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 maximise their income and reduce their touring costs.
Following reports at the start of the week that Spotify was planning to reduce its workforce, on Monday (January 23) the music streaming company confirmed that it is in the process of slashing over 500 jobs worldwide.
The firm confirmed in an SEC filing that it is reducing its employee base by “about 6% across the company”.
In the same filing, Spotify confirmed that Dawn Ostroff, Chief Content & Advertising Business Officer, is to leave the company.
Spotify CEO Daniel Ek told staff in a memo on Monday that, “I take full accountability for the moves that got us here today.”
Meanwhile, news of a number of music rights deals hit our pages this week. On Tuesday (January 24), for example, it was confirmed that Justin Bieber has agreed to sell his catalog to Blackstone-backed Hipgnosis Songs Capital (HSC).
Other deals announced this week included Primary Wave Music’s acquisition of the music rights of Robby Krieger and the late Ray Manzarek of legendary US rock band, The Doors, while Warner Music Group struck what it calls a “milestone deal” with legendary British progressive rock band YES.
Plus, Kobalt announced that its first-ever employee, Chief Creative Officer Sas Metcalfe, is stepping down, effective February 28, 2023.
Here’s what happened this week…
Credit: TT News Agency / Alamy
1) OVER-SPENDING AND UNDER-PRICING: SPOTIFY’S COMMERCIAL MISSTEPS HAVE COME BACK TO HAUNT IT.
“I take full accountability for the moves that got us here today.” And so he should.
Daniel Ek’s admission that he bears personal responsibility for yesterday’s news of Spotify cutting over 500 jobs is noble. It’s also 100% justified.
In my view, Ek’s loss-making company has played with fire on three key matters these past few years:
(i) Spending a monstrous amount of money on staff, sales, and marketing; (ii) Spending a monstrous amount of money on Spotify’s podcasting strategy, despite podcasting burning through Spotify’s funds; and (ii) Stubbornly refusing to increase the price of Spotify’s flagship subscription service in its biggest market – not even once – over the past 12 years. Despite the fact that doing so would have likely made Spotify… a monstrous amount of revenue.
These three factors have coalesced to squeeze Spotify’s gross margin figure, which missed the company’s own guidance in Q3 2022.
This gross margin struggle has sent Wall Street analysts into a flap these past few months, and ultimately contributed to Ek’s decision this week to cut 6% of Spotify’s global workforce…
2) DONE DEAL: JUSTIN BIEBER SELLS CATALOG TO HIPGNOSIS’ BLACKSTONE FUND
It’s official: Justin Bieber has agreed to sell a career-spanning catalog to Blackstone-backed Hipgnosis Songs Capital (HSC) in a nine-figure deal.
On Tuesday (January 24), Hipgnosis announced via a media release that HSC has acquired “Justin Bieber’s 100% interest in his Publishing Copyrights (including the Writer’s Share of Performance), Master Recordings and Neighboring Rights for Bieber’s entire back catalog, comprising over 290 titles released before December 31, 2021”.
[Universal Music Group continues to own the master recordings of Bieber’s back catalog; it appears that Hipgnosis will now receive Bieber’s artist royalty stream on those masters via Universal. UMPG will continue to administer Bieber’s publishing.]
The Wall Street Journal reported in December that the Hipgnosis/Bieber deal would be worth around USD $200 million…
3) PRIMARY WAVE BUYS MUSIC RIGHTS OF ROBBY KRIEGER AND RAY MANZAREK OF THE DOORS, IN ‘MONUMENTAL’ DEAL
Primary Wave Music has acquired the music rights of Robby Krieger and the late Ray Manzarek of legendary US rock band, The Doors.
The company says that the “monumental acquisition” includes Robby Krieger and the estate of Ray Manzarek’s interests in The Doors’ music publishing catalog, recordings, trademarks, and merchandise rights and income, among other things.
The price of the deal with Primary Wave has not been disclosed.
The Jim Morrison entities and the band’s drummer John Densmore retain their interests separately from Primary Wave… (MBW)
4) WARNER STRIKES ‘MILESTONE DEAL’ WITH YES, BUYS RECORDED MUSIC RIGHTS TO BAND’S ATLANTIC RECORDS CATALOG
Warner Music Group has struck what it calls a “milestone deal” with legendary British progressive rock band YES.
The deal sees Warner acquire the recorded music rights and income streams from the band’s “complete” Atlantic Records era catalog.
The company notes that the acquisition continues “a longstanding relationship” between the band and Warner Music, which now spans over a half-century, beginning with YES’ self-titled 1969 Atlantic debut album.
Warner calls YES “among the most enduring, ambitious, and virtuosic bands in music history…”
5) SAS METCALFE TO STEP DOWN AS CHIEF CREATIVE OFFICER OF KOBALT MUSIC
Kobalt has announced that after more than 20 years with the company, Chief Creative Officer Sas Metcalfe will be stepping down, effective February 28, 2023.
Metcalfe was Kobalt’s first-ever employee, hired by founder and Chairman Willard Ahdritz, according to an MBW interview published in 2015.
Kobalt calls Metcalfe “a true pioneer in the music industry…”
