Tag Archives: Taylor Swift

Taylor Swift relies on clout and class to secure a unique streaming deal for fellow musicians

“With great power comes great responsibility.”

Whether it was Voltaire or Peter Parker (Spiderman’s Uncle Ben) who said it does not much matter. The important thing is the those responsible for generating and using intellectual property – the coin of the realm –  believe it.

Taylor Swift is one of the best-selling music artists of all time. She has already generated more than 130 million streams. But her pop-star status belies her intelligence and vision.

Swift has famously blacklisted Apple for not paying musicians and removed her content from Spotify because of their paltry pay-outs until she got a better deal for musicians. Recently, Swift locked down a highly lucrative record contract with Universal Music Group’s Republic Records, while securing an unprecedented streaming deal for thousands fellow singer-songwriters on the UMG label.

One stipulation of Swift’s new contract states that if UMG sells any of its shares in Spotify, which went public in April, that money must be redistributed to the label’s artists and cannot be recouped. UMG’s 3.5% stake in Spotify has been valued at as high as $1 billion.

Historic Tumblr Post

Swift reportedly prioritized that artists rights over negotiating for ownership of her highly valuable old masters and a bigger cash advance. Largesse of this kind is unprecedented. Swift stated in Tumblr post:

I [also] feel strongly that streaming was founded on and continues to thrive based on the magic created by artists, writers, and producers. 

There was one condition that meant more to me than any other deal point. As part of my new contract with Universal Music Group, I asked that any sale of their Spotify shares result in a distribution of money to their artists, non-recoupable.

‘Non-recoupable’ means that if a recording artist owes UMB money as a result of a cash advance from the label (often the case with younger artists) the proceeds from the sale of Spotify stock cannot be used to pay down the debt. That cash (Swift’s contract states) is to be used expressly for the musicians, many of whom have been paid almost nothing for their Spotify streams while helping build the company’s market value, which has been as high as $35 billion.

Spotify executives have been cashing in some of their valuable shares – why not the musicians who helped to build that value?

She demanded that Apple make sure artists were
compensated 
during Apple Music’s free trials in 2015; and went on a
three-year boycott of Spotify over royalty payouts

IP behavior matters 

“Taylor Swift has been consistent her whole career about protecting the value of music copyrights not just her own,” said David Lowery, lead singer of Cracker and publisher of the Trichordist in the January IAM magazine, here. “IP holders and users both can learn something from her: protecting IP as a matter of principle lifts all boats.”

Swift’s strategy with UMG and Spotify, as well as Apple, is not for effect – it is genuine. Her vision of the future reflects a keen sense of history and an uncanny instinct for survival. Without a truly viable music industry, she suggests, everyone will suffer, even if a handful of top artists may prosper for a while.

For Swift, IP behavior matters. It begins by creating an environment conducive to quality and success.

Let us hope that her bold moves will not go unnoticed by those who generate and own inventions, authored works and other types of creative output. It’s a big IP world and we all have to live in it.

Image source: Irish Times; http://fr.fanpop.com

How Spotify can survive the size of Apple, Amazon, Google & YouTube

The streaming genie is out of the bottle. There is no going to back to CD sales or downloading as the primary model for music revenue. For industry leader Spotify, whose stock has dropped from a high of $196 in July to $120, more challenges lay ahead. 

Streaming may be acceptable to celebrity artists with CD sales and negotiating leverage, and who play concerts, but not for more mainstream musicians who have difficulty securing a record deal and receive pennies per stream.

With more than 87 million current subscribers and 191 million active users, Spotify appears to be well-positioned for success. Whether or not you believe that Spotify has gone from music industry slayer to savior depends on you ask and when you look.

The service survived the wrath of Taylor Swift and has settled a class action suit brought by musicians, including Cracker frontman David Lowery, publisher of The Trichordist, for $41 million. (More on how Swift is improving fellow artists streaming compensation in a future IP CloseUp.)

But if Spotify is going to bring the music industry forward it will need to show more than the ability to add subscribers. It must be able to work collaboratively with all recording artists, despite the adverse economics of the music business, and to become profitable in the not too distant future. 

Cash Out

Spotify (NYSE: SPOT) went public in March 2018 with a much-publicized offering that did not raise capital, but enabled some insiders, including investors like Sony Music and Warner Music Group, to take cash out and for the market to broadly value its model. The company’s offering price was $132 and had traded as high as $196.28 in July, but Spotify shares are down to about $120 (as of December 17), below its IPO price, an indication that its shares may not have been as accurately priced as initially believed, or that they can expect to struggle in a bear market.

To go public, Spotify executed an unusual move called a direct listing, forgoing investment-banking underwriters and opting not to raise any money for itself at this time. In the process, Spotify showed confidence in its future and saved tens of millions of dollars in fees while still giving its employees and early investors the chance to cash out at least some of their holdings without diluting the share price.

It’s not clear that streaming – and Spotify agreeing to pay higher royalties to some for their content – will save the music industry or earn the company a profit.

The Main Stream

Spotify was the first company to make streaming mainstream, a simple alternative to both the murky Torrent digital music piracy sites and the more expensive downloads model popularized by Apple’s iTunes.

The brainchild of Swedes Daniel Ek and Martin Lorentzon, Spotify launched as a desktop application in October 2008 and quickly gained millions of users across Europe before spreading to the US.

Spotify represents hope for the patent community, where serial infringers use others’ inventions with much the same impunity that streaming services employ content

“A good example of a tech B-lister is Spotify, which appears to be winning its battle with its biggest suppliers but lives in perpetual danger of being steamrolled by a tech giant,” reported The New York Times.

Perhaps the clearest indication of the Spotify’s awkward status came from Randall Stephenson, the chief executive of AT&T. “Mr. Stephenson has been fighting to acquire Time Warner since November 2016 in an attempt to cobble together some combination of content libraries, mobile networks and advertising tech that is big enough to survive a battle with the Googles and Amazons of the world.”

This is a defining moment for Spotify and big tech. If content it to survive meaningfully, IP rights need businesses, executives and shareholders to step up and look beyond quarterly earnings.

When a $200 billion business like AT&T is jockeying for leverage against Netflix, Google, Apple, and others, how is a university start-up, independent inventor or musician going to compete?
Not easily. 

Yet to be Determined

Despite its subscriber base and public offering, Spotify is far from a financial success. Some believe that to do so it must turn against artists and song writers. That will do little more than make its competitors, especially Apple, look good. Microsoft is among the few players who are big and smart enough to acquire the streaming giant at the right price.

Like AT&T, Spotify’s ability to compete depends on how it fares against much larger, more powerful companies, some with only a passing regard for IP rights.

Leading technology businesses set the tone for how licensing is conducted and how creators are treated, and so far – as far as copyrights and patents are concerned – it has not been a very harmonious one.

Image source: spotify.com; statista.com; economist.com

Taylor Swift assists recording artists, Apple Music, and (even) herself

Taylor Swift, a pop star with sufficient power to move mountains, succeeded in moving an equally resolute object last year: Apple Music’s position on paying royalties to recording artists. 

A year later it is unclear if was the musicians, Apple, or Swift who benefited the most.

A Wall Street Journal op-ed last week reminded us that there are more important things to cover other than Kardashian/West war of words that the combatants and media are jointly milking.

In Support of Taylor Swift, Economist, Hong Kong based op-ed writer David Feith says,”Never mind the feud with Kanye West, the pop star has waged more important fights defending the value of intellectual property.”

Taylor-Swift-Apple-642x3611

The Top Earner

Forbes ranks Swift as the number one celebrity artist in 2016 with $170M in earnings. According to the magazine she is in the top 100 of self-made women and power women.

Swift has sought to champion the IP rights of recording artists by using her star power to assure that they (not she) are paid. That’s admirable, for sure, as the streaming services, Pandora, Spotify and YouTube, to name a few, have built valuable businesses without paying their fare share of artists royalties. (YouTube has been valued by Bank of America at $80 billion.)

But maybe Swift was at least somewhat motivated by dollars, not sense.

After outing Apple Music for refusing to pay artist royalties in a now infamous tumblr post, Swift wound up receiving not one but two spots from the company, promoting their new streaming service. I guess they were more interested in thanking her for the exposure than punishing her for the dis. Both ads went viral generating huge attention for Apple Music and her. Good timing, I guess.

Here is the latest Taylor Swift Apple Music ad, which generated more hits than most TV series (via Fortune).

Below is the original tumblr piece in which Swift challenged Apple – and the stream industry – to change their music rights policy. Swift won more than the argument, and so did Apple. The argument is well-stated:

 Free-riders come in many shapes and sizes

“This may be the ‘information wants to be free’ era, when online content is glibly swiped by millions who would never dream of shoplifting,” said WSJ’s Feith, “but Ms. Swift has a deep appreciation for the profit motive and the fruits it bestows on society.

“Ms. Swift’s most ambitious [IP] crusade may be in China,” writes WSJ’s Feith, “where she has launched branded clothing lines with special anti-piracy mechanisms to combat rampant counterfeiting on e-commerce sites like Alibaba’s Taobao.”

Swift has been known to trademark not song or titles, but phrases from songs which can be used to build her brands and fashion portfolio.

*****

I hope that Taylor Swift invents something soon, so she can bring her loyal following and keen business instincts to patents and patent holders. They sure could use them. 

Image source: appadvice.com 

 

Angry musicians are pushing back on royalties – Will inventors follow?

Song writers may have something to teach inventors when it comes to getting a fair share for their intellectual property rights, or not.  

Confusion faced by writers and performers in the recording industry over “legal” downloading of copyrighted work by aggregators like Spotify, Pandora and YouTube have forced a range of musicians to question the logic of an overly complex and chronically opaque royalty payment system.

With most music streaming services using copyrighted content for free, or almost free, confusion has given way to anger and frustration.

Who Said Fair? 

The primary issue right now for many copyright holders is not a matter of the legitimacy of their rights, but how much is fair payment for frequent use? In at least one important way, song writers are way ahead of inventors, who hold more encompassing, but frequently uncertain, patent rights. For them, the first hurdle is whether their invention is innovative in the eyes of the changing law — a challenge, even under the best of circumstances. Then, it needs to be determined if the invention is indeed being used (infringed) and by whom, and how much they should be compensated. (Did you think innovation could be so much fun?)

There are reasons why patent licensing has become synonymous with costly litigation. With high-tech inventions today, virtually no one takes a license unless they are forced to. Why should they? Exactly who are the bad actors is not always clear.

Inventors and patent holders can learn from the tension between recording artists and their intermediaries (publishers and record labels), and distributors (e.g. Spotify). To be fair, most of these streaming services are not very profitable. Still, they are building bold business model and creating value on the backs of musicians and publishers. Both song writers and inventors (or those assigned to hold their patents) do not have much negotiating leverage when it comes to 02byrne-master675collecting a fair share of royalties. For patent holders attempting to out-license for revenue, it is frequently sue or get nothing at all – and that’s no bargaining position.

Historically, there has been little transparency regarding the deals made to use copyrighted songs, and today it is no different. There are few standards and the information provided about deals is asymmetric. Basically, the pricing is what ever the distribution channel (and the labels) can get away with, and they both no longer see a much of need for publishers, who they would prefer to cut out. Headliners have more leverage and can benefit from free exposure (more concerts, merchandise licensing) in ways that less well-known artists cannot.

The Business, as Usual

A recent New York Times article, “Music Artists Take on the Business, Calling for Change,” acknowledged that more musicians are fed up about their participation in benefits of the new distribution technologies and have begun to demand a better accounting. It helped when Taylor Swift refused to take no royalties during a three-month trial period on Apple Radio’s. (Would Apple allow customers to use a new iPhone for free until they deemed it worth purchasing? Oh, you say, doesn’t Apple have an R&D investment and the copyright holders are just pulling tunes out of the air?)

Ms. Swift was probably thinking more about her own interests, but they affected the entire industry, and Apple got the message.

“‘The support that we’re seeing, in terms of the range and number of artists, whether it’s from somebody who’s a working-class musician to somebody who’s very successful, it’s unprecedented,’ said Ted Kalo, the executive director of MusicFirst, a lobbying coalition that includes record labels and musicians’ groups and that helped organize the social media campaign.

“The economics behind downloads is relatively simple: Typically about 70 percent of a song’s retail price goes to a record company, which then pays its musicians according to its contracts. But with streaming, the system is complex and often opaque, as became apparent in May, when an outdated licensing contract between Sony and Spotify was leaked online, showing the elaborate formulas used in computing streaming rates.

“Public relations missteps in the early 2000s kept many musicians from speaking out about economic issues, artists and executives said. Those include the music industry’s lawsuits against thousands of fans for online file-sharing, and the pillorying that the band Metallica received after it sued Napster for copyright infringement. But the shift toward streaming in recent years has prompted many musicians to investigate the changes in the business…”

A Bottle of Wine

“New businesses are being built on this cheap almost free use of copyrights,” said Steve Loeb, a producer of more a dozen albums for Riot, a heavy metal band. “It’s sad but has always been this way. Now we’re all Black blues artists, if you catch the drift. They used to pay those guys with a bottle of wine – now they pay all of us that way.”

“Most artists don’t have the intellect to understand what is going on affects their future and music quality,” continues Loeb, who closed his successful Greene St. Recording in 2001. “Inventors don’t appear to be much smarter when it comes to how their work is used. Royalty payments are a complex process that’s become even more complicated with new technology, and few are willing spend the time to understand it.”

Pandora’s market value is about $3 billion; Spotify’s is over $8 billion. Bank of America analyst Justin Post believes that YouTube’s value on its own is about $70 billion. 

Black Box 

In a Times op-ed, “Open the Music Industry’s Black Box,” David Bryne, a musician and author, said

“Everyone should be celebrating — but many of us who create, perform and record music are not. Tales of popular artists (as popular as
02artists-web4-articleLargePharrell Williams) who received paltry royalty checks for songs that streamed thousands or even millions of times (like “Happy”) on Pandora or Spotify are common. Obviously, the situation for less-well-known artists is much more dire. For them, making a living in this new musical landscape seems impossible… Perhaps the biggest problem artists face today is that lack of transparency.

“Some of these ideas regarding openness are radical — ‘disruptive’ is the word Silicon Valley might use — but that’s what’s needed. It’s not just about the labels either. By opening the Black Box, the whole music industry, all of it, can flourish. There is a rising tide of dissatisfaction, but we can work together to make fundamental changes that will be good for all.”

More Transparency

Patent holders are frustrated with the uncertainly of issued patents, whose validity must be proven repeatedly before review boards, in the courts and in appeals.

Will they respond as an increasing number of musical artists have and demand more certainty and transparency?

It’s important to remember that what makes patent licensing easier for some, makes it more expensive for others. That’s why those well-situated on the corner of technology and brand are compelled to determine what is truly innovative and its value before others do.

Patent holders: Both of the provocative articles above are worth reading.

Image source: nyt.com

 


%d bloggers like this: