with impunity" as a way to show his superiority.

In a statement to TMZ, Vext says: "For several years I've poured all of my energy and passion into building Bad Wolves. We've toured the world several times and charted six billboard number one singles. All the while I've had to endure disparaging, manipulative and at times racially charged misconduct from my former manager Allen Kovac and his record company Better Noise Music".

"Allen has forced me out of my own band and is now attempting to slander and cancel me", he goes on. "After several failed attempts to settle amicably, I'm now forced to place this in the hands of the courts".

However, in a joint statement, Bad Wolves drummer John Boecklin and guitarist Doc Coyle defend Kovac, saying: "In all our dealings with Allen Kovac, he has never used any derogatory racial slurs. Tommy is making all of this up. Period".

Kovac himself also strongly refutes the allegations made against him, stating: "I am disappointed to see these accusations from Tommy against me, 10th Street Management and Better Noise Music. They are categorically false".

"In 40 years in the music business, I have never made any derogatory racist comments, been accused of doing so, or been sued by an artist", he goes on. "Tommy Vext, a self-proclaimed QAnon supporter, has dragged us into a ridiculous, unfounded narrative that falsely paints him as a victim".

"Tommy quit Bad Wolves in January 2021 after being abusive to his band members, and he has since waged an all-out assault against the band and its members on social media", he says. "Behind the scenes, he and his team of lawyers have been trying to extort the band and the record company for a big payout. Because these tactics were not successful, he upped the ante and filed this bogus and spurious lawsuit to get leverage in contract negotiations. But this strategic ploy won't work. We will not be extorted; and will defend and defeat these phony claims in court".

"As a management company and record label, we pride ourselves on working with artists from all different walks of life and encourage them to speak their minds creatively and authentically", he continues. "I have never forced political beliefs or values on any of our artists or employees, but I also will not tolerate when people create a hostile environment. Bad Wolves has always been a collaborative effort between its members, its management and our label, and no single member is responsible for the creation of its art or its success".

"Putting this distraction aside, Bad Wolves is continuing to focus on its music and will release its best record yet in October with new lead singer Daniel 'DL' Laskiewicz", he concludes. "I am very proud of the band".

Bad Wolves, who first formed in 2017, recently released behind-the-scenes footage of the recording of their new album, 'Dear Monsters', which features the there mentioned Laskiewicz.

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Songwriter groups formally call on US Copyright Royalty Board to reject NMPA's mechanical royalty rate proposals
An assortment of organisations representing songwriters in America and beyond - led by the Songwriters Guild Of America, the Society Of Composers & Lyricists and Music Creators North America - have called on the US Copyright Royalty Board to reject a proposal endorsed by the major music publishers to keep in place the current mechanical royalty rates for discs and downloads within the US.

Under American copyright law, the so called mechanical copying of songs is covered by a compulsory licence, meaning that - although music publishers and songwriters are due payment whenever their songs are copied - the rates they are due are set by a panel of judges, aka the Copyright Royalty Board. Those rates are then reviewed from time to time.

In recent years most attention has fallen on the mechanical royalty rates that apply when music is streamed - a stream involving some copying, as well some communicating and making available, of a song. The last time the CRB reviewed the streaming rates it approved an increase, so that the rate would go up - over a number of years - from 10.5% to 15.1% of any monies allocated to a song by a service based on consumption share.

Although that brought the US statutory rate more or less in line with the rate enjoyed by music publishers which negotiate direct deals on the free market in other countries, most of the streaming services have appealed the CRB’s decision. That appeal is ongoing with publishers large and small united with songwriters in fighting to ensure the recent rate increases are not revoked.

However, when it comes to the mechanical royalties due on discs and downloads, there is a big divide between the songwriter community and the publishers, certainly the major publishers.

The main customer of mechanical rights when it comes to discs and downloads are the record labels. And earlier this year the National Music Publishers Association and Nashville Songwriters Association International told the CRB that they'd agreed a new deal with the major labels to keep the current mechanical rate for discs and downloads in force. That rate hasn't increased since 2006 and is currently 9.1 cents per copy.

Plenty of songwriter groups have hit out at that proposal, arguing that the wider songwriting community has not been consulted and is not happy with the plan that the CRB retain a rate that has fallen by a third in real terms since 2006 when inflation is taken into account.

They also point out that the NMPA's biggest members - the publishing wings of Sony, Universal and Warner - have a vested interest in the status quo, because their sister record companies are the biggest customers of these rights.

SGA, SCL, MCNA and others formally raised concerns about the NMPA/NSAI proposal back in May, and urged the CRB to allow the wider creative community to input on what had been proposed. The NMPA and NSAI then formally filed a motion asking the CRB to endorse its agreement with the majors and to confirm that the mechanical royalty rate on discs and downloads would remain at 9.1 cents.

In a subsequent statement, the CRB said that the judges on the board were now welcoming "comments on whether they should adopt the proposed regulations as statutory rates and terms relating to the making and distribution of physical or digital phonorecords of nondramatic musical works. Comments and objections regarding the rates and terms and the minor revisions must be submitted no later than 26 Jul 2021".

It was in response to that call for comments that SGA, SCL and MCNA yesterday made a submission to the CRB asking for the NMPA/NSAI settlement to be disregarded and for, at minimum, the current rates to be amended to take into account inflation since 2006.

In a lengthy document, the three organisations provide a brief history of the mechanical rights compulsory licence and subsequent royalty rate setting, and how - in their opinion - it has repeatedly disadvantaged US songwriters over the decades, and especially since 2006. They also set out their objections to the NMPA leading on the negotiations for a new rate, given that its three biggest members have a conflict of interest.

And while the NSAI was also involved, yesterday's submission states that, "in regard to NSAI, its demonstrably uniform alignment with NMPA on a broad array of music industry issues over recent years has in our view appeared so unwavering as to approach potential inseparability. As a result, we believe we are correct to be concerned that the organisation cannot be said in this instance to represent music creator rights and interests in an independent, unbiased manner".

The submission also notes remarks made by NSAI to the effect that - with discs and downloads now representing a minority of recorded music revenues - it's not worth pursuing a battle to get the mechanical royalties on those products increased, and instead songwriters and publishers should focus their efforts on ensuring the increases on the streaming side are kept in force.

However, the SGA/SCL/MCNA stress that, while obviously discs and downloads are a much smaller deal today than in the past, they are still bringing in decent money for the record industry, even in the US. Because, while it is true that the shift to streams has occurred faster in the US than the other big mature recorded music markets, discs and downloads still accounted for more than 16% of US record industry revenues last year.

And, the submission notes, not only is the vinyl revival still underway, but those pesky NFTs that everyone has been chattering about all year are, when sold by the music industry, usually linked to a disc or a download or both.

With all that in mind, the submission concludes: "We urge the CRB to decline to adopt the settlement agreement as a basis for statutory rates and terms. Adoption of the settlement and the rules as proposed would represent a miscarriage of justice, placing the imprimatur of the CRB on a negotiation and settlement process that was unfair, non-transparent, and may have been conducted under circumstances that were anything but reasonable pursuant to (and setting crucial precedent for) the required 'willing buyer-willing seller' standard".

In addition to calling for new royalty rates to be set that - at the very least - take inflation into account, the submission also asks that provisions be made for future increases inline with inflation. It also says that the US Copyright Office should look into how it could make it easier for independent creators to input on future royalty rate decisions.

"We urge that the CRB recommend the undertaking of a study by the US Copyright Office to improve the ability of independent music creators and music publishers to more fully participate in CRB proceedings at reasonable cost", the submission adds. "The current inability of all but the major music publishers and their affiliated music publisher and music creator groups to effectively participate in CRB proceedings due to the costs of such participation must be effectively addressed".

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West One announces new deal with WarnerMedia
West One Music Group has announced a new partnership with Warner. But not that Warner. No, the other Warner. The telly show Warner. Not the pop song Warner. The movie studio Warner. Not the record label Warner. You know, WarnerMedia. Not Warner Music. Totally separate. Totally different. Unless you're tuning into this from 2003. In which case, I'd stay where you are. It only gets worse.

Anyway, this new and expanded global partnership between West One Music and WarnerMedia will allow the latter's telly show businesses - like HBO, HBO Max and Turner - to access the former's "music collection and multi-territory creative services".

"We're incredibly excited to expand on our partnership with WarnerMedia", says West One boss Edwin Cox. "We share a longstanding commitment to the highest quality content and are THRILLED about the potential of this strengthening in our relationship. We are looking forward to supporting their teams and productions around the world and the potential this brings to our musician, composer and artist community".

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TikTok rival Lomotif signs licensing deal with Universal
TikTok rival Lomotif has signed a licensing agreement with Universal Music, giving the video-sharing app and its users access to the major label's big old catalogue of lovely music.

"We are very pleased that Lomotif's fast-growing community of users around the world will be able to take inspiration from the artists and music they love, all while ensuring UMG's artists are fairly compensated for the value music generates on Lomotif's platform", says Michael Nash, Universal Music's EVP of Digital Strategy.

"UMG continues to broaden the creative and commercial opportunities for our artists by licensing an ever-expanding array of new digital platforms and supporting emerging entrepreneurs", he goes on. "We look forward to working with Lomotif to help unlock even more innovative music-based features for their community".

Lomotif CEO Paul Yang adds: "Our deal with Universal Music Group will continue to grow users and increase engagement within our platform, a destination for emerging artists, and will significantly expand the types of music our community can utilise, collaborate with and share. With nearly 800 million videos created to date, we are heading in a great direction as a platform and making high-value content, functionality and features available to our community will only help us grow exponentially".

Lomotif claims to be the fastest-growing video-sharing social network, with more than 225 million installations of its app in 200 countries over the last three years. Whether it can challenge TikTok remains to be seen.

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DEALS

The Gibson guitar company has launched its own record label, Gibson Records, in partnership with BMG. The label's first signing is Guns N Roses guitarist Slash. "Launching a record label that is in service to our artists is the natural evolution of our 127 years of history", says Gibson's Brand President Cesar Gueikia. "Gibson Records will work with Gibson artists to capture, record and promote their music under an artist friendly partnership".

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MARKETING & PR

Former co-MD of Island Records, Liv Nunn, has launched new marketing agency No Boundaries. "In this era, more than ever, music is accessible immediately on release by everyone, everywhere, via many ever evolving platforms and touch points", says a press release. "No Boundaries Agency aims to be a conduit that helps facilitate music reaching as many audiences around the world as possible, through innovative, creative, bespoke solutions".

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MEDIA

BBC One will air an interview with Billie Eilish in a special programme going out this Saturday at 10.30pm. Following the broadcast, it and a Radio 1 Live Lounge performance will be available on the iPlayer.

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RELEASES

Skepta has announced that he will release new EP, 'All In', this Friday, featuring collaborations with J Balvin, Teezee and Kid Cudi.

Caroline Polachek has released the video for her latest single 'Bunny Is A Rider'.

Liars have released new track 'From What The Never Was'. New album, 'The Apple Drop', is out on 6 Aug.

Park Hye Jin has released new single 'Whatchu Doin Later'.

Peter Broderick will release new EP 'The Wind That Shakes The Bramble' on 10 Sep. Listen to the title track here.

The Scaramanga Six have released new single 'Horse With No Face'. It's the first taste of the band's new album, 'Worthless Music', which is out on 10 Dec.

Check out our weekly Spotify playlist of new music featured in the CMU Daily - updated every Friday.

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Adam Clayton gives Bono the nod to go solo
Hey, that Bono solo album you've been hoping for just got a step closer. U2 bassist Adam Clayton has given his approval for the vocalist to break away from the band and go it alone.

Appearing on Gary Kemp and Guy Pratt's Rockenteours podcast, Clayton said: "I think at this point if Bono said he wanted to go off and do a solo record, I'd certainly encourage him and everyone else would. We've all done 40 years and that's pretty long in any job. If anyone wanted to go off and do something different and come back to the band or whatever, I think the band is elastic enough for that".

Bono has made music without the rest of his band before, of course. Over the years he's guested on tracks with artists including Wyclef Jean, Pavarotti, Frank Sinatra, The Corrs, Clannad and DMX.

He even contributed a poem to a compilation about a dead cat, and more recently - along with U2 guitarist The Edge - collaborated with producer Martin Garrix on the official UEFA Euro 2020 single, 'We Are The People'.

However, the good news is, the big Bono solo album probably isn't coming any time soon. U2 have reportedly been working on new music during the pandemic. Wait, is that good news?

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