In today’s CMU Daily: The zombie-unicorn formerly known as Utopia Music is imploding. As a Swiss court denied the company’s bankruptcy appeal yesterday, investors threaten legal action and former staffers tell CMU that they want top banana John Mitchell to clarify who was responsible for fake payslips that were issued across multiple subsidiaries as far back as July last year

Also today: Earlier this year Parliament’s culture select committee said the live sector should set up a ticket levy and the government introduce a VAT cut to support grassroots music venues and shows. The government has responded agreeing the industry should swiftly set up a levy system, but rejecting the VAT cut

Plus: The US Copyright Office recently undertook a consultation on copyright and AI. In an update to Senators, the Office revealed that both AI companies and copyright owners think current US copyright law is fit for purpose. They just radically disagree on how those laws should be interpreted

Approved: Gia Ford

As Utopia’s bankruptcy appeal is denied investors threaten legal action, while former staff tell CMU of widespread “manipulation” of financial documents across shuttered subsidiaries

The Swiss company formerly known as Utopia Music - rebranded Proper Group AG earlier this year - has had its bankruptcy appeal rejected by the Cantonal Court in Zug.

The news - which was published by the official gazette in Switzerland in the early hours of this morning, but effective 12 Nov - is the latest blow for the troubled company which, over the past couple of years, has sunk from a so-called ‘unicorn’ that trumpeted its $2.5 billion valuation, to a barely functioning circus and the laughing stock of the music industry.

Today, CMU has been told that some investors in the business may now be planning to take legal action against the founders of the company, while other shareholders are pointing the finger at the current management team, asking how on earth a company that claimed to be getting back on track could have “thrown itself down the toilet” due to an apparent administrative hiccup over an unpaid invoice.

With only one avenue left - an appeal to Switzerland’s supreme court - it looks increasingly unlikely that the company will be able to pull itself out of bankruptcy, leaving investors and creditors high and dry. CMU understands that those investors have pumped more than €200 million into the ill-fated venture, with recent desperate attempts to get investors to commit yet more money to the failing business.

The trail of destruction wrought by Utopia has seen hundreds of former employees left in the lurch by the company, with numerous horror stories of employees being fired when facing health challenges or personal difficulties, and other employees discovering that the premiums for private health insurance cover that they believed was in place as part of the employment contract had not been paid, leaving them unable to get private medical care when needed.

As the story has unfolded over the past couple of weeks, numerous former employees of Utopia and its subsidiaries have talked to CMU. A recurring theme of those conversations, and one thing that apparently did not change as the company slid further into chaos, was a policy of manipulating documents to mislead employees about the status of salary payments, taxes and social security contributions.

>>> CMU has been investigating Utopia for nearly 18 months now. Click through to read our latest story in full...

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UK government warns live sector: sort out ticket levy ASAP or we will force people to the negotiating table

The UK government has called on the live music sector to introduce a ticket levy system to support the grassroots music community, and to do so “swiftly”, otherwise ministers may use their “convening powers” to kickstart the process.

The levy will help support a grassroots live sector currently in crisis, it’s hoped, rather than any kind of VAT cut on tickets, because that ain’t happening anytime soon. Even though organisations from across the live sector have been calling for a VAT cut ever since the COVID-era rate reduction ended.

In demanding that the live industry put in place a ticket levy system, the government is backing a call made earlier this year by Parliament’s Culture, Media & Sport Select Committee. In a report in May, the committee wrote, “We recommend that the live music industry introduce a voluntary levy on arena and stadium tickets no later than September 2024 to support grassroots music venues, artists and promoters”.

“It is crucial that we work together to support the grassroots including venues, festivals, artists and promoters”, culture minister Chris Bryant said earlier today. “That is why I am urging the industry voluntarily to introduce a ticket levy on the biggest commercial players, to help ensure the health and future success of our entire live music industry for decades to come”.

In a formal response to the select committee’s report, the government says that setting up “a voluntary levy on arena and stadium tickets” would be the “quickest and most effective mechanism for a small portion of revenues from the biggest shows to be invested in a sustainable grassroots sector”. With the September deadline set by MPs already missed, the government says it wants the levy to “come into effect as soon as possible for concerts in 2025”.

By ‘voluntary’, the government means a scheme set up and run by the industry, rather than a legislative levy introduced through a change to the law.

US Copyright Office boss says she’s “kept up” at night by the speed at which AI is developing

Both the tech sector and the copyright industries in the US currently believe that the country’s current laws are adequate for dealing with the copyright challenges posed by generative AI. However, they have very different opinions on how those current laws should be applied.

As a result, US Congress will likely be asked to reform copyright law at some point, according to Shira Perlmutter, who heads up the US Copyright Office, and identifying the right reforms will be a challenge. Asked what keeps her awake at night, Perlmutter declared, “the speed at which all of this is developing”.

Congress and the Copyright Office both want to “act with due diligence as well as promptly enough to make a difference and to be ahead of the curve as needed” she added. But, “that is difficult to do when almost every week there is some new development being reported”.

Nevertheless, Congress will ultimately need to find a way to ensure copyright law doesn’t “impede the development” of generative AI, while also ensuring human creativity can “continue to thrive”.

To help with that process, the Copyright Office has undertaken a consultation on copyright and AI, and is publishing three reports based on that work. Companies and organisations from across the AI sector and the copyright industries, including the music industry, made submissions to the consultation.

At the heart of that project is the big debate over the copyright obligations of AI companies and whether those companies need to get permission before using copyright protected works as part of their AI training. On that issue, Perlmutter told the Senators, “by far the majority of them expressed the opinion that the existing law in the United States was adequate to deal with this issue”.

That position, Perlmutter added, is based “primarily on the fair use doctrine”. Under US law, if use of a copyright protected work is ‘fair use’, permission from the copyright owner is not required. The question here is whether training a generative AI model with existing content is fair use...

🎧 Approved: Gia Ford

With a darkly atmospheric allure that’s all her own, Gia Ford is the striking new indie it-girl to watch. Her music carries a timeless edge, blending darkly atmospheric dream-pop with elements of rock and synthwave. Think Lana Del Rey meets Chromatics - a haunting, layered sound that pulls you into its depths.

Her latest single, ‘Earth Return’, swells with Ford’s soft, smoky and theatrical quality. It’s an ode to the powerful connection between identity and place.

As she explains, “‘Earth Return’ was born out of the desire to be in your most loved place when you die. For me, that’s around where my grandparents lived, in the Hope Valley in Derbyshire, whenever I’m there I feel at ease with everything; as if, I died there right then, it’d be the right thing, and that my spirit would be among my family and even the spirits of versions of me, me as a child, running around there”.

🎧 Listen to ‘Earth Return’ here