#TheWeeklyRoundUp - 09.05.21

Universal Music Group is raising $3.5 Billion in financing. Will a spending spree follow? (MBW)

Last month, MBW revealed that Universal Music Group spent a whopping €1.5 billion (approx $1.7bn)in 2020 on a combination of acquiring catalogs and paying advances to artists.

This expenditure figure was unusually large – more than three times the equivalent number from the prior year. It included nearly $400m spent by UMG on acquiring the peerless song catalog of Bob Dylan in Q4 2020.

This all seemed indicative of something important: the ‘traditional’ major music companies, like Universal, are doggedly refusing to bow out of a modern music rights acquisition frenzy that has been accelerated by the likes of Hipgnosis Songs Fund, Primary Wave, KKR and others. (Another example of this trend:Sony Music Publishing has just spend an unknown – but almost certainly nine-figure – sum on buying Paul Simon’s song catalog.)

The $1.7bn sum Universal spent in 2020 suggested that company was locking down its market power (and refusing to allow it to be snapped up elsewhere) ahead of UMG’s debut on the public markets, which is expected to arrive in Amsterdam later this year.

So, did Universal exhaust its music acquisition war-chest with its mammoth 2020 catalog splurge?

Don’t bet on it.

Universal Music Group has confirmed to MBW that it recently reached an agreement with four “leading banks” regarding a new five-year financing line worth €3 billion (approximately $3.5 billion).

UMG expects the syndication of this financing amongst a pool of banks to be completed by the end of April 2021.

One particularly interesting aspect of this raise is that it is being carried out by Universal itself, rather than its majority-parent, Vivendi.

Specifically, it is Universal’s Dutch company – Universal Music Group B.V. – that is raising the $3.5 billion.

That’s not only significant because Universal’s listing on the stock market will take place in Amsterdam this year. It’s also significant because of the corporate structure of UMG today – a structure that appears to have been regrouped and cemented in readiness for the firm going public.

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TikTok will pay South African musicians for every play under a just-signed deal (Business Insider SA)

TikTok has announced a multi-year licensing agreement which covers 58 territories across the African continent. The deal will see South African songwriters, composers, and music publishers paid royalties when their music is used on the video-sharing social networking service.

TikTok is estimated to have more than six million users in South Africa, according to the 2020 SA Social Media Landscape report. The popular app has racked up more than two billion global downloads since its release in 2016, outpacing Facebook, Instagram, Snapchat, and Twitter.

The platform allows users to upload and share short-form videos – usually limited to 15 seconds – which are accompanied snippets of popular music.

Jerusalema, a song produced by local hitmaker Master KG, became a TikTok sensation in 2020. The #Jerusalema dance challenge spawned videos which were viewed over a billion times and helped Master KG reach chart-topping positions in Belgium and Switzerland.

Following Jerusalema’s success and TikTok’s ever-expanding international reach, the Southern African Music Rights Organisation (Samro) and Composers Authors and Publishers Association (Capasso) reached a licensing deal with the company.

The multi-year licensing agreement will see registered musicians receiving royalties via Capasso, which has more than 7,000 members.

“We are happy to have reached an agreement with TikTok in order to ensure that pan African songwriters are taken care of on the platform,” says Wiseman Ngubo, Capasso’s chief operations officer.

“With the increasing spotlight on African music, more African songwriters are poised to reach global superstar status and TikTok will play a major role in showcasing their talents to the world.”

Although Capasso and Samro are two distinct entities, they license digital use jointly, and artists need to be members of both organisations to reap the benefits of the latest deal.

There are no signup or membership fees when registering with Samro. Capasso has an administration fee of R100 for artists and R250 for their publishers.

“Streaming royalty calculations are not based on a fixed rate per stream, rather they are based on what is termed a pro rata share of the available pool,” Ngubo told Business Insider South Africa about the size of royalties artists are due to receive.

“This means, in essence, royalties are determined by one’s market share, as determined by usage, in each period.”

The licensing deal with Capasso and Capasso in Africa comes after TikTok signed an “expanded” global licensing agreement with Universal Music Group in February. Sony Music and Warner Music Group entered into similar licensing agreements with TikTok in November and December, respectively.