The Pitch newsletter is a monthly update of legal issues and news affecting or related to the music, film and television, fine arts, media, professional athletics, eSports, and gaming industries. The Pitch features a diverse cross-section of published articles, compelling news and stories, and original content curated and/or created by Arnall Golden Gregory LLP’s Entertainment & Sports industry team.
“Art enables us to find ourselves and lose ourselves at the same time.” – Thomas Merton
AGG News
Five Likes for FTC: Agency Issues Updated Endorsement Guides and Proposed Rule to Address Increasing Use of Social Media, Influencers, and Consumer Reviews in E-commerce
Over a year ago the Federal Trade Commission (“FTC”) proposed updates to its Guides Concerning the Use of Endorsements and Testimonials in Advertising. The updated Endorsement Guides are finally here. The newly issued Guides are long overdue to address the burgeoning trend of companies using social media, online influencers, and customer reviews to promote their products. In addition, FTC has proposed a new rule to strengthen its ability to obtain financial penalties in enforcement actions. For entertainment and sports companies, vendors, and agencies using social media influencers, FTC’s updated Guides are a must read.
(Source: Arnall Golden Gregory, August 16, 2023)
Industry News
Linear TV Falls Below 50 Percent of Viewing for First Time
Broadcast and cable networks made up less than half of all TV use in July — the first time linear TV viewing has fallen below 50 percent in Nielsen’s two-plus years of tracking viewing time by platform. While overall TV use in July edged up from the previous month, the growth came in streaming — which hit an all-time high of 38.7 percent of all TV usage — and the “other use” category, which includes video games played on a TV screen and physical media playback, among other things. That made up 11.6 percent of usage.
(Source: The Hollywood Reporter, August 15, 2023)
Record Labels File $412 Million Copyright Infringement Lawsuit Against Internet Archive
Universal Music Group, Sony Music Entertainment, Capitol, and other record labels filed a copyright lawsuit against Internet Archive, founder Brewster Kahle, and others over the organization’s “Great 78 Project,” accusing them of behaving as an “illegal record store.” The suit lists 2,749 pre-1972 musical works available via Internet Archive by late artists, including Frank Sinatra, Ella Fitzgerald, Chuck Berry, Billie Holiday, Louis Armstrong, and Bing Crosby, among others. The suit, which was filed in federal court and reviewed by Rolling Stone, claims the Internet Archive’s “Great 78 Project” — launched by Internet Archive as a community project for “the preservation, research and discovery of 78rpm records,” according to its blog — has violated copyright laws. By “transferring copies of those files to members of the public, Internet Archive has reproduced and distributed without authorization Plaintiffs’ protected sound recordings,” the suit alleges.
(Source: Rolling Stone, August 12, 2023) [Subscription may be required]
Avid to Be Acquired by STG for $1.4B
Following months of rumors that it was exploring a sale, Avid — the maker of the Media Composer editing system and Pro Tools audio postproduction system, both leading tools used in Hollywood for picture editing and sound, respectively — has entered into an agreement to be acquired by an affiliate of private equity firm STG in an all-cash deal valuing Avid at approximately $1.4 billion, inclusive of Avid’s net debt. The board of directors of the publicly traded, Burlington, Massachusetts-headquartered tech developer unanimously approved the sale, which is expected to close during the fourth quarter. With the acquisition, Avid will again become a privately held company.
(Source: The Hollywood Reporter, August 10, 2023)
Rights Reversions Could Stoke the Catalog Investment Market — But Artists Face Hurdles
Thanks to the Copyright Act of 1976, songwriters and other creators may recapture the copyrights to compositions and recordings that they may have signed away earlier in their careers. Songs dating from before 1978 can revert to their creator or heirs after 56 years, and songs from after 1978 can revert to the creator or heirs after 35 years, provided they file the proper paperwork.
(Source: Billboard, August 10, 2023) [Subscription may be required]
The 3 Major Music Companies Generated $1BN More in the First Half of 2023 vs. the First Half of 2022
The three ‘majors’ – across recorded music, publishing, and other income streams – jointly generated USD $12.99 billion in the first six months of 2023. This figure was a clear billion dollars (almost to the penny!) larger than the $11.99 billion that the ‘Big Three’ generated in revenues in the same period of 2022. It also means – oh yes – that the three majors combined generated an average of approximately $72 million per day in the first half of this year… or roughly $3 million per hour.
(Source: Music Business Worldwide, August 8, 2023)
PENN Entertainment and ESPN Enter Into Long-Term Exclusive Strategic Alliance for U.S. Online Sports Betting
ESPN and PENN Entertainment Inc. announced a $2 billion U.S. online sports betting agreement on Tuesday granting PENN a 10-year exclusive right to the ‘ESPN Bet’ trademark for online sports betting.
(Source: Business Wire, August 8, 2023)
Google, Record Labels Working on Deal Covering Musical “Deepfakes”
Google and Universal Music are in talks to license artists’ melodies and voices for songs generated by artificial intelligence as the music business tries to monetize one of its biggest threats. The discussions, confirmed by four people familiar with the matter, aim to strike a partnership for an industry that is grappling with the implications of new AI technology.
(Source: Ars Technica, August 8, 2023)
YouTube Superstar MrBeast Sued for $100 Million by Company Behind His Virtual Burger Restaurant Chain
The biggest YouTube star in the world — Jimmy Donaldson, aka MrBeast — is being sued by Virtual Dining Concepts, the ghost kitchen company that operates his virtual restaurant chain, MrBeast Burger. Virtual Dining Concepts and Celebrity Virtual Dining (VDC) are suing the YouTuber and his Beast Investments for failing to honor his contractual obligations, as well as intentional tortious interference. Damages are alleged to exceed $100 million.
(Source: Variety, August 7, 2023)
Gizmodo Editor Files Lawsuit Against Apple for Tetris Movie Infringement Claims
Dan Ackerman, a technology and video game journalist who recently editor-in-chief of the tech news website Gizmodo, filed a copyright infringement lawsuit against Apple, screenwriter Noah Pink, and other defendants on August 7, 2023, in United States District Court for the Southern District of New York. The suit, brought by the Landau Group, alleges that the recently released Apple TV+ film Tetris copies material elements from Ackerman’s 2016 non-fiction book The Tetris Effect: The Game That Hypnotized the World.
(Source: AmLaw.com, August 7, 2023)
Paramount to Sell Simon & Schuster to KKR for $1.62 Billion; Media Giant’s Earnings Top Estimates
Paramount Global agreed to sell book publisher Simon & Schuster to private equity giant KKR for $1.62 billion, the media company said Monday as it reported earnings that topped Wall Street estimates. KKR’s entry into the book publishing space comes months after Paramount scrapped its initial agreement to sell Simon & Schuster to rival Penguin Random House — which was valued at $2.2 billion — after a federal judge rejected the merger and it raised red flags with the government.
(Source: CNBC, August 7, 2023)
Future Sound Asia Demands the 1975 Pay Financial Damages After Malaysian Festival Cancellation
Organizers of the Malaysian music festival that was cancelled last month after onstage actions by The 1975‘s Matty Healy has issued a letter of claim to the U.K. band. This legal document, typically issued to notify a person or entity that court proceedings may be brought against them, demands compensation for the financial damages incurred by the event’s promoter Future Sound Asia after the remainder of Good Vibes Festival was canceled after a July 21 headlining set by The 1975. During this show in Kuala Lumpur, the Healy critiqued the country’s LGBTQ laws as “f–king ridiculous” then shared an extended kiss with bassist Ross MacDonald. Homosexuality is illegal in Malaysia, and those convicted face up to 20 years behind bars.
(Source: Billboard, August 7, 2023) [Subscription may be required]
Marvel Studios VFX Workers File to Join IATSE Union
Visual effects crews at Marvel Studios filed for a unionization election with the National Labor Relations Board, according to the International Alliance of Theatrical Stage Employees. The labor organization said that Marvel’s more than 50-worker crew had signed authorization cards indicating they wished to be represented by the union. These are VFX pros employed directly by Marvel and generally work in Atlanta, Los Angeles and New York. It doesn’t include the thousands of VFX artists that work on Marvel movies through third-party VFX studios. Marvel has not yet voluntarily recognized the union effort, The Hollywood Reporter has learned. Marvel didn’t immediately respond to a request for comment.
(Source: The Hollywood Reporter, August 7, 2023)
Zoom Says It’s Not Stealing Customer Content to Train AI Models
A recent change to Zoom’s terms of service pertaining to AI set off alarm bells in Hollywood and the tech world — with some interpreting the videoconferencing provider’s update as granting the company royalty-free rights in perpetuity for customer video calls and presentations for the purposes of training AI models. In response, Zoom said it doesn’t use any customer audio, video or chat content for training AI without consent. In addition, the company says, the “service-generated data” it collects is to “make sure that we aren’t unwittingly being used to spam or defraud participants” using its AI-powered features.
(Source: Variety, August 7, 2023)
5 Ways AI Has Already Changed the Music Industry
Not every use-case of the emerging technology involves generating computer-made songs or voices instantaneously. While some applications of AI certainly present urgent legal and ethical concerns, there are also many applications that give musicians and rights holders new creative opportunities from the way it’s created to how it’s released and beyond.
(Source: Billboard, August 4, 2023) [Subscription may be required]
Hasbro Confirms Sale of eOne to Lionsgate for $500M
Hasbro has confirmed the sale of Entertainment One (eOne) to Lionsgate for $500M, which should close by the end of this year. Speculation had been intensifying that confirmation was incoming, with Deadline revealing several weeks ago that Lionsgate was in pole position to buy the majority of the on-the-block Woman King and Yellowjackets studio.
(Source: Deadline Hollywood, August 3, 2023)
Triller, Sony Music Settle Licensing Fees Dispute
Triller has settled a lawsuit from Sony Music accusing it of showing “brazen contempt for the intellectual property rights” of its artists by ceasing to pay license fees for the use of the company’s songs on the social video app. The deal was reached on July 21 after a federal judge overseeing the case sided with Sony on its breach of contract claim and ordered Triller to pay $4.6 million, according to a securities filing. The settlement includes an “agreed plan” for payment of the judgment on top of an additional undisclosed amount in exchange for dropping the remaining copyright infringement claim. Further terms of the deal weren’t disclosed.
(Source: The Hollywood Reporter, August 2, 2023)
SAG-AFTRA’s Controversial Interim Agreements Rescue — and Baffle — Indie Producers
Nearly three weeks into the strike, the guild has issued more than 100 interim agreements allowing independent productions to go forward. But questions remain about who qualifies and what the risks they might carry once the strike ends.
(Source: The Hollywood Reporter, August 2, 2023)
Dua Lipa Sued Again Over ‘Levitating’: Producer Says Remixes Featured Unlicensed ‘Talk Box’ Sample
Dua Lipa and Warner Music Group are facing another copyright lawsuit over “Levitating,” this time from a music producer who says he never granted the star permission to use his “talk box” recording in remixed versions of the smash hit song. In a lawsuit filed July 31 in federal court, Bosko Kante says he created a so-called talk box track for use in Lipa’s original version of the song, but that the creators of “Levitating” had no right to use it in subsequent remixes, like the even-more-popular version featuring DaBaby.
(Source: Billboard, August 1, 2023) [Subscription may be required]
Music Streaming Services Are on the Cusp of Major Structural Change
The music industry is on the cusp of another major structural change, according to Goldman Sachs Research. While the industry is yet to fully monetize its content, with music streaming services seeing less revenue for every song streamed, our analysts expect the sector to grow and capture new business opportunities. Global revenue for recorded music is forecast to grow 7.5% in 2023 (versus 7.3% in the previous forecast), with a compound annual growth rate of 8.6% for 2023 to 2030 (broadly unchanged from before), Lisa Yang, head of the European Media and Internet Research team, writes in the team’s report. Goldman Sachs Research expects streaming growth to remain healthy, with a CAGR of 11% (unchanged).
(Source: Goldman Sachs, July 31, 2023)
Ticket Act Passes Committee, Headed to Full Senate
The TICKET Act, a bill that would require event ticket sellers to display the total ticket price upfront—including all fees—in any advertisement or marketing that lists a ticket price, is now headed to the full Senate. The TICKET Act Co-sponsored by Chair Senator Maria Cantwell (D-WA) and Senator Ted Cruz (R-Texas), passed out of the Senate Committee on Commerce, Science and Transportation on July 27.
(Source: KNDU KNDO NonStop Local News, July 27, 2023)
What the Hollywood Strikes Mean for the $2B Music Synch Business
With film and television production shut down for the foreseeable future, the Hollywood writer and actor strikes are ravaging all the businesses that touch the movie industry, from catering to editing to flower delivery — including music synchs. After generating $382 million for record labels and nearly $1.5 billion for publishers in 2022, the sector is beginning to struggle as the strikes proceed.
(Source: Billboard, July 26, 2023) [Subscription may be required]
Spotify Packs on More Premium Subs in Q2 Than Expected to Reach 220 Million, Projects Slower Growth After Price Hikes
Spotify, the world’s biggest music and audio streaming service, delivered strong numbers for the second quarter of 2023 — beating forecast user growth on paid subscribers and total listeners, while Q2 revenue was in-line with expectations. But with newly announced price increases for Spotify Premium in dozens of markets including the U.S., the company is forecasting a smaller gain in paid subscribers for Q3. The company netted 10 million new Premium customers in the quarter (over its expectations of 7 million), to stand at 220 million. Spotify said the subscription gains were topped forecasts across all regions, led by Europe and Latin America. Overall, Spotify had 551 million monthly active users for the period, a pickup of 36 million sequentially — an all-time high for the company.
(Source: Variety, July 25, 2023)
Report: BMI Weighing a Sale
Broadcast Music Inc (BMI), the music rights, is reportedly once again exploring options for a sale. According to Reuters, BMI is being advised by the investment bank Goldman Sachs, who also advised the company rumored negotiations for a potential sale in 2022. BMI is weighing the potential sale after pivoting away from its non-profit model, where the majority of its profits were provided to artists, publishers, and other rightsholders. The model proved to be a sticking point during previous negotiations over a potential sale as potential suitors found it difficult to justify the reported $2bn price tag for the music rights company, Reuters reported.
(Source: CelebrityAccess, July 25, 2023)
Photographer Sues Over Unapproved Use of Tupac Photo on Cannabis Website
A US photographer has sued online cannabis marketplace Leafly for allegedly using a photo he took of Tupac on its website without permission. According to a lawsuit filed with the courts in New York , the Leafly site used T Eric Monroe’s Tupac image alongside some copy about blunts, ie hollowed out cigars filled with cannabis.
(Source: Complete Music Update, July 24, 2023)
Music Lawyers Have a Problem: Too Many Clients, Too Many Deals & Too Much Paperwork
Managers, artists and even some attorneys wonder: Are lawyers taking on too much work?
(Source: Billboard, July 21, 2023) [Subscription may be required]
Why Taylor Swift Isn’t the Only Artist Who Has Re-Recorded Past Songs
Long before Taylor Swift decided to re-record all her original songs, including the “Taylor’s Version” of 2010’s Speak Now which was released last week, Frank Sinatra did the same thing. So did Chuck Berry. And Elmo Shropshire. And many of the classic pop and rock stars who have licensed new versions of their best-known songs to movies, TV shows and commercials to keep all the royalty money over the years. Artists re-record old hits for several different reasons: Movie and TV productions can pay them rather than their original record labels when licensing songs; they can update the tracks to sound more modern, with newer technology; they can revisit older recordings that were never properly available digitally due to contract disputes, as JoJo did; or, as with Swift, they’re having a dispute with the original label and prefer to put master recordings solely under their own control. “Our thinking was, if we do these now, they’ll be around as long as the originals, and whenever the opportunity arises, we can say, ‘Look, we’ll give you this,’ and we can undercut what whoever owns our masters are asking for,” Squeeze‘s Glenn Tilbrook told Billboard in 2019, nine years after the band put out its re-recorded greatest-hits album Spot the Difference.
(Source: Billboard, July 20, 2023) [Subscription may be required]
SoundExchange Collected $1.017B in 2022, Surpassing $1B for Third Straight Year
In 2022, SoundExchange reported that collections fell slightly to $1.017 billion from 2021’s $1.06 billion — a decrease of about $43 million, or 4.1%. Likewise, distributions fell 3.4% to $959 million from 2021’s $993 million. However, those collection decreases mainly appear to be due to either revenue or content payout declines from digital services in direct licensing arrangements with labels as well as from foreign collection societies.
(Source: Billboard, July 20, 2023) [Subscription may be required]
Lucasfilm Sued in Trademark Dispute Over Backpack in ‘Indiana Jones and the Dial of Destiny’
Lucasfilm has been roped into a legal battle between rival clothing companies over the backpack Indiana Jones wore in the latest installment to the franchise. Frost River in a suit filed in California federal court accused Lucasfilm of using its products in Indiana Jones and the Dial of Destiny without permission and then passing off its signature backpacks as a competitors’ product in a deceptive marketing campaign. “This lawsuit concerns two corporate juggernauts, Filson and Lucasfilm, exploiting the hard work and intellectual property of Frost River, a small American company,” states the complaint.
(Source: The Hollywood Reporter, July 20, 2023)
YouTube Hikes Prices for Premium, Music Streaming Offerings
YouTube is the latest streaming company to hike the subscription prices for its offerings. On July 20, the company raised the prices for its YouTube Premium service (which lets users watch videos ad-free and download them for offline viewing) and its YouTube Premium Music app, the company’s music streaming offering.
(Source: The Hollywood Reporter, July 20, 2023)
Netflix Adds 5.9M Subscribers in Q2, More Than Doubling Expectations; Effort to Limit Password Sharing Expands to Most of the World
Netflix added 5.9 million global subscribers, reaching 238.3 million, with password sharing pushing subscribers to the months-old $7-a-month plan with advertising. Earnings per share of $3.29 exceeded Wall Street analysts’ consensus forecast of $2.86, while total revenue came in a bit light at $8.2 billion. Analysts had expected $8.6 billion.
(Source: Deadline Hollywood, July 19, 2023)
The NCAA’s New Gambling Policy Punishments, Explained
The NCAA has amended its disciplinary policy for athletes who violate its rules against sports betting. A series of recent controversies has brought the issue of NCAA participants engaging in sports gambling, even to the point of an SEC baseball coach being fired amid a betting scandal. Anyone involved with NCAA athletics is prohibited from engaging in any form of sports betting whatsoever.
(Source: FTW!, June 28, 2023)
A line is a dot that went for a walk.
—
Paul Klee
