Author: djfrosty

Universal Music Group (UMG) chairman/CEO Lucian Grainge released his annual New Year’s memo to staff on Monday (Feb. 3), about a month later than usual owing to the wildfires that broke out in Los Angeles in early January.
In the 3,113-word letter, Grainge retreaded much of the same ground covered in his 2023 and 2024 New Year’s addresses and his presentation at the company’s Capital Markets Day in September, including mentions of “Streaming 2.0,” “responsible AI,” “artist-centric” approaches, “super fans” and more.

Grainge began the letter by noting UMG’s accomplishments over the last year, including breaking new artists like Sabrina Carpenter and Chappell Roan, working with Taylor Swift — the most streamed artist globally on Spotify, Amazon and Deezer — and Apple Music’s Artist of the Year Billie Eilish, adding that “achievements like these don’t just happen.”

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“Those achievements were greatly assisted by our continuing self-reinvention, reshaping our organizational structure,” wrote Grainge, referring to the widespread restructuring of UMG’s recorded music division in 2024 that led to layoffs. “Within months we were operating with greater agility and efficiency. We then saw something exceptional take place.”

As the largest music company in the world enters 2025, Grainge reminded his staff that UMG is still a “relative minnow” compared to the trillion-dollar tech companies it calls its partners. Still, he noted that UMG was successful in ushering in its “artist-centric strategy,” a term he introduced two years ago to describe UMG’s efforts to better monetize music and to limit gaming of the systems.

“Not only do we want to ensure that artists are protected and rewarded, but we’re also going after bad actors who are actively engaged in nefarious behavior such as large-scale copyright infringement,” he wrote. In the last year, UMG forged new deals with TikTok, Spotify and Amazon to aid in those efforts. Also in 2024, UMG sued AI companies Suno and Udio and music distributor Believe to prevent what Grainge called “large-scale copyright infringement.”

Grainge then detailed his plans to influence and set the ground rules for “Streaming 2.0” — or “the next era of streaming” — with UMG’s partners. He pointed back to new agreements with Amazon and Spotify as major wins, adding, “We expect that similar agreements with other major platforms will be coming in the months ahead.”

He also discussed the company’s goal of finding ways to “accelerat[e] our direct to consumer and superfan strategy,” building on past moves like its strategic partnership and investment in NTWRK and Complex. “This year will see us expanding our product offerings to fans, as we continue to redefine the ‘merch’ category and create superfan collectibles and experiences,” Grainge wrote.

He also noted the company’s focus to “aggressively grow our presence in high potential markets,” whether that’s through A&R, artist and label service agreements or mergers and acquisitions. In the last year, UMG has managed to work towards this goal by announcing that Virgin had entered an agreement to acquire Downtown Music Holdings, purchasing the remaining share of [PIAS] and partnering with Mavin Global in Nigeria.

“The reason so many independent music entrepreneurs actively seek to partner with UMG when they have more alternatives than ever before is that we provide what they’re seeking… After all, we’re not a financial institution that views music as an ‘asset,’” he wrote. “And we’re not an aggregator that views music as ‘content.’ We are a music company built by visionary music entrepreneurs. For us, music is a vital — perhaps the vital — art form.”

Grainge ended on a high note, writing, “Let me leave you with this: Some will try to disrupt our business or criticize us. That we know. It comes with being in the most competitive market that music and music-based entertainment has ever seen, and it comes with being the industry’s leader and primary driving force. But our vision and our ability to consistently execute gives us the momentum to continue to succeed and grow.”

Read Grainge’s full New Year’s note to staff below.

Dear Colleagues:

When I wrote my first letter about the L.A. fires, I said that my annual New Year’s note would have to come later than usual.  And so here it is…

Last night’s Grammy awards served as a perfect metaphor for our company’s performance in 2024—breaking new artists and taking our superstars to new heights.  In fact, last night, UMG artists and songwriters brought home more Grammys than ever before in our history.  You can read more about that here.

Thanks to your day-in, day-out dedication and hard work, we accomplished so much together in 2024 and are positioning ourselves for another great year of success.  I’ll sum up some of UMG’s stunning achievements last year and give you a glimpse of what we plan for this year.  Our company’s fundamental building block is artist developmentand in 2024, investment in new talent continued to produce spectacular results around the world.  Consider the following facts: that UMG broke the two biggest artists in the world last year in Sabrina Carpenter and Chappell Roan; Taylor Swift was the most streamed globally on Spotify, Amazon and Deezer; and Apple Music named Billie Eilish its Artist of the Year.  And that a UMG recording artist who is also signed to UMPG as a songwriter had the No. 1 song globally on the year-end lists for both Apple Music (Kendrick Lamar) and Spotify (Sabrina Carpenter).  Or that UMG had four of the Top 5 artists globally on Spotify with Taylor Swift (No. 1), The Weeknd, Drake and Billie Eilish; eight of the Top 10 albums (Taylor Swift’s The Tortured Poets Department at No. 1); five of the Top 10 songs (Sabrina Carpenter’s “Espresso” at No. 1), and six of the 10 Most Viral songs (Lady Gaga and Bruno Mars’ “Die With A Smile” at No. 1). Or consider that in the U.S., UMG had all Top 3 label groups according to Billboard (Republic, Interscope and Universal Music Enterprises) not to mention four of the Top 5 artists and eight of the Top 10 albums, including all of the Top 5 – Taylor Swift (No. 1 and No. 2), Morgan Wallen, Noah Kahan and Drake. And on YouTube, six of the Top 10 songs (Kendrick Lamar at No. 1) and two spots on the Trending Topics Top 10 across all content categories in 2024 (Kendrick Lamar and Sabrina Carpenter). You can read more of our remarkable achievements around the world at the end of this note, but as you can already see, in 2024, our momentum only grew.  Also, these were achievements not only by a few superstars, but also by dozens of artists from around the world—both developing and established—performing in multiple genres, styles and languages.  Achievements like these don’t just happen. They are the culmination of maintaining a clear vision of who we are, what we do and where we’re going, then executing on that vision, maintaining momentum and, of course, at the heart of it all, having some absolutely incredible music to work with.  And last year those achievements were greatly assisted by our continuing self-reinvention, reshaping our organizational structure, re-building our teams and refining our strategy.  A vision which boldly and, when necessary, quickly adapts to an ever-changing world.  For example, in early 2024 we executed on our vision to realign our U.S. label structure, and within months we were operating with greater agility and efficiency.  We then saw something exceptional take place: UMG had its best U.S. performance in six years, according to Luminate.  I’m confident that our realignment will yield still further momentum around the world and that the achievements of our artists and songwriters—as well as UMG’s success—will reach new heights.In 2024, we continued to lead the media industry in our embrace and advancement of “Responsible AI.”  Three recent examples of that initiative include our agreements with SoundLabs, ProRata and KLAY—companies that are taking unique approaches to the rapidly evolving AI space through new technologies that provide accurate attribution and tools to empower and compensate artists.Our leadership also includes our commitment to the enactment of Responsible AI public policies, fighting back against so-called text and data mining copyright exceptions and other misguided and ill-intentioned proposals that would enable what I will euphemistically call the unauthorized exploitation of creators’ work.  Instead, we will work towards legislative “guardrails” to ensure the healthy evolution and growth of AI that mutually serves creators, consumers and responsibly innovative technology players.In my note last year, I said that 2024 would see us once again attracting the brightest entrepreneurs, expanding our existing relationships with other such talents and investing more resources into providing a full suite of artist services businesses to independent labels around the world.  And we did exactly that.  We acquired the remaining share of [PIAS] two years after taking an initial stake in the company and brought its highly respected co-founder Kenny Gates into our family.  And we grew our geographic footprint.  One example: our partnering with and investing in Mavin Global, whose founders Don Jazzy and Tega Oghenejobo continue to lead that company as well as, going forward, all of UMG’s business in Nigeria.Just last month, Virgin announced it entered into an agreement to acquire Downtown Music Holdings, which includes FUGA, Downtown Artist & Label Services, Curve Royalties, CD Baby, Downtown Music Publishing and Songtrust.The reason so many independent music entrepreneurs actively seek to partner with UMG when they have more alternatives than ever before is that we provide what they’re seeking: the most innovate creatives and finest resources that will advance the careers of their artists and achieve their financial goals within a culture that respects artists and their music.  After all, we’re not a financial institution that views music as an “asset.”  And we’re not an aggregator that views music as “content.”  We are a music company built by visionary music entrepreneurs.  For us, music is a vital—perhaps the vital—art form.  Artists and the music they create are our lifeblood.  We’re proud both to invest in businesses that can and do support today’s leading music entrepreneurs and to advocate for the policies and practices that are designed to protect and grow the entire music ecosystem.And finally, one of 2024’s announcements of which I am proudest is the formation of our Global Impact Team, whose mission is to enact positive change in our industry and in the communities in which we serve.  This cross-functional group of executives brings a deep understanding of our global organization and will develop and execute strategies to tackle a variety of critical issues, including: equality; mental health and wellness; food insecurity and the unhoused; the environment; and education.  By dovetailing seamlessly with our goals and those of our artists, we can promote and even catalyze beneficial and authentic changes where they are needed.  Recently, in the wake of the terrible Los Angeles wildfires, the Impact Team mobilized, offering support to those affected, activating a multi-pronged relief effort to help both our own employees and the broader L.A. communities.Before I get to what lies ahead for 2025, let me first provide you with some context as to the enviable position UMG holds.UMG is a global creative enterprise at the center of an ecosystem of hundreds of digital partners.  And while we’ve consistently been the music industry’s leader since the advent of the streaming era—an era whose dawn we were instrumental in ushering in—the leadership posture among our DSP partners has undergone some significant changes.  For example, one of our fastest-growing subscription partners, YouTube, is also one of the most recently launched.  We expect more inevitable jockeying for the leadership position among standalone platforms as well as among the music services that are divisions of trillion-dollar valuation tech companies.But, even though we are a relative minnow in comparison to a trillion-dollar tech company, the music of our incredible artists and songwriters enables us to exercise outsized influence on the global stage and serve as a critical catalyst in fostering a truly competitive commercial marketplace for music.  We will keep using our position to promote a healthy and sustainable music ecosystem that benefits all artists at all stages of their careers.Now to 2025 … starting with our artist-centric strategy:When we introduced that strategy two years ago, we immediately went to work with our partners to make it a reality.  In a matter of months, we reached agreements in principle on a number of issues: increasing the monetization of artists’ music; limiting the gaming of the system by protecting against fraud and content saturation; and focusing on the value of authentic artist-fan relationships, inspiring the development of more engaging consumer experiences, including specially designed new products and premium tiers for superfans.  Platforms as diverse as Deezer, Spotify, TikTok, Meta and most recently Amazon, have adopted artist-centric principles in a wide variety of ways—principles that benefit the entire music industry from DIY to independent to major label artists and songwriters.Our work in driving these artist-centric principles will continue in 2025.  Not only do we want to ensure that artists are protected and rewarded, but we’re also going after bad actors who are actively engaged in nefarious behavior such as large-scale copyright infringement.  To that end, we’re setting forth the best practices that every responsible platform, distributor and aggregator should adopt: content filtering; checks for infringement across streaming and social platforms; penalty systems for repeat infringers; chain-of-custody certification and name-and-likeness verification.  If every platform, distributor and aggregator were to adopt these measures and commit to continue to employ the latest technology to thwart bad actors, we would create an environment in which artists will reach more fans, have more economic and creative opportunities, and dramatically diminish the sea of noise and irrelevant content that threatens to drown out artists’ voices.In September, during our Capital Markets Day presentation, I described what would constitute the next era of streaming—Streaming 2.0.  Built on a foundation of artist-centric principles, Streaming 2.0 will represent a new age of innovation, consumer segmentation, geographic expansion, greater consumer value and ARPU growth.I’m pleased to report that the Streaming 2.0 era has arrived.  We recently announced a new agreement with Amazon that includes many of these elements, and just last week, we announced a multi-year agreement with Spotify.  We expect that similar agreements with other major platforms will be coming in the months ahead. In 2025, we’ll also be reaching out in new ways to engage fans.  In addition to listening to their favorite artists’ music, fans want to build deeperconnectionsto artists they love.  Last year, in accelerating our direct-to-consumer and superfan strategy, we formed a strategic partnership and became an investor in NTWRK and Complex to build a premium live-video shopping platform for superfan culture.  This year will see us expanding our product offerings to fans, as we continue to redefine the “merch” category and create superfan collectibles and experiences.  Some of this will be done through our current partners and some through our own D2C channels, which we will continue scaling to meet the massive appetite of fans. After years of working to aggressively build a healthy commercial environment for artists and music—one in which we have reached approximately 670 million subscribers—we will be laser-focused in 2025 on continuing to expand the ecosystem and improve its monetization.  As we did in 2024, this year we will continue to aggressively grow our presence in high potential markets through organic A&R, artist and label services agreements, and M&A.The work that lies ahead of us will bring challenges, no doubt about that.  But we will meet those challenges with pride and a sense of privilege, because no other form of creative expression is more fundamental to human existence than music.  By that, of course, I mean real music created by human artists.  So let me leave you with this:Some will try to disrupt our business or criticize us.  That we know.  It comes with being in the most competitive market that music and music-based entertainment has ever seen, and it comes with being the industry’s leader and primary driving force.  But our vision and our ability to consistently execute gives us the momentum to continue to succeed and grow.  Our global worldview and the internal competition fueled by our entrepreneurial spirit breeds innovation.  Our passion for finding new and better ways to bring music to the world will keep us ahead of competitors and new entrants alike.  We’ll continue to do what we do because what we do and how we do it is impossible to replicate.  Our culture and our people—you—are our superpower.I can’t wait to see and hear what this year brings, and I am thrilled to be on this journey with you.Let’s go!Lucian