Is high street music dead? HMV collapse into administration – again

The UK’s biggest music retailer are struggling to keep up as music goes digital going into administration after clawing their way out of it 5 years ago.

It’s a sign of the times – the high street is slowly dying as Netflix and Amazon replaces DVD shops, digital music services replace record shops and Amazon replaces every other shop. After high street retail suffered the biggest Christmas slump yet and the “worst year on record” for sales in 2018, the UK’s biggest physical music retailer HMV have come out of the festive season worse for wear.

The British chain of record stores have entered administration putting 2,200 jobs at risk and telling of a larger story in which physical music is going out the window and high street chains are losing appeal. As a sign that the physical music chain may have reached it’s end, this is the second time the company has gone into administration after restructuring specialists Hilco saved the brand in 2013 with a £50 million deal.

HMV are a major part of the physical music industry in the UK, accounting for nearly one-third of all physical music sales. However, the issue isn’t that people are listening to music less but that the industry is shifting to new ways of listening to and consuming music. Music streaming is booming with millions of people coming to services like Spotify and Apple Music every day to listen to music.

The fact is people don’t want to buy a CD from a shop anymore when they have the world’s catalogue of music at their fingertips. People still value music, but the dynamics are changing. Whilst CD sales dwindle vinyl records have seen a massive resurgence as people look to the old format as the physical counterpart to their digital libraries. Live music has also become a much larger asset to musicians and artists as the industry reshapes itself to the digital shift.

Accountancy firm KPMG have been appointed as joint administrators for a high court hearing today to find a buyer for the business or to decide on it’s closure. Their 125 stores across the UK will remain open until talks with suppliers and potential buyers reach a conclusion. Experts have advised that anyone with gift cards use them as soon as possible as they may be invalid following Friday’s result, as could refunds and item exchanges.

Will Wright, partner and joint administrator at KPMG, has said: “Whilst we understand that [HMV] has continued to outperform the overall market decline in physical music and visual sales, as well as growing a profitable ecommerce business, the company has suffered from the ongoing wave of digital disruption sweeping across the entertainment industry. This has been in addition to the ongoing pressures facing many high street retailers, including weakening consumer confidence, rising costs and business rates pressures.

“Over the coming weeks, we will endeavour to continue to operate all stores as a going concern while we assess options for the business, including a possible sale. Customers with gift cards are advised that the cards will be honoured as usual, while the business continues to trade.”

South Korean music services increase payments to artists

Artists and labels are going to be paid more for their music on South Korea’s mobile services with a new change to their royalty regulations.

On Tuesday South Korea’s copyright royalty regulations changed to stipulate that 65% of the revenues made on music streaming services must go to the copyright holders, 5% more than before. The change in law is a great move for artists and labels meaning that they will be compensated higher for their digital sales and streams in the emerging digital music market of South Korea.

Whilst streaming plans aren’t being affected by the change, listeners who look to download their music to own will be paying the price. Many services that offer discounts for bulk downloads of songs are reducing their discount rates. Whereas discounts of up to 50% were available for 30-song packages these have been reduced to 40%. The discount on song download bundles is expected to be completely rid of by 2021.

South Korea’s biggest and favourite music service MelOn set their unlimited mobile streaming package with a 50-song download at a new price of 20,000 won ($17.86) a month. Last year the same package cost subscribers 15,500 won. However their unlimited mobile music streaming package, MelOn’s Mobile Streaming Club, stayed the same price of 7,400 won.

With the discounts expected to keep reducing until reaching 0 in 2021, music downloads will likely continue to increase in cost. But hopefully as with Tuesday’s change in copyright law this will translate in to higher revenue payouts for artists and labels on South Korea’s blooming digital music market.

Japan protects artists with new 70 year Copyright laws

Japan have updated their copyright laws to protect intellectual property for up to 70 years following agreements with countries around the world.

Japan have updated their copyright law to extend the copyright protection period from 50 years to 70 years in the country. The bill was passed through their National Diet legislature houses on June 29th, 2018 and the law went into effect on the 30th December to protect creator’s content for a longer period of time.

It’s not clear what this will mean for intellectual property that has entered the public domain in Japan in the last 20 years, though it may be returned to copyright control depending on when the author died. The law will allow anyone with ‘interest’ in an intellectual property to sue a party it deems to have committed copyright violation, not just the rights-holders.

This means that the Japanese Society for Rights of Authors, Composers and Publishers, Japan’s administering society for musical compositions, will essentially be able to sue anyone for using a composition without a contract regardless of whether the creator has granted them permission. This may lead to disputes over whether the change creates more complications rather than protecting rights-holders.

Japan have extended their copyright protection laws as part of the Trans-Pacific Partnership despite concerns that the agreement would continue after Donald Trump pulled the US out of it. The 11 remaining countries continued forward with the agreement and it has prompted Japan to bring their copyright law in line with the other countries despite it not being a condition of the partnership.

Canada have also extended their copyright term to 70 years following trade agreements with the US and Mexico allowing creators to profit for longer. There are concerns that the change in law will only benefit labels and not the creators as the intermediaries are more likely to benefit in Canada.

Bryan Adam’s has criticised the law and asked that Canadian Parliament change one word to make the law side with the musician. He states: “The simplest solution would be to amend subsection 14(1) of the Copyright Act by changing the word “death” to “assignment”. All copyright assignments would end after 25 years.”

Tencent raised over $1 billion their first day on the NYSE

Tencent Music’s highly anticipated entry onto the New York Stock Exchange has finally come after months of postponements.

After Spotify’s successful IPO earlier this year other music services have been eyeing up an entry onto the New York Stock Exchange (NYSE). Tencent Music have been planning one since early this year but have delayed a number of times due to uncertainty in global markets. Now Tencent Music Entertainment have launched their IPO at last under TME on the NYSE.

TME have a market value of $21.3 billion though they were expected to float at around $29 billion to $31 billion when their expected IPO date was October 18. In their first day on the stock exchange TME have raised roughly $1.1 billion after offering 82,000,000 shares at $13 each. TME are expected to end their offering on December 14th, subject to customary closing conditions.

Tencent Music are a powerful force in Asia’s emerging digital music industry. They own three of China’s biggest and most popular streaming services: QQ Music, Kugou and Kuwo. Their services counted over 800 million unique Monthly Active Users in a SEC filing for the 3rd quarter of 2018. They are majority owned by the overall Chinese media/entertainment company Tencent.

Morgan Stanley, Goldman Sachs, J.P. Morgan, Deutsche Bank Securities Inc., and Merrill Lynch, Pierce, Fenner & Smith Incorporated are joint bookrunners on this offering. Last week as their IPO approached Tencent became embroiled in controversy as one of their investors tries to sue them over “unlawful intimidation tactics and threats” which he says led him to sell his shares for far less than their value.

Tencent Music’s IPO looms and they are being sued by an investor

China’s biggest streaming service are finally gearing up for their long-awaited IPO this week, but one of their investors are unhappy with the media giants and taking legal action.

Tencent Music Entertainment have been discussing an IPO for a majority of 2018 after Spotify so successfully placed themselves on the New York Stock Exchange. After months of delays due to uncertainty on global stocks Tencent have finally set the date for their Initial Public Offering as December 12th. Now just days away the Chinese media giant is being sued by one of their own investors.

Last Week Tencent’s co-president Guomin Xie Guo was accused of using misinformation, threats and intimidation to acquire equity stakes in a rival music service. Chinese investor Hanwei Guo claims that Guomin compelled him to sell his equity stakes in Ocean Music which then became part of Tencent’s own QQ Music service after a merger in 2016 with China Music Corporation.

Hanwei is seeking guidance from investment firms Deutsche Bank AG, JPMorgan Chase & Co., Bank of America Corp. and other companies who help to invest in Tencent. He has filed a motion for discovery and is requesting that Guomin and any others involved return percentages of their equity stakes in their music services to compensate the losses made by giving up his equity stakes in music streaming.

Hanwei claims that Guomin convinced him Ocean Music would turn a profit a year after 2012 when he invested the equivalent of $26 million in Ocean Music which eventually went to establishing Tencent Music. Guomin then told Hanwei that the business was failing despite receiving capital infusions of $100 million. Hanwei was reportedly threatened with government investigation if he didn’t sell his equity and was eventually convinced to sell his shares for far less than their value.

A spokesperson for Guomin says: “We believe a review of the circumstances and facts surrounding this matter clearly show that Mr. Xie, who is now Tencent Music’s Co-President, used unlawful intimidation tactics and threats to defraud a respected, honorable investor. It is unfortunate that Mr. Xie and other respondents have not righted this wrong prior to Tencent Music’s December 12 Initial Public Offering in the United States, where shareholders and regulators hold companies and their officers to high standards of conduct.”

Tencent are limited in what they are able to say prior to their IPO on Wednesday, December 12th so there is currently no comment from the other side. However, coming just a week before they go live this controversy could tar their entry into the US stock market.

Saavn becomes $1 billion+ JioSaavn to lead music streaming in India

India’s leading platform Saavn has completed it’s merger with ex-rivals and India’s most popular music app JioMusic to launch the ultimate streaming service in India as Spotify prepare to enter the market.

In March of this year Indian music streaming service Saavn announced that they would be working with Reliance Industries Limited (RIL) to integrate RIL’s $670 million music service JioMusic into their own. The integration is now complete with the launch of JioSaavn making it the most valuable music streaming platform in South Asia, worth over $1 billion combined, and amongst the most popular streaming services in the world.

JioSaavn merges Jio’s 252 million subscribers, India’s largest digital services network, with the streaming expertise and knowledge of Saavn. The new JioSaavn app will be available on all app stores including the Jio app store on JioPhone. The new app will come with a range of new in-app products and music experiences such as interactive lyrics, localised vernacular display, custom integrations with concerts and live events, and exclusive video content.

Reliance/Jio director Akash Ambani says: “JioSaavn represents a turning point for the music streaming industry in India, as the country continues to experience accelerated tech innovation, rapid adoption of digital services, and a digital music industry at par with global leaders. Powered by Jio’s advanced digital services infrastructure by its widespread user base, JioSaavn will be the largest streaming platform in India.”

The completion of the merger, which has been in the process since March, comes just days after it was reported that Spotify are planning to launch in India within the next 6 months. The reports comes from Spotify‘s Mumbai offices which they launched earlier this year leading us to believe that no matter when, Spotify are planning an inevitable launch into the territory with over 1.3 billion people. With the launch of JioSaavn Spotify will have a big local service to go up against as well as Western services already in the region like Apple Music and Amazon Music.

Co-founder and CEO of JioSaavn Rishi Malhotra said: “Since announcing our merger in March 2018, the Jio and Saavn teams have been working to integrate and re-imagine a combined platform in JioSaavn. Today, we have one of the most personalised and capable media platforms in the world, an unmatched content catalog, regionalised editorial and original programming and music that’s redefining how artists and creators connect directly with audiences worldwide.”

Tencent Music will go public on December 12th

Tencent Music Entertainment’s will happen before the year is over despite a number of delays leading people to believe it would be pushed to next year.

At the start of the year Spotify went public on the New York Stock Exchange (NYSE) after a long build-up and it was a success. Spotify‘s triumphant entry inspired a series of companies around the world to launch an IPO this year including Chinese music streaming giant’s Tencent Music Entertainment (TME) who have finally revealed a date for their NYSE entry.

Tencent revealed their plans for an IPO early in the year however unstable stock markets pushed them back from their planned October launch to November – then November passed leading analysts to assume the IPO wouldn’t happen until 2019. Tencent have now revealed that they will go public on Wall Street on December 12th. They hope to raise between $1.07 billion and $1.23 billion from the IPO, half of what their company executives had expected to seek last year.

Speaking to Reuters a “source close to the deal” reportedly said that Tencent were eager to launch their IPO before the end of the year, fearing that US and China’s trade relations will worsen in the new year. The source said: “It’s not worth waiting any longer for a potentially higher valuation if they have to deal with so many uncertainties.”

Tencent Music’s business comes from their massively popular streaming apps QQ Music, Kugou and Kuwo as well as karaoke app WeSing. Overall they have over 800 million monthly active users using their apps. Their books opened on December 4th, today and trading will go live on Wednesday the 12th.

Apple Music close on Spotify with 56 million subscribers

Apple Music have been chasing Spotify’s numbers since they launched 3 and a half years ago and they’re getting closer with each subscriber announcement.

The latest numbers for Apple Music have been revealed in a new Financial Times article, revealing that Apple Music now reportedly have 56 million subscribers. The report comes after CEO Tim Cook confirmed that their streaming service had reached 50 million subscribers earlier this summer.

The new stat puts Apple even closer to Spotify in number of paying subscribers, whilst Spotify still hold a large lead in overall users thanks to their popular free streaming option. Spotify have been pushing for conversion from free streaming to Premium more and more and it’s beginning to pay off as a report in late October showed that Spotify were nearly 50/50 with free to Premium listeners.

Apple Music doesn’t offer a free streaming option, however they do offer a period of streaming for free to new users, and whilst they are a long way off of matching Spotify’s overall users they are very close to matching paid subs. In July earlier this year anonymous sources claimed that Apple Music had already surpassed Spotify for paying subscribers in the US. Whilst a report by the Financial Times claimed that “music industry insiders who are privy to the data” expect Apple to have 3 million more paid subscribers than Spotify by the end of the year.

The last numbers for Spotify in July showed 80 million paying subscribers around the world and 180 million overall monthly users. Apple Music still have a way to go to match Spotify’s worldwide presence but conversion rates for Spotify are roughly 0.24% whilst Apple Music have almost triple that with 0.64% uptake of subscribers.

Apple’s streaming service has significantly increased in quality since it’s launch as well, which some executives explain is the reason that Apple hasn’t already beaten Spotify for the top spot in Western streaming. An unnamed senior major label executive said: “Apple stumbled out of the gate with an inferior product 3 years ago. Apple Music did not become this spectacular product like iTunes was.”

Next year will no doubt be a highly competitive year for streaming, particularly between Spotify and Apple as their gap gets smaller every month.

ViaGogo will be forced to revealed identities of ticket touts

The world’s most popular resale site for gig and event tickets will soon be forced to reveal the identities behind those pesky touts ripping you off for tickets.

Ticket touts have been a scourge of big events and concerts for years and with the advent of the internet things have only gotten worse with entire marketplaces centring around the buying and re-selling of tickets. The Competition and Markets Authority (CMA) scored a landmark victory in court which gives them the legal basis to force ticket resale website Viagogo to present more information about the tickets they’re buying which includes the identity of touts.

Viagogo agreed to a “comprehensive overhaul” of their site based in the UK on a permanent basis from the 17th of January. The CMA had at first applied for an interim enforcement order that would allow them to force Viagogo to change it’s practices until the case had been settled but Viagogo agreed to go ahead with the changes after pre-court talks.

Viagogo will now be held legally accountable to provide information about sellers on their website and gives courts the power to launch a prosecution against them if they don’t live up to it. This could result in fines for the company or in more serious cases the imprisonment of senior staff. Viagogo must inform buyers if there’s any risk the tickets they are buying might not be valid due to resale restrictions at certain venues.

Digital minister Margot James described the court order as a “great victory for consumers” as it will require each ticket seller to reveal their identity, making them accountable for any issues with ticket sales. Sellers will also be required to provide information about the tickets including seat numbers and the face value of the tickets, so buyers know exactly what they’re getting.

A spokesperson for Viagogo welcomed the settlement, saying: “We are pleased that we have been able to work closely with the CMA to come to an agreement that provides even greater transparency to consumers.”

As ticket selling becomes almost entirely online and certain companies and sellers are taking advantage of this, each move made to protect the consumer is a step in the right direction to creating a fair playing field for ticket sales online.

Tencent’s IPO gets delayed again, likely to 2019

China’s streaming giant Tencent have once again delayed their plans to go public making it likely that we won’t see their IPO this year.

Tencent Music Entertainment (TME) are China’s dominating streaming service with over 800 million users. The streaming giant made their plans clear earlier this year to expand with an upcoming Initial Public Offering (IPO) on the US stock market, following Spotify’s lucrative entry onto the New York Stock Exchange. After delaying their plans to early November already it seems that they may not go public this year at all.

Their highly anticipated $2 billion IPO was initially planned for October but the company delayed it, stating that they would wait for global stock markets to stabilise first. According to two sources involved, reported by Reuters, TME are now discussing pushing their IPO – the last major one of the year in the US – back to 2019. The company hasn’t made a final decision yet as it analyses uncertain markets and weak technology stocks.

One source reportedly said: “Of course they want to get the deal done within the year, but meanwhile they don’t want to rush for the listing. What they care about a lot is (getting) the right valuation, rather than the fast pace of the listing.” Another simply said: “We continue to monitor.”

The New York Stock Exchange is typically slower in December and with only 9 days left until the last month of 2018 it’s looking increasingly unlikely that the IPO will take place this year. TME have declined to comment officially.