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Music Business News, July 25, 2017

Spotify and Warner indicated they may reach a licensing deal by September. Also, Sony/ATV extended its contract with Michael Jackson’s valuable Mijac Music catalog. And Apple Music revealed a new perk to streaming music fans.

 

Spotify and Warner Music Group (WMG) Approaching Deal

 

Sources indicated that Spotify is nearing a licensing deal with Warner Music. According to Reuters, Warner is the last major label the streaming service needs to snag in order to go public on the U.S. stock market.

 

An insider indicated that some of the previously big issues have been resolved, including giving Spotify a better revenue split in exchange for making some of Warner’s albums only accessible to paying subscribers for a specific period of time. Artists on Warner include Ed Sheeran and Muse.

 

The exact amount of the split and the up-front guarantee to the label have not yet been named.

 

A source said, “The negotiations are at a crossroads … There are still a number of key points that remain to be agreed. If we manage to come to terms on these points, then it could lead to a very quick transaction. If not, any deal would remain at bay.”

 

Another source speculated talks will finalize by the end of the summer: “Given the way talks are progressing, I would be surprised if we don’t have a deal in September.”

 

Spotify has grown into the most popular streaming service in the world during the past decade. However, it will face profitability issues if it is not able to come to an agreement with major labels that has it paying lower royalty rates.

 

Competitors like Apple and Amazon have an advantage over Spotify because can afford to pay their way into music with money from other assets/businesses.

 

Recent reports said Spotify is worth $13 billion. The company is trying to get a 50-50 revenue split with major label Warner, but Warner demands at least 52 percent. Spotify currently pays 55-percent of royalties to WMG.

 

Warner stated it also wants an up-front payment guarantee from Spotify, independent of subscription growth.

 

Sony/ATV Re-Upping Agreement with the Mijac Music Catalog

 

Sony/ATV Music Publishing reached an agreement with the Estate of Michael Jackson for long-term administration of Michael Jackson’s valuable Mijac Music catalog.

 

According to Music Business Worldwide, Mijac Music includes hit songs by Jackson including “Bad,” “Beat It,” “Billie Jean,” Dangerous,” “Don’t Stop ‘Til You Get Enough,” “Smooth Criminal,” “We Are the World” and others. Launched in 1980, Mijac Music also has the Sly and the Family Stone classic catalog and songs by soul songwriters Kenneth Gamble and Leon Huff.

 

Additionally in the mix are tunes made famous by Ray Charles, Elvis Presley, Aretha Franklin and more.

 

Martin Bandier, chairman and CEO of Sony/ATV explained, “Michael Jackson’s Mijac catalog is one of the most significant and valuable in music. Michael’s songwriting talents are respected and admired by everyone, but I also want to acknowledge his gifts as a smart businessman who put together an incredible catalog of classic songs.”

 

He added, “His Estate continues to further his vision and we are privileged to be the administrators of such an important collection of songs.”

 

Co-executors of the Michael Jackson Estate, John Branca and John McClain said, “The incredible songs in the Mijac Music catalog showcase Michael’s creative genius as a songwriter, and further, his acumen in understanding the creative and commercial value of these acclaimed third party songs … We trust in Martin Bandier’s leadership and in his team. The music of the greatest entertainer that ever lived, Michael Jackson, is in the hands of the #1 publishing company in the world.”

 

Jackson acquired the catalog of Rock and Roll Hall of Fame artist Sly Stone in 1983, and it was the first to be added to the Mijac Music collection. Songs include “Dance To the Music,” “Everybody is a Star,” “Everyday People,” Family Affair,” “Hot Fun in the Summertime” and others.

 

Mijac then acquired songs like “Ain’t No Stoppin’ Us Now,” “After Midnight,” “Ease on Down the Road,” “Great Balls of Fire,” I Got a Woman,” “Love Train,” “Runaround Sue,” “Shake, Rattle and Roll,” “When a Man Loves a Woman” and many more.

 

Apple Music Exploring Alternatives to Album Exclusives

 

Apple Music showed it is exploring live performance exclusives in a tweet, reported Digital Music News. The streaming service announced a deal with Arcade Fire to exclusively livestream a performance.

 

The streaming service’s original push to attract new users was to offer album exclusives. The company signed deals wit Frank Ocean and Chance the Rapper.

 

Apple has moved away from album exclusives as labels have been less enthusiastic about signing these types of agreements. Even though several mega artists earned a great deal of money initially from album exclusives, these exclusives led to an increase in online piracy.

 

Long-term, exclusives have proven to be bad business for artists, and many have backed out of pre-established agreements recently. Britney Spears canceled her exclusive deal with Apple Music right before the release of Glory. And Lady Gaga threatened to leak her album after being forced into a deal with Apple. Kanye West is in the midst of a high-profile legal battle with Jay Z and TIDAL after allegedly losing millions of dollars on his exclusive The Life of Pablo. And even though Jay Z’s latest TIDAL-exclusive album, 4:44 quickly went platinum, it did not make the Billboard 200.

 

Troy Carter, Spotify’s Global Head of Creator Services elaborated on the shift: “I think people have learned over the last six months that it’s bad for the music industry, it’s not that great for artists because they can’t reach the widest possible audience, and it’s terrible for consumers.”

 

However, the strategy initially worked, pushing Apple Music to “well over” 27 million subscribers. In a push to compete with Spotify’s 50 million subscribers (and counting), Apple showed it is testing out a new type of exclusive by offering exclusive access to an Arcade Fire livestreamed concert.

 

In a twist, Arcade Fire’s Win Butler and Regine Chassagne are actually TIDAL co-owners and appeared on stage at TIDAL’s relaunch show in 2015. However, they have released several songs from their new album Everything Now on Apple Music.

 

Apple’s focus on livestreamed performances shows the company is not backing off exclusive content. The move towards livestreaming music may also be attached to Apple’s upcoming series of documentaries.