Andy: Welcome to Setlist, the music business podcast from CMU. I'm Andy Malt, with me is Chris Cooke. Hello Chris.

Chris: Hello there.

Andy: As ever, we're going to take a look back at some of the biggest and most interesting music industry news stories of the last week. A week when founder of the Parklife Festival, Sasha Lord, and the Nighttime Industries Association hit out at the UK government's continued insistence that it hasn't changed its position on drug testing at music festivals.

Chris: Yeah, so hopefully you'll remember that that is something that we discussed in some detail on last week's edition of Set List. And we were talking about how Sasha Lord and the Nighttime Industries Association had written to the about this issue. The home office then sent a letter back and basically the home office is persisting with what it has been saying in recent weeks, which we talked about last week. So in terms of whether or not you need a license from the home office in order to do drug testing onsite at a music festival, it has always been assumed in the past that you didn't need a direct license. You would arrange it as a festival promoter with the local authority and the local police force.

The Home Office is now saying that you do need a license, but crucially, and this is what the Sasha Lord and NTIA responded to this week, the Home Office are insisting, not only do you need a license, you always did. They're saying they've not changed their position on this. They're just stating the rule that apparently has always been in force, even though nobody knew. So we knew that's what the Home Office was saying. But last week, just after we'd recorded the podcast.

The Home Office sent another letter to Lord and the NTIA, reaffirming that and responding to the latest letter. Well, Sacha Lord said that that response was frankly laughable and wholly disingenuous.

Andy: He did and NTIA CEO Michael Kill added, there seems to be an unwillingness by the Home Office to ignore us that testing has happened for the last 10 years under a memorandum of understanding with local police and much of our dialogue and engagement has been met with the same bureaucratically scripted response.

Chris: So no real progress on that story in the last week beyond the letter with the Home Office saying what they were already saying and Sasha Lord and the NTIA criticizing that position once again. If you wanna know more about this story, well, first of all, if you didn't listen to last week's setlist, go and listen to last week's setlist. We go into it all in much more detail. Plus I'm sure Andy Malt will link you to our report in the CMU Daily on the most recent development in that domain. But this is not what we are here to talk about in any detail this week.

Andy: No, later on we'll be discussing the NME's return to print. But first, Warner Music last week announced a new deal with TikTok, which it called a first of its kind partnership. That announcement came as TikTok's new standalone music service went live in three more countries.

So this new deal between Warner Music and TikTok involves both the Warner Music recording company and its music publishing business, Warner Chapel, and it covers various platforms run by TikTok owner, ByteDance. So that's the main TikTok app that you know and love, the brand new TikTok music service, as well as its video editing app, CapCut, and the social media firms, commercial music library. And in their announcement, also said that they will work together to create new revenue marketing and insights opportunities for the major labels, artists and songwriters, as well as deepening the engagement with TikTok's huge audience of passionate music fans, while also developing additional and alternative economic models. And that just sounds great. Just sounds super, super great.

Chris: Super great. A lot of stuff to do. They're setting themselves a big list of tasks ahead, but I'm sure lots of exciting times to come. Now, I guess a little bit of backstory here. The music industry, the record companies, the music publishers have had licensing deals in place with TikTok for some time. So there has been money coming in from TikTok to the music industry for the music that is used in all of the videos are uploaded to the TikTok platform. Nevertheless, despite the fact that those licensing deals been in place for a while now. There has been increased criticism, particularly in the last year, about how much money TikTok has been paying over to the music community every month slash year. Last year, the International Federation of the Phonographic Industry, IFPI if you prefer, put out its annual report looking at music consumption, which is looking at where is it that people are interacting with music.

And in that report, which is a survey based on data from lots of different countries, it reckons that the average person is consuming as much music through the videos that they watch on social media platforms like TikTok as they are on the standalone music services like Spotify and Apple Music, etc. So similar levels of consumption. But if you then look at the RFPI stats for revenue and where the money's coming from,

The streaming services like Spotify are paying over vastly more money into the music industry than the social media platforms are. So, as a result, increasingly, record labels, music publishers and the wider music community have been looking at the TikToks of this world and saying, we think you're underpaying for the music that is being used on your platform. In addition to that, in addition to the total amount of money that is coming in,

It's also the case that the deals that are negotiated by record companies, music publishers, et cetera, with platforms like TikTok and Meta for Facebook and Instagram, those deals often are different to the deals that are negotiated with Spotify and Apple Music and Amazon, et cetera. And a key difference is that certainly the initial deals that were done with both Meta and TikTok were lump sum deals.

So basically the platform commits to pay over to its partners in the music industry, record labels, music publishers, on the song side, it's sometimes collecting societies. The platform agrees to pay over a set sum of money for each licensing period, so that might be each year, and actually how much it pays is not affected by how much music is actually used. It's just a set sum of money that comes in at the start of the year covering a set licensing period. So it's a lump sum deal.

Whereas the Spotify type services, those are revenue share deals. So every month of the revenue that comes in, the majority actually of that revenue is going to be paid through to the music industry. Meanwhile, we know that the revenues of the Metas and TikToks of this world continue to grow. They are very much booming. And as a result, there are people in the music industry who think, A, we should be getting more money just generally from TikTok and for Meta, et cetera. But maybe we should be trying to push those services to revenue share arrangements like the Spotify, Apple, Amazon type streaming services so that when their revenues are booming, the amount of money that we make increases as well.

Andy: So all of this put a lot of pressure on TikTok as it sought to negotiate its next round of licensing deals with the music industry. A factor in that is the marketing value of TikTok and ByteDance will have tried to exploit that in order to get a better deal. Plus, it has been known for some time that ByteDance was planning to more closely integrated standalone music service, Resso, with the TikTok app, and then roll that service out globally. And that process began earlier this month when Resso was relaunched, basically, as TikTok music in Brazil and Indonesia. And as that service arrives in more countries, it will mean that the main TikTok platform is more overtly promoting a premium music service that pays money into the music industry, more like something like Spotify does.

And YouTube did the same thing as that. And that helped it improve its relationships with the music industry. So bite dances plans for TikTok music will have been a key part of the most recent round of licensing talks. And obviously those negotiations and the deals that come out the other end are always NDA'd to the hilt, but whatever has been agreed with Warner music will result in a significantly improved partnership.

More specifically, he said, "'We are happy and excited for our next chapter together with TikTok. Through this expanded and significantly improved partnership for both companies, we can jointly deliver greater value to WMG's artists and songwriters and TikTok's users.'"

And the CEO of TikTok, Sho Chu, added, “We are very excited to partner with Warner Music Group to create a shared vision for the future in which artists, songwriters, music fans and the industry can all benefit from the power of discovery on TikTok platforms.”

Chris: So as we said, that all sounds great. Who's not excited about that? Everybody's excited about that. That's who.

Andy: I’m excited.

Chris: Well, mainly people who work at Warner.

Andy: Oh. Yeah.

Chris: But, here we go. Let's now post some questions. Because not only has there been criticism in the music community at large about the amount of money that TikTok is paying in, there has been more specific criticism within the music maker community, artists, songwriters, and their managers, about the total lack of transparency around how the deals with TikTok and meta, it has to be said, have been structured and what that means in terms of artists and songwriters getting paid. So all the digital licensing deals are complicated. And if you want to know how the Spotify licensing works, buy a book because the book exists too. Maybe Andy will put a link in the show notes, which will tell you how the Spotify deals.

Andy: I think the link is always in the show notes.

Chris: The link is always in the show notes. We're constantly pushing that book, Dissecting The Digital Dollar. So, you know.

The way Spotify is licensed is complicated and there are various questions around Spotify as well. But as I mentioned earlier, the initial deals with TikTok and Meta were lump sum deals. And that raises some very specific questions because whereas with Spotify and Apple and Amazon, yes, the deals are complicated, but every month money is allocated to specific tracks and specific songs and then the relevant labels and publishers and collective societies are paid and the data flows through.

So when a record label gets a chunk of money from a streaming service, it knows which tracks that money relates to and how much money relates to each track. So it can then account that to the artists and songwriters down the supply chain and say, okay, this much Spotify money was allocated to your track, you're due 25% of that under contract, here's your cut. Whereas if TikTok pays the record company $10 million for the year, and basically says, go away for a year, and then we'll worry about the next year and our next round of talks.

Well, what happens to that $10 million? Is there any data flowing through? Is it that TikTok is saying, okay, how much you earn is not related to how much your music is used, but nevertheless, we'll still send you some data. We'll send you some data about every time that someone inserts a track into a video. We'll tell you when that happens. Maybe we'll even tell you every single time the video that contains that track, is played. So there are two sets of data that are potentially coming through. And if that data is coming through, then in theory, albeit really only at the end of the year, the record company could figure out how to share out that money across the catalog based on usage, whether that's insertion or actual plays or whatever.

Or maybe they take the money and they split it into 12 chunks, a monthly chunk, and then they do that on a monthly basis. But what if there is no data? And our understanding was with the original meta deals and TikTok deals, initially, at least there was no data coming through. So then what do you do with the money? Well, you have to find some proxy. Well, I mean, you could just bank the money if you were a dodgy, devious record company, but assuming you want to share the artists.

Andy: Oh, no such thing exists.

Chris: No such thing exists. Yeah. I just imagined those. Never, never has there ever been such a record label in the history of the record industry.

So let's, yeah, they don't exist. So every record company clearly wants to share the money with their artists. They're just sitting there every day in their offices thinking, we want to share this money with our artists. How can we share it with our artists? So in the absence of data, they would have to come up with some sort of proxy.

So for example, I know that some people in some of these scenarios have said, well, Instagram, TikTok, bit like YouTube. So let's take the YouTube data and apply it to TikTok money or whatever. I mean, any combination of those could be employed. I guess the key frustration when it comes to artists and songwriters and managers is they don't usually know. They don't usually know how much money has been paid. They don't know whether any data is flowing through. If it is, they don't know which data is being used. Is it insertion? Is it play? Is it combination of the two? If there is no data, is a proxy being used? If so, what proxy? Nobody knows.

And I remember chatting to one manager who managed an artist here in the UK, who was very successful on TikTok because they had other projects beyond music that meant that they had a huge audience on that platform and their music was appearing in videos that were getting huge numbers of plays signed for a major record company. And so the manager, rightly, goes to a major record company and says, great, the stats we're seeing on TikTok. What does that mean in terms of payment? We know you've been paid a lump sum from TikTok because that Chris Cooke at CMU said so.

So how are we going to be paid? Should we be expecting a big chunk of money coming down the line based on that? And this is about a year ago now, but that manager couldn't find anybody at the record company he was working with who could answer that question. So lots of transparency concerns from the music maker community as to how the old deals worked. But what about this new deal? What about these new opportunities that were being promised? What about these new economic models are working on. How is that going to work? How is the money going to be shared? It will be interesting to see as these new deals are negotiated, how much information will flow down. It's also not yet completely clear how TikTok and TikTok Music will work together.

As we mentioned, TikTok Music went live earlier this month in Brazil and Indonesia, very much builds on the back of Resso that already existed, the ByteDance service that was live in those two markets already.

Resso already had some social media elements to it, which made it a little bit different to Spotify and Apple, et cetera. It's clearly gonna be much more closely integrated with TikTok moving forward. TikTok music doesn't have a free tier like Spotify, so they're clearly gonna be using TikTok to upsell TikTok music in the same way YouTube uses YouTube to upsell YouTube music. So how are these services going to interact? All three majors and the indie label repping Merlin have deals in place with the all new TikTok music, even though Sony actually fell out with Resso at one point.

But this new Warner deal, does that change the way the two things are gonna work, either from a revenue perspective or from a marketing perspective? Who the hell knows? I don't. Maybe I don't need to know. Maybe I should know. But I think there'll be quite a lot of artists and songwriters signed to Warner and Warner Chapel and the managers of those artists and songwriters who will be thinking, what the hell is going on here? And it will be interesting to see if that information is made available as these deals fall in line, we expect Sony Universal other deals to follow. So, very exciting, but is it exciting? How is it exciting? And let's see whether or not artists and songwriters get to find out any information about all of that.

Andy: Meanwhile, as we mentioned, just as that new Warner deal was being confirmed, it was also announced that TikTok music is now beta testing in Mexico, Australia, and Singapore, which means that the new service is now operating beyond the markets where Resso already existed. And commenting on that, a TikTok spokesperson said last week, TikTok music is a new kind of music service that combines the power of music discovery on TikTok with a music streaming service offering millions of tracks from thousands of artists. We are now beta testing TikTok music in Australia, Mexico and Singapore. I will have more news to share on the launch of TikTok music in the coming months, so stay tuned for that. Presumably you can expect to see TikTok music in more places, maybe a place where you live, assuming you don't live in Australia, Mexico, Singapore, Brazil or Indonesia, which I mean, I've seen the stats for this podcast, the chances are you don't. So let's assume you aren't. Enjoy your wait for TikTok music, which presumably you are waiting for as we speak.

Chris: And all of that, the fact that we're expecting a Sony deal, Universal deal, a Merlin deal, the big distributors, the societies, et cetera, the fact we're expecting TikTok music to launch in more places, there will no doubt be lots more announcements coming up for everyone to get excited about. But maybe when that happens, rather than talking about it again on Setlist, we'll just refer people back to this edition because I suspect that if you just swap Warner for Sony or Universal, including the quotes. Pretty much everything we've just said will still apply.

Andy: Well. Presumably they won't call it a first of its kind partnership. I don't know. No, they probably will, won't they? Nothing like this has ever been done before!

Chris: They’ll find some reason why their deal is a first of its kind and then won't explain any of it to their artists and songwriters. Prediction there for you people!

Andy: And finally, on this edition of Setlist, the NME has announced plans to revive its print edition just over five years after stopping publishing it in order to expand a digital first strategy. Although, rather than being a weekly publication as it was for, what, 60 odd years, it's now going to come out every other month, so six times a year. You're not gonna get a lot of NMEs is what I'm saying, but you'll get some, and that's what's important.

Now announcing this, NME Network's Chief Operating and Commercial Officer Holly Bishop said, "'Print has always been a cornerstone of the NME brand, and we are thrilled to announce the return of an icon. Our new global magazine will curate the very best of NME, championing emerging artists and bands and serving as the definitive voice in pop culture.'"

That’s quite different to what they were saying in March 2018 when they announced that they were stopping publishing the print edition when they said that increasing production costs and a very tough print advertising market meant that the NME had reached a point where the free weekly magazine is no longer financially viable.

Chris: Yeah, that's what the then bosses of NME were saying in 2018. In that quote, a reminder for those of you who forgot that in the latter part of its history, the print enemy magazine was a free magazine because in 2015 they stopped selling it at the newsstand and in newsagents and they started dishing it out on the street and at tube stations and in student unions and record shops, those record shops that would take it. And it was a free title.

So that was what they were closing down in 2018 after a three-year adventure of being this free magazine that became, if we're being honest, more of an entertainment magazine than a music magazine, because obviously once you're handing it out outside tube stations, it can't just be covering the latest niche alternative bands. It needed to have some movie stuff and TV stuff in there.

But prior to that little adventure of being a free magazine for most of its history, obviously, NME was a paid for weekly title, although from about 2000 onwards in the 15 years up to it becoming this free title, Sales of the NME collapsed. And I mean, ultimately, sales of most print magazines collapsed. But I guess because NME was always pitching itself at a younger demographic, it was one of the first music titles to really experience that significant decline in how many copies it was selling every week. Obviously, it was because of competition from online media, not least NME.com, which was pretty successful from the off.

But of course, other online media and then the rise of social media, et cetera, et cetera. So the circulation of the pay for NME collapsed. When it became a free title, immediately its circulation became much, much bigger. However, not big enough because once you're a free title, it's all about advertising sales. And clearly, the then owners of NME decided that those ad sales were just not enough to keep it going as this free weekly magazine.

So it became a digital only, digital first title. NME.com became the primary part of the operation with the various other spin-offs, online spin-offs around it. And then about a year after it had become online only, it was acquired by BandLab, which obviously has the main music making app and platform that it runs, but has been very acquisitive in recent years, buying up lots of other music companies. It actually acquired a few music media and magazines.

It then rebranded that bit of its business as NME Networks. And then you've got the band lab bit and there's another strand as well. And then that company had a rebrand and is now called Coldercott Music Group. So that's probably why we're getting slightly different messaging about how important print is because we do now have a totally new team in charge running it.

Andy: Yeah, also it would be weird if they were now saying, oh, it's not financially viable and it's a really tough market, but we're gonna do it anyway. But I mean, this isn't actually the first return of a print edition of NME. There was one launched in Australia in 2020. And when that happened, BandLab insisted in its official statements that, whatever the previous owner might've said, the UK print edition of NME was on hiatus. It hadn't been shut down for good.

And the Australian print edition, I mean, it carried on for a while, although it did cease publishing at the start of this year. But not because of any downbeat reasons. At the time, a spokesperson said that this was because of new developments ahead for our global print strategy. And hey, that's what we're talking about now. So yeah, last week's announcement is seemingly the implementation of that new global print strategy because this relaunched magazine, which you may have noticed in the quote earlier, is gonna be available globally.

It's not just in Australia. It's not just in the UK. It's everywhere. Although, I mean, it's mainly seems to be the UK, but ignore that. It's mainly going to be sold via Dawson's the music instrument retailer, which, I mean, might seem like a weird partnership, but that company was acquired by another Coldercott subsidiary Vista musical instruments last month. And it is currently in the process of relaunching that retail brand which actually went into administration in 2021. And presumably this NME tie up is a big part of that relaunch. Although in addition to being distributed via this sister company, the all new print NME will also be made available, they said, via artists, record stores, and select partners.

Quite how that's gonna work is not clear. I don't know if, I mean, maybe they're gonna go back to the, you know, when they were handing out via tube stations, but they're going to make artists hand it out in the street. It'd be a way artists could make money in this day and age. Maybe that's the plan. This is how artists are going to make money in 2023. They were going to get paid to hand out NME magazines in the street. We'll see. I don't know.

Chris: I know. They won't. But it is true that beyond this partnership with their own music instrument seller, Dawson's, a little bit ambiguous about exactly where this magazine will be made available. But the first issue is out next month. So I'm assuming we'll find out quite soon.

Andy: Yes. I mean, yeah, we must agree because they were a bit vague about, I mean, we assume that it's going to be a paid for title and not just given out for free by artists in the street. But they have said that the first edition will be available to order from Dawson's from the 9th of August, which is actually quite soon. So we'll find out all the details, if not before, then certainly then.

Chris: And if you want a quote to go with this story, because we always love to have quotes with a story, here's an upbeat quote from the founder of BandLab, who's also CEO of Enemy Networks, Meng Rue Kwok, who says of the new magazine: “Building on our commitment to supporting the new talent, shaping the future of music and the industry itself, we are prouder than ever to showcase and immortalise emerging artists in our new global edition. NME has never reached more people than it does today.”

Obviously, that's the online reach. I don't think they're going to be printing that many copies of this new magazine. But with all the different online channels never reaching more people than it does today, and “we”, this is him and them, not us, just to clarify, “we are excited to embrace our legacy giving emerging artists the recognition and exposure they truly deserve while creating new synergies and opportunities for both talent and fans.”

So a nice little upbeat quote there. You can decide for yourself what is more exciting, the launch of TikTok music or Warner Music with their first of its kind partnership with TikTok or NME returning as a print magazine. Answers on a postcard. We look forward to receiving your answers.

Andy: I mean, I get that they're excited about relaunching NME as a printed magazine. But I don't know talking about creating new synergies and opportunities when what you're really saying is we're going to print a few copies of a magazine. I think that's stretching it a bit. It's just a magazine. It's not like, it's not some new technology. It's a very old technology. Uh, it's just, it's just a magazine, just a magazine. I don't know.

Chris: Yeah, but if the kids are getting excited about cassettes and I met one who is, then maybe they're getting excited about music journalism on paper. We shall see.

Andy: Yeah. Well, that's all we've got time for on this edition of Setlist. If you want to find out more about anything we've discussed on this edition of Setlist, do go and have a look at the show notes, which you'll find in your podcast player at the moment as you're listening. Or you could go to setlistpodcast.com - all the links are there, everything you could possibly need to know.

Don't forget to subscribe to the show if you haven't already rate and review the show. Someone did. It was good. Everyone else do it now, please. And if you've got anything you want to tell us. Email us setlist@unlimitedmedia.co.uk

Setlist is the music business podcast from CMU. It's presented by Andy Malt and Chris Cooke. And for more on CMU, go to completemusicupdate.com.