Music Business News, August 9, 2017

SESAC signed a new  U.S. radio deal. And SoundCloud was saved by two angel investors. Also, Samsung and Live Nation announced one of the first virtual reality live music projects.

 

SESAC Radio Deal Signaling Shift in Broadcasting Royalties

 

Licensing body SESAC announced it had reached an agreement with the Radio Music License Committee (RMLC) for a higher royalty rate, reported Music Business Worldwide.

 

SESAC represents writer clients that include Adele, Randy Newman and Green Day. According to spokespeople, the new deal is 50-percent higher than the rates received by ASCAP for the same five-year agreement the PRO signed in December of last year.

 

However, the RMLC, which oversees more than10,000 radio stations throughout the U.S. contradicted that statement with a claim it had reduced the highest rate paid to SESAC and members by U.S. radio stations by 60 percent.

 

Still, SESAC said its goal of instigating a significant change in the way radio stations pay royalties has been achieved – that it has helped increase the money coming to songwriters from U.S. radio.

 

At the moment, radio royalty rates earned by the U.S.’s two biggest PROs, ASCAP and BMI are ruled by Consent Degrees. These Consent Decrees throw disputes over broadcast payouts into federal courts.

 

Originally, this policy was meant to stop anti-competitive behavior. But critics argue they have actually put an unfair cap on potential radio and digital radio rates earned by artists.

 

SESAC is a private and for-profit company, so it is not bound by the same rules as the non-profit ASCAP and BMI. Thus, it was able to deal with negotiations through commercial arbitration.

 

According to SESAC, the RMLC argued during deliberations that the royalty rate agreed to by ASCAP was the “true market value” for publishers and songwriters and that SESAC should thus have to accept the same terms.

 

SESAC CEO John Josephson argued that the higher royalty rates that were agreed upon in the end were “a resounding affirmation of the fact that ASCAP rates in radio do not reflect fair market value.”

 

Many music publishers saw the deal as a good sign for artists and labels. Jody Gerson, chairman and CEO of Universal Music Publishing Group stated, “We welcome this finding as a benchmark that will ultimately achieve higher market value for our songwriters … We remain committed to continuing to work with the various members of the music community to achieve that goal and we commend John Josephson and his team for this important step in the right direction.”

 

CEO of the National Music Publishers Association, David Israelite noted, “SESAC’s victory in this arbitration proves what we already know to be true. Arbitration is better than federal consent decrees, and a free market would be best of all … It’s time for the government to get out of the business of setting rates for songwriters.”

 

SESAC’s win will be more important if it ends up changing the course for its competitors. While the RMLC signed a deal with ASCAP, BMI continues to hold out until radio presents a more favorable rate.

 

SoundCloud Saved by Angel Investors

 

A pair of mystery investors purchased a 50-percent stake in SoundCloud this past week, likely saving the company from having to shut down permanently.

 

Music Business Worldwide said the investors are rumored to be merchant bank The Raine Group and Singapore state investment corporation Temasek Holdings.

 

Reports indicated that SoundCloud only had enough funds to stay afloat for another 50 days. The company is valued at $300 million.

 

In 2014, SoundCloud co-founders Alexander Ljung and Eric Wahlforss attempted to sell their company to Twitter for $1 billion. Talks disintegrated, but Twitter invested $70 million into the company in 2016, bringing its value up to $700 million.

 

At the end of last year, Spotify was also seriously eying the company, but then walked away unexpectedly.

 

In early 2017, Google approached SoundCloud to buy it for around $500 million, with Deezer also thinking about bidding.

 

An anonymous source close to the situation revealed some alarm about the angel investments: “SoundCloud plays a unique role in the industry and it’s a great shame that it’s [in this financial state] … It’s not like Private Equity will be looking at this deal as a way to contribute to the music industry; they’re unlikely to be thinking about how they can serve artists and songwriters … [This investment is a shot of steroids in order to make some quick money – it’s not about the long-term health of the music business.”

 

Samsung and Live Nation Join Forces for a Virtual Reality Tour

 

Samsung and Live Nation announced they will be teaming up to live stream the upcoming Coldplay tour in virtual reality.

 

Billboard revealed that the Coldplay’s giant A Head Full of Dreams Tour will be streamed using virtual reality technology starting on August 17th at 8:30 p.m. CT at Chicago Soldier Field. The show will be broadcast in real time by way of Samsung Gear powered by Oculus through the Samsung VR service.

 

This will be one of the first virtual reality music experiences available to fans, who will be able to see the tour in 360 degrees using a Gear VR headset coupled with a Samsung smartphone.

 

Michael Schmier of amsung Electronics America said, “Through our industry-leading VR hardware and platform ecosystem, we are thrilled to offer Samsung Gear VR owners access to premium, immersive live entertainment and experiences in full 360 … By partnering with Live Nation and Coldplay, music fans across the globe with Gear VR can tune in to the live concert, experiencing the energy of the show.”

 

Live Nation’s EVP of global partnerships and content distribution added, “We not only give fans the best in-seat experience, but we’re also committed to working with the best technologies to provide every music fan an extraordinary concert experience, regardless of where they are.”

 

The concert signals the opening of a new avenue for artists who want to personally connect to their audiences and a potential shift in the music industry, which has been slowly gravitating towards livestreaming opportunities for the past several years.