Friday, December 23, 2016

2016 Year in Review - Tech & Game News

Professionally speaking, in 2016, I found articles about in-app purchasesthe value of interactive game deals, pricing of bundles and discounting to be most relevant news to my practice of auditing game publishers and distributors, while right of publicity cases like this and this were most relevant to my forensic accounting work.

Further, followers of my tech feed on Twitter - especially game developer CFOs and attorneys - were most engaged by the following news in 2016, especially news reported by Gamasutra and VentureBeat:
There were many shares of information that did not engage readers, so I did not mention them.  What was the most interesting games earnings news story not mentioned here, especially those that pertain to royalties and/or damages?

Friday, April 22, 2016

Three Business Tactics From Prince

Just as Prince the musician was at once visionary, experimental, subversive and successful, so was Prince the business executive.  

The genius gift of Prince's music will be with us forever, but I also hope we remember some of the business tactics that seemed to serve him well:

·         Manage Supply – Prince strategically limited exploitations of his work and avoided overexposure in order to maximize the value of his music and brand

·         Embrace Change – Prince was not afraid to cycle through an array of advisors and business models in order to best support his individual career path

·         Activism – Prince was a fiercely outspoken artist rights and copyright advocate, which he leveraged to favorably renegotiate at least one record deal

What lessons have you learned from Prince and his great legacy?

Monday, April 18, 2016

Productions Running Away to... Birmingham, Alabama?

Dozens of post-production/visual effects houses in the Los Angeles area have gone out of business over the past few years - or moved to locations such as Canada that offer tax incentives to producers.

According to anecdotes from visual effects artists and others who were formerly employed in LA post-production houses like Laser Pacific, it seems that most of LA's post-production jobs had moved outside the United States.

So, during a recent trip to Alabama for the 2016 Sports and Entertainment Symposium (SES), I was surprised to learn that one of the beneficiaries of runaway productions has been Birmingham and it's rapidly growing post-production house, Red Sky Studios.

A photo posted by Cedar Boschan (@auditrix) on

Red Sky Studios' CEO Stephen Preston explains that Alabama's "film incentive covers 25%-35% of covered expenses."

A photo posted by Cedar Boschan (@auditrix) on

Should you have any questions about what Alabama production or post-production costs may qualify for Alabama subsidies and/or tax incentives, I met an accountant who audits production expenses to see whether they comply with the state law(s).  His name is Mark Underhill, CPA with Barfield, Murphy, Shank and Smith and I imagine he should be able to consult with you to answer your questions and ensure you or your client are complying with the relevant legislation.

Alabama's tax incentives and its growing track record of work (e.g., the visual effects in the movie Woodlawn, for example) are definitely driving expansion at Red Sky Studios, which is growing beyond Birmingham, Alabama;
Much of Red Sky Studios' work is performed on-site but some aspects are outsourced to foreign workers.

Red Sky Studios Woodlawn VFX Reel from Red Sky Studios on Vimeo.

On a private tour of Red Sky Studios in Birmingham, Alabama, we found the facilities to be nondescript (no sign out front) but impressive.

A theater and man at work at Red Sky Studios:

We hope Red Sky Studios enjoys so much growth that it opens an LA office.  There are plenty of underemployed visual artists and editors here, after all!

Saturday, January 2, 2016

2015 Year-in-Review: Music Royalties

Beyond Blurred Lines:

1. 2015 Year-In-Review: Live Music Preliminary numbers suggest that the largest component of the music industry may have continued its strong run in 2015, perhaps increasing by as much as 10% if preliminary reports are any indication.  

Pollstar says that the top tours of 2015 include Taylor Swift, AC/DC, One Direction, U2 and Foo Fighters were the top earners.  Plenty of commentators have problems with Pollstar's list, though.

Our post last September may interest those looking for deeper analysis:

2. 2015 Year-In-Review: Recorded Music
Preliminary reports from Nielsen and Billboard in 2015 were positive, showing streaming revenues continued to rise and and download sales fell in most genres.  Physical sales are mostly down, with a few exceptions (e.g., vinyl sales are up and WMG reports rising physical sales). (FYI, global recorded music sales totaled about $15 billion in each 2013 and 2014 according to IFPI.)

2015 was an especially good year for the growing sector of sound recording performance royalties. Major developments include:
  • In 2015, the USA's Copyright Royalty Board increased future royalty rates payable to SoundExchange for non-interactive audio streaming by webcasters like Sirius XM and Pandora
  • Sirius XM and Pandora settled disputes with rightsholders regarding historic uses of pre-72 sound recordings to the collective tune of $300 million
Our post last October may interest those looking for deeper analysis:

The RIAA's 2014 Reported Revenues Reveal the Growing Relevance of SoundExchange's Distributions of Sound Recording Performance License Fee Royalties 

Other 2015 notable record industry news includes:
  • Wu Tang Clan finally sold a sole copy of its album for $2 Million to notorious pharma exec./criminal defendant Martin Shkreli - click here for Bloomberg's report
 Click to View: 2015 Damages Year-In-Review
Click to View

3. 2015 Year-In-Review: Music Publishing
Globally, the latest figures from CISAC showed 2.4% growth to about about $9.2 Billion USD during 2014 (based on an estimated average exchange rate from Euros to Dollars of 1.329). Almost $8 in $10 global publishing revenue dollars represent performing rights license fees.

However, in the United States, The National Music Publishers' Association (NMPA) revealed in 2015 that domestic revenues fell 2.5% in 2014 to $2.15 billion.  

Domestically, about $5 of every $10 publishing revenue dollars represent performing rights license fees.  While "performance" and "other" revenues are growing, highly government-regulated "reproduction" revenues continue to melt away, representing a mere fraction of what sound recording copyright holders are able to collect via free market licensing.

Also, publishers aren't happy with the Department of Justice's position that any rightsholder can issue a license for 100% of a copyright. (See also 
The NY Chapter of the Association of Independent Music Publishers (AIMP)'s 2015 program on the difference between fractional and 100% licensing and SONY/ATV's Martin Bandier's letter).

Thus, publishers led by associations including the NMPA and the AIMP continued to seek in 2015 deregulation of both performance and reproduction licensing and royalty rates. For more details, check out Billboard's Cheat Sheet for Copyright Reforms: Radio Royalties, Simplified Licensing and More.

However, the music industry - especially the music publishing sector - does not have much funding to lobby lawmakers in Washington D.C.  During a talk at the Association of Independent Music Publishers (AIMP), NMPA's David Israelite pointed out that all songwriter and publisher groups combined spend only about one fortieth of the amounts that the MIC coalition spends on lobbying.

Speaking of the NMPA, 2015 was the end of an era for the organization, which sold its mechanical licensing and collection arm - The Harry Fox Agency - to SESAC, a performance rights organization which is not directly subject to the consent decrees under which ASCAP and BMI operate.

L - R: John JosephsonSam Kling & Dennis Lord of SESAC - seated with Michael Simon of The Harry Fox Agency (HFA) on the heels of SESAC's acquisitions of HFA and Rumblefish (Photo by Cedar Boschan)

See SESAC CEO John Josephson's vision for expansion in this article and this video. (The latter video is free to AIMP members, in which AIMP lunch attendees questioned Spotify's PDF statement formats to payees of non-HFA clients, which are inordinately expensive to process.  Also, certain audience members expressed dismay over the appearance of a conflict in HFA's audit of Spotify on behalf of HFA clients who pay HFA an 11.5% commission, in light of the fact that Spotify is itself HFA's client).

SESAC is but one example of the evolution in the music publishing rights marketplace. As another example, Kobalt, which has expanded into performance royalty collection, made a similar move in 2015, acquiring from Sindee Levin her US mechanical collection society, AMRA, a small HFA competitor.

In terms of judicial activity, some of the key music publishing cases this year include:

Many more copyright and music publishing cases appear on our rather uncurated listicle of damages news with which our readers engaged in 2015:

2015 Year-In-Review: Pandora

In 2015, Pandora struck direct deals with many music rights holders including ASCAP, BMI, BMG, Warner/Chappell & SONY/ATV.

AIMP members can click here to hear for free the National Music Publishing Association's David Israelite:

  1. Report some news about Pandora turning a new leaf in its publisher relations
  2. Share analysis of Pandora's paid vs. free subscribers and plans for the future
  3. Explain why he thinks Pandora's "rising tide" of direct deals with the majors will will "raise all boats" in music publishing:

David Israelite, Esq. of the National Music Publisher's Association Speaking in November 2015 at the Association of Independent Music Publishers

Pandora share prices closed 2015 at $13.41, down nearly 40% from their peak of over $22 per share in October, perhaps due to factors such as:

  • US Government Raises Master Webcasting Rates, which Pandora pays to SoundExchange
  • Pandora settled for $90 Million a lawsuit brought by major labels over pre-1972 recordings 
  • Recent acquisition costs:
Look for Pandora to expand into more on-demand services in 2016.

For more on Pandora, check out the links below, with which our readers engaged during 2015:

  • Pandora's share price tumbles 50% in a year - Music Business Worldwide
  • Sub Pop artist creates music-streaming site to mock Pandora, Spotify
  • More Teens Listen to Spotify and Pandora Than FM Radio ¦
  • NYT: @Pandora Readies for Another #Royalties Battle, This Time With @BMI - by @Sisario
  • Pandora's Shares are Losing Value, Sales Decline
  • Pandora Has No Comment About Payola In Direct Deal With Naxos Records - hypebot
  • Next Out Of Pandora's Box: Letting The Artists Speak To You, Literally | Fast Company | Business + Innovation
  • Pandora Making Bid to Unruffle Music World -
  • Pandora to release day pass for ad-free listening
  • Guest Post: Is Pandora's Licensing Deal With Classical Label Naxos Unfair to Professional Artists? | Billboard
  • Still just 1 woman on the @pandora board: Pandora Adds Former CEOs of AEG and EMI to Board of Directors | Billboard
  • .@DavidIsraelite @NMPA Responds to Roger Faxon, Saying '@Pandora Exploits Songwriters' | @Billboard
  • Because 1 token female on the board is enough? @Pandora pays members of music's old boys club to join its board /
  • Pandora loses 2m listeners and $48m in three months - Music Business Worldwide
  • Pandora earnings return to the same old song - CNET
  • Pandora didn't pay 50 employees for two years (P)
  • Pandora is paying out $0.0001 more per stream than it was last year - Music Business Worldwide
  • Billboard: @Pandora_Radio Wins in @ASCAP's Appeal of Payment #Rate by @EdChristman
  • @Pandora_Radio set to claw back $1.5m from songwriters with FM buy - Music Business Worldwide
  • Billboard: @Pandora_Radio Wins in @ASCAP's Appeal of Payment #Rate by @EdChristman
  • Pandora loses to BMI in #hearing over #royalty #rates, vows to #appeal
  • Pandora loses to BMI in #hearing over #royalty #rates, vows to #appeal
  • Court Rules that Pandora Has to Give BMI More Money... - Digital Music News
  • Court Rules that Pandora Has to Give BMI More Money... - Digital Music News
  • BMI hones in on some key points in its Pandora ruling | Complete Music Update
  • Judge Explains Why Pandora Must Pay 2.5 Percent of Revenue to BMI | Billboard
  • BMI hones in on some key points in its Pandora ruling | Complete Music Update
  • Judge Explains Why Pandora Must Pay 2.5 Percent of Revenue to BMI | Billboard
  • People are saying Pandora just dodged a huge bullet in the Apple Music launch (P)
  • Why Pandora Is Running a Small Town Radio Station - Bloomberg Business
  • Pandora CFO: Music streaming royalties 'going to get worse' - Nashville Business Journal
  • NPR Leaves Pandora and Google’s Music Lobbying Group
  • Pandora CEO not worried about Apple Music
  • Pandora launches Sponsored Listening for advertisers out of beta
  • Stock analysis: Pandora Has Potential After a Pullback - Barron's
  • Judge Denies Pandora Bid To Lower #Royalties After Buying FM Station - hypebot
  • Spotify And Pandora Help Streaming Music Ad Revenue Pass $1 Billion By 2017, Report Says
  • "Pandora has lost almost $200 million since its inception."
  • Pandora's stock price has "fallen more than 40% over the past year"
  • Pandora's Summer Surge Starts Melting on Wall Street
  • Pandora's new ad-free Internet radio pass costs $1 for 24 hours, launches September 10
  • Pandora financials
  • Pandora Media Jumps After Preliminary Decision on #Royalties to Use Merlin Agreement as Benchmark #crb
  • Pandora and SoundExchange Each Get Small Wins in Rate Proceeding
  • Pandora Reaches $1.5 Billion in Royalties Paid by @billboardglenn
  • Pandora buys Ticketfly for $450 million
  • I think it is a smart move: Pandora's Acquisition of Ticketfly Is Expensive, Groundbreaking and Full of Opportunity
  • Pandora's $123 million #royalties bill for #broadcasting the golden oldies
  • Pandora reportedly close to major label deal over pre-1972 recordings | Complete Music Update
  • Pandora Agrees to $90 Million Deal to End Pre-72 Lawsuit By Major Labels - by @EriqGardner Hollywood Reporter
  • Pandora listeners can hear only so much - CNET
  • Pandora Revenue Growth Overshadowed by Questions About Apple Music's Impact
  • Pandora Reports Q3 2015 Financial Results | Business Wire
  • Pandora Shares Plummet as Competition Grows
  • Manatt: Pandora ordered to pay ASCAP and BMI disparate rates in parallel rate case decisions - Lexology
  • Pandora, Apple Music and a #Music #Streaming Market in Flux by @billboardglenn
  • Sony/ATV music publishing and Pandora ink direct publishing deal
  • Martin Bandier promises songwriters 'significant increase' in Pandora cash - Music Business Worldwide
  • Bandier: 'Sony/ATV's Pandora deal will significantly increase songwriter royalties'
  • Rdio is filing for bankruptcy, Pandora will buy ‘key assets’ for $75M
  • Per @DavidIsraelite @NMPAorg @AIMPorg: The deal Pandora made with @Sony, @Pandora is offering to all #publishers.
  • Pandora's aggressive plot to defeat Spotify: 5 things you need to know - Music Business Worldwide
  • Pandora financials reveal $1bn+ investment since 2009
  • 5 Things Pandora Media, Inc.'s CEO Wants You to Know --  The Motley Fool
  • Pandora CEO: Free on-demand music streaming is bad
  • Pandora is laying off more than half of Rdio employees following acquisition
  • Pandora is gearing up for an all-out music streaming war
  • Pandora CEO: Free on-demand music streaming habit is killing the music industry
  • Songs Music Publishing signs direct licensing deal with Pandora
  • Why Pandora needs a streaming ruling that doesn't irk music industry
  • NYT: For Pandora, Ruling on Streaming Royalty Rates Is Crucial by @Sisario
  • Pandora CFO wants to pay lower royalties, claims iTunes "eviscerated" the music industry by @sambarsanti
  • Pandora's profits depend on #CRB - interview with @sisario
  • Copyright Royalty Board raises rate of royalties for streaming music services like Pandora
  • Warner/Chappell Music and Pandora Sign Licensing Agreement | Business Wire
  • Pandora and Warner/Chappell Sign Direct Licensing Deal by @EdChristman | Billboard
  • In case you missed it: ASCAP and BMI Sign Licensing Agreements with Pandora
  • Pandora, Music Rights Holders Settle Royalty Rate Dispute

Friday, January 1, 2016

2015 Year In Review: Apple Music

Our readers engaged with the below uncurated list of 2015 Apple news items we shared on social media:

Click to View

2015 Year-In-Review: Interactive

Below are some of the news items with which our readers engaged in 2015:

Year-In-Review | The Auditrix:

More (uncurated):

AIMP Members Click Here to View "The Evolution Of Music In Video Games" Video for Free

2015 Year In Review: Crowdfunding

2015 Year-In-Review: Apple

Must-know 2015 news for development CEOs, CFOs and counsel:

2015 Year-In-Review: Netflix

2015 Year In Review: YouTube

Click to View

2015 Year-In-Review: Damages

 What We Learned About Damages from Blurred Lines + Howard King Talk