lucian grainge
For the second time in three years, Universal Music Group (UMG) chairman/CEO Lucian Grainge tops Billboard’s annual list of the highest compensated music executives.
In the first year of a five-year employment contract, the London-born, Los Angeles-based Grainge earned $150.3 million, nearly six times the $25.6 million paid to second-place finisher James Dolan, executive chairman/CEO of both Sphere Entertainment Co. and Madison Square Garden Entertainment. (The fiscal years of the latter two companies ended June 30, 2023.) Live Nation president/CEO Michael Rapino, last year’s No. 1, was third at $23.4 million.
Most other executives appeared on the prior two compensation rankings. Warner Music Group CEO Robert Kyncl and WMG’s outgoing CEO of recorded music, Max Lousada, were fifth and sixth, respectively (for the fiscal year ended Sept. 30, 2023). Spotify co-president/chief product and technology officer Gustav Söderström and co-president/chief business officer Alex Norström were seventh and 10th, respectively. IHeartMedia chairman/CEO Bob Pittman and president/COO/CFO Rich Bressler were eighth and ninth, respectively.
Trending on Billboard
The top 10 list has one new name in 2023: John Hopmans, executive vp in charge of mergers and acquisitions and strategic finance at Live Nation, at No. 4. The only vice president on the list, Hopmans had a relatively low salary of $982,000 but earned $23.4 million, mostly from restricted stock units and performance stock valued at $21.4 million.
The second-longest-serving CEO on the list behind Rapino, Grainge dramatically boosted his 2023 earnings with stock options, performance stock units and restricted stock units valued at $120 million. These grants included a $100 million “one-time transition award,” according to the company’s 2023 annual report, to move Grainge from all-cash compensation in his previous contract to “a combination of cash and equity” under the stock incentive plan UMG adopted in 2022.
Due to the size of the transition award, Grainge’s $7.5 million base salary accounted for just 5% of his 2023 compensation, a relatively small figure but not the lowest of the group. Söderström’s $300,000 base salary amounted to just 2% of his $14.7 million compensation. (The remainder was a stock option award.) Lousada’s $5 million base salary made up 29% of his total compensation and was the highest percentage on the list.
On average, the 10 executives received 10% of their compensation from base salaries, which is on the low side of averages in the corporate world. “By and large,” says Aalap Shah, managing director at Pearl Meyer, a compensation consultancy, “base salary constitutes about 10% to 20%” of average executive compensation.
Instead of receiving a large, guaranteed salary, top executives at public companies are increasingly paid based on their performances on metrics such as revenue growth, adjusted EBITDA growth and share price gains. “Shareholders typically prefer that at least half of a CEO’s equity awards be based upon performance criteria,” says Stephanie Hollinger, vp at ISS-Corporate, a Rockville, Md.-based provider of data and analytics to corporations. That percentage is expected to increase over time, Hollinger adds, as “pay is becoming more equity-based, and those equity awards are increasingly tied to performance-based conditions.”
In 2023, performance-based pay accounted for 53% of the average compensation for CEOs of companies in the Russel 3000, an index of the 3,000 largest public companies in the United States, according to ISS-Corporate. For CEOs of media and entertainment companies in the Russel 3000, performance-based pay was 42% of average compensation in 2023, “likely due to a higher relative proportion of other compensation elements, such as time-based equity compensation,” says Hollinger.
For most executives, performance-based pay comes in the form of company stock. Grainge’s five-year employment contract, which took effect April 1, 2023, reduced his base salary by 72% and added stock-based compensation that accounts for 57% of his target pay package. By putting Grainge’s earnings and shareholders’ interests in better alignment, UMG followed the practices of other public companies. “The view is that there should be more accountability and more performance orientation to executive compensation,” says Shah.
Receiving stock as compensation can pay off handsomely but also carries risk. The value of Grainge’s options, which vest in equal installments over four years, will depend on UMG’s share price at the conclusion of his employment contract on May 1, 2028. One-third of the options are exercisable if UMG’s share price exceeds 26.50 euros. Another third is exercisable at 30.00 euros. The final third requires a share price of 38.00 euros. The value of the grants took a short-term hit on July 25 when UMG’s share price dropped 24% to 21.70 euros following UMG’s second-quarter earnings report. But with nearly four years left on Grainge’s employment contract, there’s ample time for the share price to hit the thresholds.
With so much executive pay coming from stock, Billboard created a new separate list for top cash earners. Here, the value of noncash earnings such as stock options and unvested stock grants are excluded in favor of money that went into executives’ bank accounts in 2023.
Three executives who made the top cash earners list do not appear on the overall compensation ranking: At No. 5 is SiriusXM CEO Jennifer Witz, with $7 million; No. 6 is Live Nation president/CFO Joe Berchtold, with $6.4 million; and No. 7 is German concert promoter CTS Eventim CEO Klaus Peter-Schulenberg, with $5.7 million.
Billboard’s list of top-paid music executives is made from publicly available information culled from annual reports and proxy filings for calendar year 2023 or, in some cases, the most recent fiscal year. Public companies reveal compensation for a small number of named executive officers. So, in the case of multi-sector companies like UMG and UMG, the earnings of label heads are not made public. Because publicly traded conglomerates do not share details of subsidiaries’ executive compensation, the list does not include executives such companies as Sony Music Entertainment and BMG. Executives at privately held companies are excluded due to a lack of publicly available information.
08/19/2024
Tracing the rapid ascent of the 30-year-old record executive (and son of UMG’s Lucian Grainge), from his early entrepreneurial ventures to his industry-shaking new role.
08/19/2024
If your last name is Grainge, you probably oversee a large chunk of the U.S. music business.
Following Elliot Grainge’s promotion to CEO of Atlantic Music Group effective Oct. 1, the Grainge family— Elliot and his father, Lucian Grainge, chairman/CEO of Universal Music Group (UMG) — will control roughly 37.6% of the U.S. recorded music market, according to Billboard’s analysis of data from Luminate.
The younger Grainge, whose record label 10K Projects was acquired by UMG competitor Warner Music Group in 2023, will lead a record label group with about 7.9% of the U.S. market’s equivalent album units (EAUs). That includes Atlantic Records, which had a 5.3% share through Aug. 1, along with the remaining labels that comprise Atlantic Music Group — 300 Elektra Entertainment (which includes the labels 300, Elektra, Fueled By Ramen, Roadrunner, Low Country Sound, DTA and Public Consumption) and 10K Projects — with an estimated 2.6% share.
Led by Republic Records’ 10.5% share and Interscope/Geffen/A&M’s 10.0% share, UMG-owned record labels have a 29.8% share of the U.S. market’s EAUs. Other labels under UMG’s umbrella are Island Records, currently basking in a string of hits by Sabrina Carpenter and Chappell Roan, and Universal Music Group Nashville, a collection of labels that are home to Chris Stapleton, Luke Bryan and Carrie Underwood, among others. UMG also distributes labels it does not own, although for these purposes, Billboard is comparing market share of owned labels only. Billboard estimates that UMG’s distributed labels have an aggregate market share of 8.8% of EAUs.
Trending on Billboard
The Grainge’s father-son CEO dynamic is unprecedented even for an industry that often sees the offspring of heavy hitters follow a parent into the business. There have been many family businesses run by successive generations — music publisher peermusic, for example — but never in modern history have a father and son been CEOs of a global music company and a major label music group simultaneously.
Grainge, age 30, will ascend to CEO of Atlantic Music Group as WMG restructures its organizational chart and Atlantic retools to market music to digital natives (a.k.a. young people). CEO Robert Kyncl is “excited by the prospect of taking Atlantic’s culture making capabilities and adding the 10K Projects founder’s digitally native approach into the mix,” he said during Wednesday’s earnings call.
As Billboard reported in February, Atlantic laid off about two dozen staffers with the intention of “bringing on new and additional skill sets in social media, content creation, community building and audience insights,” with the goal of “dial[ing] up our fan focus and help[ing] artists tell their stories in ways that resonate,” Julie Greenwald, the company’s chairman/CEO, said at the time. Greenwald was to assume the new role of chairman upon Grainge’s promotion but announced her resignation on Tuesday (Aug. 6). She will officially step down at the end of January 2025.
Universal Music Group (UMG) shareholders approved CEO Lucian Grainge‘s 138.8 million euros ($128 million) compensation package from 2023 in a nonbinding advisory vote at the company’s annual general meeting in The Netherlands on Thursday (May 16).
Explore
Explore
See latest videos, charts and news
See latest videos, charts and news
A majority of investors voted to approve all proposals up for a vote this year, including the reappointment of billionaire Bill Ackman, Cyrille Bollore and others as non-executive directors despite criticism from shareholder advisory groups Glass Lewis, who last month called UMG’s pay practices excessive and said the board lacked independence.
Advisory shareholder votes like these are only advisory and not enforceable, but they are closely watched as indicators of investors’ feelings on a company’s pay policies and the people who make up their boards. Anytime a significant percentage of investors expresses disapproval, which Glass Lewis defines as 20% or more, directors consult with shareholders about how to make internal changes to address their concerns.
Trending on Billboard
Investors in Live Nation and Cumulus Media used recent shareholder meetings to vote their disapproval of those companies’ CEO pay packages.
UMG did not immediately disclose the percentage of votes cast in support of the proposals at this year’s annual meeting, which was livestreamed only to registered shareholders. Last year, a slim majority of UMG investors representing roughly 59% of shares voted in approval of UMG’s remuneration policy, which details the 2023 compensation packages paid out to Grainge and deputy CEO Vincent Vallejo.
About 58% of UMG’s voting shares are collectively held by Ackman’s Pershing Square Capital Management, Tencent, Bollore and Vivendi. Last year, all four shareholders voted to approve UMG’s remuneration policy.
Grainge’s total 2023 compensation is 138,814,000 euros, or $128,264,000 based on a monthly average foreign exchange rate of 0.924. In 2022, he was the third highest-paid music executive, having made total compensation of 47.3 million euros ($49.7 million) thanks to a 28.8 million euros ($30.3 million) performance bonus in addition to a base salary of 15.4 million euros ($16.2 million).
In 2023, Grainge had a base salary of 7.5 million euros (just over $8 million) and bonus of 15.16 million euros (nearly $16.3 million), and a one-time transition equity award worth 92,406,852 euros (roughly $100 million). That award was paid out in half in restricted stock units and half in performance stock options. The performance stock options vest over the coming five years and can only be excised once UMG’s stock hits certain thresholds.
Glenn Peoples contributed reporting.
Influential shareholder advisory groups Institutional Shareholder Services and Glass Lewis advised Universal Music Group (UMG) investors to vote their disapproval of a UMG compensation report that details CEO Lucian Grainge‘s 2023 pay package, which included a one-time $100 million stock and options award, when it’s put to an advisory vote at UMG’s annual meeting on May 16.
Explore
Explore
See latest videos, charts and news
See latest videos, charts and news
It’s the second year in a row that ISS and Glass Lewis have criticized Grainge’s compensation package –with ISS calling it “excessive” and Glass Lewis saying it has “severe reservations” about UMG’s remuneration report – and it could stir opposition among investors, many of whom expressed reservations about payouts at last year’s annual meeting.
UMG did not respond to a request for comment.
Trending on Billboard
While investor advisory votes are non-binding and Grainge and other UMG executives are expected to keep their compensation regardless of the outcome, they are considered a measure of investor sentiment, which has hardened in recent years.
Last year, a slim majority of UMG investors – roughly 59% of shares – voted in favor of the executive pay packages for Grainge, who has been CEO of UMG since 2010, and his deputy CEO Vincent Vallejo, at the company’s annual meeting.
Other media and entertainment companies have fared worse. Investors in Cumulus Media overwhelmingly rejected CEO Mary Berner‘s $4.5 million 2023 compensation earlier this month. Last June, 53% of Live Nation shares were voted against CEO Michael Rapino‘s nearly $139 million 2022 compensation package.
Rapino and Live Nation’s president/CFO Joe Berchtold, who earned $52.4 million in 2022, were the best paid music executives of that year, and the board of the world’s largest concert promotion and ticketing company said that pay reflected “strong leadership decisions” made during the pandemic that contributed to a record-breaking $16.7 billion in Live Nation revenue in 2022.
Grainge, 64, was the third highest paid music executive of 2022, having made a total compensation of 47.3 million euros ($49.7 million) thanks to a 28.8 million euros ($30.3 million) performance bonus in addition to a base salary of 15.4 million euros ($16.2 million).
For 2023, Grainge’s base salary and cash bonus were reduced by half to 7.5 million euros (just over $8 million) and 15.16 million euros (nearly $16.3 million), respectively. The significant boost to his total compensation is owed to a one-time transition equity award worth 92,406,852 euros (roughly $100 million) that is comprised of 50% restricted stock units and 50% performance stock options. The performance stock options vest over the coming five years and can only be excised once UMG’s stock hits certain thresholds. UMG’s stock last traded at 29.23 euros ($31.44).
Taking into account other short-term and long-term incentives and benefits, Grainge’s total 2023 compensation is 138,814,000 euros or $128,264,000 based on a monthly average foreign exchange rate of 0.924.
The shareholder advisory firms were aligned in their concerns over how UMG’s pay practices compared to similar companies and argued the one-time transition award was not sufficiently linked to the company’s stock performance.
ISS said Grainge’s pay was more than 25 times higher than the median pay of CEOs from a peer group that included companies like Spotify and Vivendi.
In its report, Glass Lewis cited an alert published by Eumedion, the Dutch Corporate Governance Forum for institutional investors, which said it was “unclear if the company can count on societal support for the CEO’s total remuneration … in addition to the dissent shareholders expressed at the company’s 2023 general meeting.”
UMG said in its annual report that “the increase in remuneration year-over-year is primarily driven by the transition to a more performance-based and share-based remuneration package.”
UMG’s stock rose 17% in 2023, “which it believes is indicative of the success of its recent remuneration practices in incentivizing the creation of value,” according to the Glass Lewis report.
ISS also recommended investors vote against the election of Bill Ackman, the billionaire investor whose Pershing Square Capital Management owns 10.25% of UMG, and also against Cyrille Bollore, Manning Doherty, Catherine Lawson-Hall, James Mitchell and Vincent Vallejo, because the board “lacks sufficient independence among its members.”
Universal Music Group chairman/CEO Lucian Grainge penned a memo to staff, obtained by Billboard, about the music company’s new licensing agreement with TikTok that ended a three-month standoff between the two entities, saying the deal ended with “a decidedly positive outcome,” with TikTok agreeing “to key changes in several critical areas.”
The announcement of the new deal, which came after a high-profile dispute between the world’s largest music company and one of the current premier social media platforms in the world that first erupted in late January, was announced early this morning (May 2). The agreement will see UMG’s millions of compositions and songs, both from its recorded divisions and its publishing company, return to the platform “in due course.” The feud has been one of the biggest talking points in the music business for the better part of this year, with artists and songwriters caught in the middle of the corporate standoff and looking for alternate ways to promote and market their music beyond the parameters of TikTok.
In his memo today, Grainge broke down some of the particulars of the new agreement, saying that UMG was able to get TikTok to address its major concerns. “This agreement marks another significant step we’ve taken to guide the industry’s evolution towards a future where human artistry must be respected, artists and songwriters are treated fairly, and their fans are provided with platforms that better prioritize safety and integrity,” Grainge wrote.
Trending on Billboard
During the dispute, many in the industry were split about the issue and its effects on artists and songwriters, particularly those without much leverage or who were trying to build a following. Many music companies and organizations came out in support of UMG, saying that its fight for better remuneration and protections in an AI age was an important one for the industry as a whole, and dozens of artists also signed an open letter stressing the importance of protections against AI infringement and other issues. At the same time, many artists and songwriters — both developing artists that relied on TikTok to build a following, and some of the bigger names in the music business — decried the ban as having a negative effect on the industry, and some of the biggest artists in the world, including several with UMG connections, found ways around the ban and were able to continue to benefit from their music being on the app while the dispute dragged on.
Grainge acknowledged that friction in his memo today. “As an organization committed to breaking new ground, driving the industry forward, and protecting artists and songwriters from the negative effects of disruptive technology, we expect and even embrace the inevitable conflicts that will result from fulfilling our commitments,” he wrote. “But ultimately, the point of engaging in such conflicts is to find higher common ground from which progress can be made.”
As part of the agreement, Grainge referred back to the open letter that UMG penned in January when negotiations first collapsed, wherein the company outlined three issues it could not come to terms with TikTok on: fair compensation for artists, protection from AI, and safety for its artists. On the compensation issue, Grainge says the new deal improves compensation for artists and songwriters and that the “total value” from the partnership “will be more closely aligned with other platforms in the social music category,” referencing the amount of advertising money that social companies bring in even for content they host for free. He also wrote that TikTok will be working to improve its content identification moderation, and “implement tools and processes to help address provenance and attribution issues, helping artists and songwriters to more effectively monetize their work.”
On the AI issue, Grainge wrote that the platform “addressed the primary concern we expressed in our open letter that AI generated content would ‘massively dilute the royalty pool for human artists,’” and committed to respecting artists’ right of publicity to own their voices and to support training AI models on licensed content, rather than without artists’ or rights owners’ consent. That means the ability to take down “fake artist” AI content uploaded by third parties, among other protections.
In terms of safety for users and artists on the platform, Grainge wrote that the platform “agreed to take steps to address our concerns around platform integrity and the negative impact of social media on its users.” Some of those steps he outlined included “policies and tools to prevent and remediate hate speech and bullying,” as well as addressing deepfakes, infringing content and “algorithmic manipulation” on TikTok.
“I want to express my deep gratitude to all of UMG’s artists and songwriters who, over the last few months, have had to endure having their music removed from TikTok during the dispute,” Grainge ended on. “We appreciate how difficult this may have been for some of them and we are so grateful for their willingness to pursue the path we took. I have no doubt that their advocacy — both publicly and behind the scenes — will positively influence the future of the industry for all artists.”
Read Grainge’s full memo below.
Dear Colleagues:
I’m very pleased to share the good news that our dispute with TikTok has ended with a decidedly positive outcome: they have agreed to key changes in several critical areas (including artificial intelligence, platform safety, remuneration) and we will once again license our music to them.
This agreement marks another significant step we’ve taken to guide the industry’s evolution towards a future where human artistry must be respected, artists and songwriters are treated fairly, and their fans are provided with platforms that better prioritize safety and integrity.
I want to express how grateful we are for the outpouring of support from so many corners of the global music community over the last several months. Artist rights organizations, independent labels, music publishers, music advocacy groups and of course so many individual artists and songwriters were outspoken in their support, recognizing the importance of what we were seeking to achieve. United in purpose, they strengthened our resolve to fight for the result we have achieved: a deal that will benefit not only UMG artists and songwriters but the entire music ecosystem.
As an organization committed to breaking new ground, driving the industry forward, and protecting artists and songwriters from the negative effects of disruptive technology, we expect and even embrace the inevitable conflicts that will result from fulfilling our commitments. But ultimately, the point of engaging in such conflicts is to find higher common ground from which progress can be made. I am enormously proud of what our teams and our artists have been able to achieve with TikTok in finding that common ground on which we will build a foundation for a brighter future.
Three months ago, on January 30, we issued an open letter to the artist and songwriter community that stated plainly that any new deal with TikTok would have to address three critical issues, including:
Protecting artists and songwriters from the harmful effects of AI, and dilution of royalties by a flood of AI content;
Improving the compensation paid to artists and songwriters; and
Prioritizing online safety for both TikTok’s users and our artists.
To convey to you the essence of what we’ve accomplished, I’ll highlight the gains we’ve achieved on all three issues within the context of why these issues have been so important for UMG and all of us as a community.
I. Protecting Human Artists from the Harmful Effects of AI
TikTok has now addressed the primary concern we expressed in our open letter that AI generated content would “massively dilute the royalty pool for human artists.” Further, they have made a number of commitments regarding AI that demonstrate respect for our artists’ and songwriters’ works and “rights of publicity,” as well as support of UMG’s principles on AI, including on training without consent.
AI technology, when used responsibly, offers artists enormous untapped potential, but when used irresponsibly, threatens to cause them deep harm. UMG has been leading the industry in addressing AI’s potentially harmful effects while embracing its opportunities. Our Responsible AI initiative, which was launched last year, puts the protection of artists and the advancement of their interests at the very core of how we think about AI. The goals of that initiative are:
·protecting human artists from being economically disadvantaged by AI;
·guarding against the use of AI-generated deepfakes; and
·requiring transparency in how AI companies train their models.
Our new agreement with TikTok will protect the integrity and value of human artistry and ensure that “fake artist” AI content uploaded by third parties that misappropriates the identities of our artists and infringes upon their right of publicity can be removed. This new deal will extend artist protections even further and promote a better environment for authentic artist/fan engagement.
The deal is only the most recent example of how we are advancing our AI initiative. Over the last year, with artists, as always, at the forefront of our strategy, we developed relationships with a wide array of leading tech companies and entrepreneurs and have been collaborating with a growing number of them on various market-led opportunities and approaches for the responsible use of AI.
II. Improving Compensation for Artists and Songwriters
Under the new agreement, artist and songwriter compensation will be greater than under our prior TikTok deal, and the total value UMG’s artists and songwriters garner from this partnership will be more closely aligned with other platforms in the social music category. Further, TikTok will implement tools and processes to help address provenance and attribution issues, helping artists and songwriters to more effectively monetize their work.
As technology evolves and allows fans to enjoy and consume music in new ways and from new sources, the health and vitality of the music industry requires that artists and songwriters be fairly compensated from the revenue generated by those new sources. Social media is a critical category for advancement of this objective.
In 2017, as the growth of social media was transforming culture, UMG and Facebook entered into the first-ever deal to monetize what had yet to be monetized—the use of music on social platforms. Since that first Facebook deal, the continued growth of social media and its free-to-consumer music engagement has been remarkable.
In fact, the revenue streams from this social music engagement generate tens of billions of dollars in advertising revenue for digital platforms. (And that consumer engagement also greatly benefits platforms in another way—it enables them to acquire customers for their other business ventures, such as eCommerce.) Given the vast sums that music generates for these platforms, any claim that the “free promotion” they provide would ever be sufficient and fair compensation for the use of that music would be absurd.
Revenue streams from several categories that are “free to the consumer” today (such as ad-supported streaming, synch and neighboring rights) account for more than 30% of all revenue for the entire global recorded music industry—almost double what it was a decade ago. For some artists, that can translate into anywhere from 20% to 40% of their income from recordings.
With the commercial significance of this sector in mind, during the last few months, we’ve accelerated engagement with music on other monetized social platforms including Snapchat, Instagram and YouTube Shorts. And, in a recent agreement with Spotify—which will make available a range of new features that were previously found only on social media platforms—we’ve even broadened the very definition of the social music category. In short, the income from social media is increasingly important income to artists, songwriters, labels and publishers, which is why we have pushed hard—and will continue to push hard—to protect and develop it.
III. Providing Online Safety for TikTok’s Users and Artists
Under our new deal, TikTok have agreed to take steps to address our concerns around platform integrity and the negative impact of social media on its users.
The harmful consequences of unmonitored social media have been highly publicized of late. It is a critical part of our mission to work toward promoting the safety and integrity of environments for our artists and their fans.
Some of the concerns on our agenda with TikTok will include safeguards such as policies and tools to prevent and remediate hate speech and bullying. Some of the platform integrity measures include important steps to help address deep-fakes, infringing and unauthorized content and algorithmic manipulation.
I want to close by saying something more about the unprecedented support we received from the music community, especially those individual artists and songwriters who raised their voices in various forums. Of special note are those who signed the recent Artist Rights Alliance open letter which called on tech platforms to employ AI in a responsible manner and not at the expense of recording artists and songwriters. Their widespread support underscored the importance of striking AI protections. In particular, I want to express my deep gratitude to all of UMG’s artists and songwriters who, over the last few months, have had to endure having their music removed from TikTok during the dispute. We appreciate how difficult this may have been for some of them and we are so grateful for their willingness to pursue the path we took. I have no doubt that their advocacy—both publicly and behind the scenes—will positively influence the future of the industry for all artists.
Thank you to all who helped make this possible. This is yet another example of what the music community can accomplish when we work together.
Lucian
Attorneys for Universal Music Group CEO Lucian Grainge fired back at a lawsuit that claims he and the label “aided and abetted” Sean “Diddy” Combs in his alleged sexual abuse, saying the accusations are so “offensively false” that they plan to seek legal penalties against the lawyer who filed them.
In a motion to dismiss all claims against UMG and Grainge, the label’s lawyers blasted attorney Tyrone Blackburn for filing “knowingly false allegations” of criminal wrongdoing “without the slightest factual or legal basis.” They said they would seek so-called sanctions against him in a future filing.
“A license to practice law is a privilege,” wrote Donald Zakarin, a longtime music industry litigator who represents UMG and Grainge. “Mr. Blackburn, plaintiff’s lawyer, has misused that license to self-promote, gratuitously, falsely and recklessly accusing the UMG defendants of criminal behavior.”
Trending on Billboard
The Wednesday filing came in response to a lawsuit filed last month by a producer named Rodney “Lil Rod” Jones, who says the rapper sexually assaulted and harassed him. The lawsuit is one of several abuse cases filed against Combs, in addition to an apparent federal criminal investigation that led to raids of his homes this week. Combs has strongly denied all allegations of wrongdoing.
But the case filed by Jones went far beyond a simple assault claim, arguing that Diddy, Grainge and many others had also violated the Racketeer Influenced and Corrupt Organizations Act – the federal RICO statute that’s more often used in criminal cases against mobsters and drug cartels. He also accused the various defendants of violating federal sex trafficking laws.
In Wednesday’s filing, UMG’s lawyers said those claims were “entirely invented by Mr. Blackburn.”
“The [complaint] hurls accusations of criminal racketeering and criminal sex trafficking against the UMG defendants, respected individuals and companies having utterly nothing to do with plaintiff’s claims,” Zakarin wrote Wednesday’s filings. “These accusations are recklessly false and, but for the fact that they are embodied in a complaint, would be libelous.”
In addition to the original allegations, UMG’s lawyers also sharply criticized Blackburn for filing a second, updated complaint this week – a filing that they claim drastically altered the allegations. In his filing, Zakarin called it the worst lawyering he had seen in nearly 50 years as an attorney.
“In all that time, I have never seen any attorney display anything remotely like the utter indifference shown by Mr. Blackburn towards his obligations as an attorney,” Zakarin wrote. “I have never seen any lawyer, in any pleading, in any court, accuse people and companies of criminal conduct without the slightest basis and then try to file an amended pleading completely jettisoning every allegation underpinning the original claims and substituting completely different and irreconcilable allegations to support the very same claims.”
In a letter to the judge Thursday, he called the UMG motion a “public relations stunt” that had been filed in bad faith. “They did not have any issues marrying themselves to Mr. Combs when it was popular. Now, suddenly … they are treating Mr. Combs like he has the plague,” Blackburn wrote in the letter.
In a statement to Billboard on Thursday, Blackburn said: “UMG should produce their financial records. Let’s see what the money was used for. Stop trying to escape liability.”
A spokesman for UMG did not immediately return a request for comment on the motion.
It’s been a nerve-wracking week for Universal Music Group employees — many did not know when they went to the office on Wednesday morning if they’d have a job on Friday. Layoffs hit department heads first and then started to impact the rank and file.
Over the past year, more than a dozen companies across the music business have undergone layoffs, eliminating thousands of jobs and leaving those who remain in a state of uncertainty. In the past twelve months alone, Warner Music Group, Atlantic Music Group, SiriusXM, Amazon Music, TikTok Music, CAA, Discord, BMG, TIDAL and Spotify have all cut staff.
This week, Universal Music Group followed suit, instituting layoffs in search of around $270 million in annual savings. The process started Wednesday and continued through Friday (March 1), impacting publicity departments, radio teams, A&R, marketing and more.
Trending on Billboard
The cuts are part of a restructure of UMG’s label operations that chairman/CEO Lucian Grainge announced in an internal memo on Feb. 1. The shift reorganized the company loosely into an East Coast-West Coast orientation, with Republic Records CEO Monte Lipman overseeing Republic, Def Jam, Island and Mercury, and Interscope Geffen A&M chairman/CEO John Janick responsible for Interscope, Geffen, Capitol, Motown, Priority, Verve and Blue Note.
For UMG employees, the long runway leading into the layoffs — which were first hinted at back in October — combined with the fact that the company announced on Wednesday morning that it had earned more than $12 billion in revenue and $1.3 billion in net profit in 2023, has caused frustration, anger and anxiety, even for those who kept their jobs. That the layoffs came immediately following the annual earnings report, sources say, has led to greater frustration.
Though the scenes employees describe are typical for any company undergoing large-scale layoffs — the slow drip of news about who’s been let go, and colleagues crying as they pack up their desks, for example — UMG’s layoffs have had an outsized impact on industry morale because of the label’s position as the dominant market leader, its strong financial results and the extended period for which employees have known the cuts were coming.
In an email to staff, Grange said that “by reimagining our global structure, we are creating a blueprint for a future where our labels are empowered with new capabilities and additional agility, ensuring they can sign and support artists with enhanced access to UMG’s highest-performing internal teams and resources.” He added, “This organizational redesign represents a new paradigm for artist support and fan engagement.”
UMG first signaled its cuts during an earnings call with financial analysts at the end of October. “[We] are currently conducting a careful review of our cost base, which we will complete over the coming months, and we will update you when appropriate about an anticipated cost savings program to commence in 2024,” said Boyd Muir, the company’s executive vp and CFO. Grainge added that the company planned to “cut overheads in order to grow elsewhere.”
Earnings calls are, by nature, full of statistics and jargon like “adjusted EBITDA.” In January, the human cost of “cutting overhead” started to become clear: That would mean laying off hundreds of employees. In a statement at the time, UMG said “we are creating efficiencies in other areas of the business so we can remain nimble and responsive to the dynamic market, while realizing the benefits of our scale.”
The October earnings call did not make big headlines at the time. But many employees saw the January reports that layoffs were looming. “Every day I wake up thinking, is this the day I lose my job?” a UMG employee said in February.
“It is a particular kind of torture to leave people guessing for an extended period of time,” adds a music lawyer who has artist clients signed to UMG labels. “Your job is your No. 1 source of security. You add on top of already stressed individuals’ psyche the uncertainty of whether or not they’re gonna have a job tomorrow and draw that out for months.”
A UMG spokesperson declined to disclose any headcount for the cuts. In the meantime, sources say executives and department heads have received some generous exit packages on their way out the door.
For others outside the labels who work with them on behalf of clients, the layoffs — at UMG, at Warner, where dozens were recently let go at Atlantic Records, and amid rumors that other labels will be following suit — have also made life difficult. With UMG specifically, one manager with an artist signed to a UMG label says that the stress permeating the labels has made it hard to plan a rollout for his act. And a second music attorney notes that it’s been hard to do record deals within the UMG system knowing that the teams his artist speaks with may not be around by the time the deal is done.
Artist teams are also trying to understand how the cuts impact them. “The more I hear, the more stressed I am,” says another manager. There are “lots of firings across different positions. Some people are getting moved into jobs they aren’t in any way prepared for. And some people are now being asked to do what was previously three different jobs at once.”
There are more cuts to come in a “phase two” of the “strategic organizational redesign” next year, according to UMG’s investor presentation this week, which stated that “a combination of further ex-U.S. headcount reduction and other operational efficiencies” was set to begin in 2025. But not a single financial analyst asked questions about the extent of the layoffs on Wednesday. Instead, they asked about UMG’s battle with TikTok.
Universal Music Group chairman/CEO Lucian Grainge addressed the company’s ongoing licensing dispute with TikTok in its latest earnings call on Wednesday (Feb. 28), saying: “there must not be free rides for massive global platforms such as TikTok that refuse to meaningfully address issues around AI platform safety or pay their fair share for our artists’ and songwriters’ work.”
Boyd Muir, UMG’s CFO and executive vp, also revealed during the earnings call that UMG would “focus on accelerating [its] partnerships” with Meta, Snap, YouTube and more competing social platforms and that it would make more announcements about this “in the coming weeks.”
At the end of January, UMG, the world’s largest music company, opted to let its licensing agreement with TikTok expire, citing that the short-form video app refused to pay the “fair value” for music. It also cited other concerns around artificial intelligence. “TikTok proposed paying our artists and songwriters at a rate that is a fraction of the rate that similarly situated major social platforms pay,” UMG wrote in a letter to its artists. Within hours, TikTok fired back at UMG in reply, saying that the major music company “has put their own greed above the interests of their artists and songwriters.”
Trending on Billboard
Since then, the companies’ negotiations have been seemingly stuck at a standstill and millions of UMG-controlled recordings have been removed from the platform. Starting Tuesday (Feb. 27), the takedowns went even further, including the removal of any recording that features one or more Universal Music Publishing Group-signed songwriters for the first time. This impacts such major recording artists as Beyoncé, Harry Styles and Bad Bunny, even though they don’t record for UMG.
In response to the publishing takedowns, TikTok said in a statement on Wednesday, “[UMG’s] actions not only affect the songwriters and artists that they represent, but now also impact many artists and songwriters not signed to Universal. We remain committed to reaching an equitable agreement with Universal Music Group.”
UMG’s earnings call on Wednesday focused largely on TikTok during the the question and answer portion, as well as other core development for the company like its new deal with Chord Music Partners.
While UMG has previously said TikTok only makes up about 1% of the company’s total revenue, chief digital officer and executive vp Michael Nash said he believes that’s not necessarily all a loss amid the negotiation standoff. “In general, if consumption shifts from TikTok to other short video platforms like Reels or YouTube Shorts, we believe we can, in fact, recapture some lost revenue,” he said during the call. “Keep in mind, over half of TikTok monthly active users already also use other short video services. In some markets, that percentage is as high as 70%. These are services that monetize engagement at a much higher rate, so revenue positive consumer migration is easily foreseeable.”
Nash also said that UMG has been “providing notices to effectuate the muting of million of videos every day for the last two weeks” on TikTok to aid in the takedown process, which started earlier this month. “And that’s the recorded music content. Keep in mind that our publishing copyrights are just now starting to be enforced on the platform.” He noted that the company has seen “no discernible negative impact” on its “broader digital business’ by leaving TikTok to date but added that “that’s qualified by the fact that we’re very early on in the process… In fact, we’ve seen a slight uptick in terms of frontline consumption and catalog consumption over this short period of time.”
In response to one question about TikTok, Grainge responded, “I’m also not prepared to compromise the future of social category by doing something that completely undermines the economics for us and for everybody else.” One of UMG’s key concerns among the licensing discussions has been that if it were to accept a diminished royalty from TikTok, then other social media platforms could request the same.
But Grainge vowed that UMG likes “to be friendly.” He said, “We are friendly. My phone is open, unfortunately, 24 hours a day. We hope that we can find a solution… we like win-win situations. We’ve laid out what’s important to us, and I believe important to our industry.”
When an investor asked if this remark indicated that UMG was waiting for TikTok to call them and reengage on a deal structure [UMG has] previously presented,” Nash said “we’re not going to comment on the status of discussions with TikTok for obvious reasons.”
At the end of the call, Grainge downplayed TikTok’s impact on music marketing: “I mean, let’s put this into perspective,” he said. “Apple, Amazon, Spotify, YouTube, all the social categories, the fitness categories, digital radio, Sirius, Pandora, iHeart… [TikTok is] one, it’s not a material part of the multidisciplinary jigsaw, where we promote and market our music globally”
Boygenius received the Universal Music Group x REVERB Amplifier Award at the Billboard Power 100 event in Los Angeles on Wednesday night (Jan. 31).
The group, signed to Interscope, was presented with the honor by Universal Music Group chairman/CEO Lucian Grainge, who began his speech by praising Republic Records megastar Taylor Swift, who dethroned him at the top of the Power 100 list this year.
“Let me say that I’ve never, ever, in my entire career been so thrilled to be No. 2 on a list,” he said at the event, which was held at NeueHouse Hollywood. “I suppose I’m honored as well as a bit relieved to be named No. 2. Many, many, many congratulations, Taylor, on your No. 1 award. You thoroughly deserve it. You are completely unique, and to see the heights that you have gone to worldwide with your voice has given all of us who know you and work with you enormous pleasure and enormous pride.”
During his brief time on stage, Grainge made no direct mention of the elephant in the room: The music giant’s industry-shaking decision to pull its music from TikTok after licensing renewal talks between the two companies collapsed. But he did appear to make a subtle nod to the dispute, which involves, in large part, disagreements over both artist compensation and artificial intelligence.
“I also wanted to be here tonight … to highlight the importance of using this room for collective good,” Grainge said. “There’s an enormous amount of power in this room, that’s why it’s called the Power awards. And I feel extremely strongly and grateful that we’re in an industry that has provided us with such pleasure, such joy and a living. But we have the platform to be able to use it for our artists, to fight for them to be fairly compensated, as well as protected, particularly against unethical A.I.”
While introducing Boygenius — the trio composed of Julien Baker, Phoebe Bridgers and Lucy Dacus, who are up for a whopping five Grammys this year, including album of the year — Grainge said its members “exemplify what it means to use power for good” before ceding the mic.
The first of the trio to speak was Dacus, who opened by shouting out Pass the Mic Foundation, the non-profit organization that organized land acknowledgements at each of the band’s recent tour stops. She proceeded to make a land acknowledgement from the stage, noting that Los Angeles County “occupies land originally and still inhabited and cared for by the Tongva, Tataviam, Serrano, Kizh and Chumash peoples.”
Dacus continued by recognizing Landback — a movement “to get Indigenous Lands back into Indigenous hands,” according to landback.org — as well as three other organizations the band worked with on its 2023 tour: Reverb, the Ally Coalition and Calling All Crows. All of them, she said, helped organize tabling at the group’s tour stops to educate fans “about local and national organizations that work to defend LGBTQ rights, abortion access and environmental concerns.”
When Baker stepped up to the podium, she said of receiving the award, “We realize it’s useful to publicly acknowledge and recommit ourselves to these values … in order to draw attention to causes we care about. But ultimately, this is a community effort. It should be important to everyone, because it’s important for everyone’s individual well-being. This is not a task for those with more power to participate in, that those with less may not participate in. The perceived scale of a person’s impact doesn’t increase or diminish your individual responsibility to act each day in a way that protects and proves or makes more equitable the world we inhabit together.”
Lastly, Bridgers acknowledged all three band members’ history of being “made to feel uncomfortable or unsafe in concerts when we were kids or in work environments later when we started making music ourselves.” She also shouted out Calling All Crows, which she said did “a demonstration for us and our tour about how to spot and stop sexual harassment or sexual violence, whether you see it in a crowd or on your own crew.”
Bridgers also mentioned, as she has previously, that she had an abortion while she was on tour in 2021 before noting that the band worked “with local organizations who make sure that other people get easy, safe access to abortion” on its 2023 tour. She concluded: “We like to create a show environment that we would have benefited from as kids. But hopefully someday, everybody’s doing it, and nobody’s getting awards.”