Spotify faced a lawsuit, but still filed to go public. Also, music listening in the U.S. rose by 12.5 percent in 2017. And top YouTube creators reported a major traffic slowdown.
Spotify Going Public, Facing Huge Lawsuit
Music streaming platform Spotify filed to go public, planning to list its shares on the New York Stock Exchange for the first time despite facing a $1.6-billion copyright infringement lawsuit.
The Los Angeles Times reported that Wixen Music Publishing Inc. is suing Spotify for allegedly violating copyright on over 10,000 songs. The songs include tracks by Tom Petty, Neil Young and Stevie Nicks.
Analysts asserted that a lawsuit of this size may frighten away possible investors, give pause to current investors and significantly decrease Spotify’s market value.
The streaming music platform filed paperwork for its public offering confidentially, said a source close to the situation. Axios was first to report the filing.
Spotify will not hold a traditional IPO, rather list shares directly on the New York Stock Exchange without raising capital or giving away new shares. This would allow the company to go public and save money on the underwriting fees that companies usually have to pay to investment banks when they hold IPOs.
Spotify’s worth has been approximated at $20 billion. It has a catalog of over 30 million songs, with over 60 million paying users and over 149 million users total. It is available in 61 countries.
The company signed multi-year licensing contracts with Sony, Universal, Warner and Merlin in 2017 in order to prepare to go public in 2018.
The Wixen lawsuit was filed on December 29 in U.S. District Court in L.A. The suit revolves around the allegation that Spotify did not obtain the musical composition copyright for approximately 10,784 songs published by Wixen and that it outsourced copyright responsibility to Harry Fox Agency, which was “ill-equipped to obtain all the necessary mechanical licenses.”
The lawsuit also claims that Spotify knew it did not hold the licenses required to stream certain songs, but willfully offered them anyway.
Representatives of Spotify did not respond to requests for comments.
Wixen holds titles by artists including Stevie Nicks, Neil Young, Tom Petty, the Doors and Weezer’s Rivers Cuomo, plus others. The lawsuit claims that users downloaded or streamed songs billions of times through Spotify and that Wixen and its artists did not receive revenue.
The lawsuit stated, “Spotify has built a billion dollar business on the backs of songwriters and publishers whose music Spotify is using, in many cases without obtaining and paying for the necessary licenses … Spotify brazenly disregards United States copyright law and has committed willful, ongoing copyright infringement.”
Wixen’s demands include injunctive relief plus payment of $150,000 per song infringed by Spotify. The total damages are valued at $1.6 billion or more.
Spotify paid $43.4 million in May to settle a class-action lawsuit filed by Melissa Ferrick and David Lowery, who accused the company of streaming their songs without a license.
Music Listening Up in 2017, Led by R&B/Hip-Hop
Music consumption was up 12.5 percent in 2017, according to a Nielsen Music report.
Billboard said the figure accounts for traditional album sales, album units and on-demand streaming album units from video and audio streams combined. One track equivalent album equals ten tracks sold, and one streaming equivalent album unit equals 1,500 on-demand streams.
Audio-only consumption rose by 10.2 percent without any on-demand video streams.
Nielsen Music’s 2017 tracking year was from December 30, 2016 through December 28, 2017.
The R&B/hip-hop genre significantly drove consumption, making up 24.5 percent of all music consumption in the U.S. This is the largest share of any genre and the first time for this particular genre to lead in a calendar year. R&B/hip-hop was also on top in Nielsen’s mid-year report. This marked the first time the genre was ahead of rock as the biggest genre mid-year.
Kendrick Lamar led the charge with DAMN. The album was No. 2 overall for 2017.
Top YouTube Creators Experience a Massive Traffic Slowdown
Popular YouTube creators, including PewDiePie and Zoella are experiencing a massive slowdown in subscriber growth. According to Business Insider, this points to a change in the way people are using the platform overall. Experts indicate that everyone will need to look beyond video if they want to maintain popularity and profitability on the platform.
A Business Insider analyst looked at stats from SocialBlade, which tracks channel stats for YouTube and other social networks. There was a trend of slowing subscriber growth and channel views that was more pronounced among famous YouTubers like PewDiePie and Zoella. While some top creators bucked this trend, they were an exception.
This subscriber growth slowdown may point to a problem with YouTube: growth is not infinite. There are “a finite number of YouTube watchers in the world who will be interested in PewDiePie – and after seven years in operation, [the channel] may have hit peak subscriber growth. In other words, anyone who wants to watch his videos regularly has most likely already subscribed.”
His monthly views, as well as the monthly views of Zoella and others, are also in decline, showing that subscribers may be looking for new and different content from creators. Zoella has already branched out into other products, including books, events, beauty products and others.
However, in November 2016, some people noted that YouTube was “mysteriously” unsubscribing some people. Analysts said the glitches may have been related to the site’s ever-changing algorithms, but many saw “really bad” view counts. Still, YouTube has admitted that it has become more careful about what it promotes through algorithms after complaints about inappropriate content.
In November of this year, BuzzFeed found an autocomplete bug that was prompting users with an inappropriate search term in the search box. Advertisers like Mars boycotted YouTube after the New York Times further uncovered inappropriate comments beneath videos with children.
This incident and also a crackdown by Google on fake traffic coming from bots may be affecting viewing figures for creators. No matter what the cause, 2018 will likely be more challenging for those trying to get subscribers and views on the channel.