Welcome to Music Business Worldwide’s weekly round-up – where we make sure you caught the five biggest stories to hit our headlines over the past seven days. MBW’s round-up is supported by Centtrip, which helps over 500 of the world’s best-selling artists maximize their income and reduce their touring costs.
With 2024 soon upon us, the season for tallying up the numbers for 2023 is approaching quickly.
One company that’s out ahead of the pack on that front is streaming service SoundCloud, which told MBW this week that, 16 years after its founding, it has finally reached that elusive promised land: annual profitability.
CEO Eliah Seton told MBW that the company is forecasting a €2 million positive EBITDA for 2023, a sharp turnaround from the €29 million negative EBITDA it posted in 2022. What’s more, the company has now achieved eight consecutive months of profitability on an EBITDA basis.
Also this week, MBW dug deeper into Spotify‘s plans to alter its payout model in the new year. Among the details in the plan: Not only will tracks need a minimum of 1,000 streams in the previous 12-months to qualify for royalty payments, there will also be a minimum number of unique listeners that will be required for a track to get paid – though Spotify isn’t saying exactly how many.
In other news, Universal Music Group (UMG), the world’s largest music rightsholder, saw its shares hit €25.77 on the Euronext Amsterdam on Tuesday (December 12). That put UMG’s market cap at €46.944 billion, or around USD $50.68 billion at current exchange rates.
Plus, Sony and Warner hit US internet provider Altice with a lawsuit over alleged music piracy on its network, while MBW interviewed Drew Simmons, manager of breakthrough artist Noah Kahan.
Here’s what happened this week…
SoundCloud is experiencing something new, a full 16 years after it was founded: annual profitability.
According to company data shared with Music Business Worldwide, SoundCloud is currently on course to post a slim – but positive – EBITDA for calendar/fiscal 2023.
The company is forecasting a €2 million in EBITDA for 2023, CEO Eliah Seton tells MBW, representing a significant improvement from the €29 million negative EBITDA the firm posted in 2022.
What’s more, says Seton, SoundCloud has now achieved eight consecutive months of profitability on an EBITDA basis.
“Reaching profitability matters because it reinforces that we are pursuing the right strategy and have taken the necessary steps to turn around the business,” Seton tells MBW…
2) UNIVERSAL MUSIC GROUP IS WORTH MORE THAN $50 BILLION, AS FIRM’S SHARE PRICE HITS HIGHEST POINT IN 2 YEARS
Universal Music Group (UMG) is finishing 2023 with a bang.
The world’s largest music rightsholder ended its trading day Tuesday (December 12) on the Amsterdam Euronext with its highest share price of the year to date.
In fact, with a share price of EUR €25.77, UMG finished the day with its largest public valuation for two years.
According to Euronext data, UMG’s share price translated into a market cap valuation of EUR €46.944 billion.
In US dollar terms at current exchange rates, that’s worth USD $50.68 billion.
This is Universal’s highest share price since December 7, 2021 (€25.78) – just over 24 months ago.
UMG’s share price peak came in mid-November 2021, when its day-close stock price crested at €27.72…
3) SONY, WARNER HIT US INTERNET PROVIDER ALTICE WITH $1.6BN LAWSUIT OVER ALLEGED MUSIC PIRACY ON ITS NETWORK
Internet service provider Altice USA is facing another lawsuit from music rightsholders over its alleged enabling of widespread music piracy through its service.
Late last year, Altice was hit with a $1 billion lawsuit on behalf of music rightsholders including Universal Music Group, BMG, and Concord Music Group, who sought to have the internet provider held accountable for “millions” of alleged infringements of “thousands” of their songs.
That lawsuit is ongoing, after a judge in the US District Court for the Eastern District of Texas rejected Altice’s motion to dismiss the case earlier this year.
Now, Sony Music Entertainment and Warner Music Group have filed a similar lawsuit in the same US District Court, accusing Altice of “knowingly contribut[ing] to, and reap[ing] substantial profits from, massive copyright infringement committed by thousands of its subscribers…”
When Drew Simmons first found Noah Kahan on SoundCloud, he was convinced he’d discovered someone special. Only one problem: the feeling was not mutual.
“Noah really didn’t have any concept of what the music industry was,” laughs Simmons. “He didn’t think I was real – he thought I was catfishing him.”
So, Simmons drove hundreds of miles to Kahan’s rural Vermont home in order to convince the musician that, not only was he real, but that he was the manager to help the nascent singer-songwriter take on the world.
The fact that, right now, Kahan is the hottest breakthrough act on the planet shows that Simmons succeeded in his mission.
But, although there was less than a year between Kahan supporting Amos Lee at Red Rocks, and selling out the storied venue in his own right in July, this was no overnight viral success.
Kahan’s rise has been an old-fashioned story of artist development, albeit one in which he reversed the traditional alternative-to-pop direction of travel…
Spotify is introducing a significant update to the way it calculates recorded royalties next year.
Starting in early 2024, tracks must have reached at least 1,000 streams in the previous 12 months in order to generate royalties on the platform.
This policy is one of the more contentious amongst a suite of new changes coming to the platform in the new year, which were first reported by MBW in October, and subsequently confirmed by Spotify in a blog post last month.
SPOT wrote in its blog post that the reasoning behind the new monetization policy is to “better distribute small payments that aren’t reaching artists”.
The company explained further that “tens of millions” of the 100 million-plus tracks it hosts on its platform “have been streamed between one and 1,000 times over the past year and, on average, those tracks generated $0.03 per month.”
The blog post continued: “Because labels and distributors require a minimum amount to withdraw (usually $2-$50 per withdrawal), and banks charge a fee for the transaction (usually $1-$20 per withdrawal), this money often doesn’t reach the uploaders. And these small payments are often forgotten about.”
According to Spotify, in aggregate, these small “disregarded payments” added up to $40 million in 2022 alone, which the company adds “could instead increase the payments to artists who are most dependent on streaming revenue…”