Record Labels
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Three top Universal Music Group Nashville executives have exited their roles: executive vp of promotion Royce Risser, evp of A&R Brian Wright and senior vp of A&R Stephanie Wright, according to Country Aircheck. Representatives at UMG Nashville did not immediately respond to a request for comment.
Risser was promoted to evp in 2018. He began his career as an intern at MCA Records in 1991 and climbed the ranks as director, NE regional promotion, then director of national promotion and vp of promotion before assuming the role of svp of promotion for UMG Nashville in 2007.
Stephanie Wright joined UMGN more than two decades ago and previously served as vp of A&R. During her tenure with the label, Wright worked with artists including Kacey Musgraves, Luke Bryan and Sam Hunt, and was instrumental in albums including Musgraves’ Same Trailer Different Park and Hunt’s Montevallo.
Brian Wright also joined UMGN over two decades ago and was promoted to his evp role in 2018 and worked closely on albums including Jamey Johnson’s Lonesome Song, George Strait’s Troubadour and Chris Stapleton’s Traveller and From A Room Vols. 1 and 2.
The exits of the Wrights — who are married — and Risser come as Cindy Mabe officially began her role as UMG Nashville chairman/CEO on April 1, following former UMGN chairman/CEO Mike Dungan‘s retirement. Mabe was named president of UMGN in 2014 and with her rise to chairman/CEO, she becomes the first woman to serve as chairman/CEO of a Nashville-based major label group.
Earlier this year, Katie Dean left UMG after a two-decade tenure with the company; Dean had led MCA Nashville’s promotion team since 2015. In 2022, UMG Nashville’s Rachel Fontenot exited her role as vp of marketing and artist development, while vp of marketing Brad Turcotte left UMG Nashville to become partner at 615 Leverage + Strategy.
Meanwhile, former Arista Nashville artist Brad Paisley recently signed a deal with UMG’s EMI Nashville imprint.
Through the first three months of 2023, two albums have largely defined the year and had a profound effect on the record label market share rankings for the first quarter: Morgan Wallen’s One Thing At a Time, on Republic; and SZA’s S.O.S., on RCA. Combined, the albums have spent all but two weeks atop the Billboard 200 albums chart this year and have contributed significantly to major gains for their respective labels.
In terms of current market share — albums released in the past 18 months — Republic Records has had a white-hot start, posting a 12.45% mark and besting the second-highest label, Interscope Geffen A&M (7.75%), by nearly five full percentage points. While Republic has continued to benefit from an exceptionally strong fourth quarter of 2022 — Q4 releases like Taylor Swift’s Midnights, Metro Boomin’s Heroes & Villains and Drake & 21 Savage’s Her Loss are all in the top 10 most-consumed albums of 2023 so far — much of that increase can be attributed to Wallen’s album. One Thing At a Time is so big that Wallen’s Republic label partner, Big Loud Records, would have ranked as the No. 8 label in current share in Q1 if it were broken out on its own, having posted a 2.84% share so far in the year. (Republic’s market share encompasses Big Loud, Island, Cash Money, Mercury and indie distributor Imperial.) In fact, the first-week impact of Wallen’s album was so large that it boosted Republic’s single-week current market share from 9.76% the week before it came out to 18.14% the week it debuted, meaning that nearly one in every five album consumption units that week was a Republic Records release.
Meanwhile, the SZA album, which has topped the Billboard 200 for eight non-consecutive weeks in 2023 so far, helped catapult RCA to a 5.76% current market share in Q1 this year. That’s up from 4.34% this time last year and lands it in fifth place, only slightly behind its Sony sister label Columbia at 5.85%. That’s significant enough for RCA on its own — rarely, if ever, has it placed above Columbia in current share in any quarter in recent years — but alongside strong new releases like the Miley Cyrus album Endless Summer Vacation on Columbia, as well as the continuing success of releases from 2022 from Bad Bunny (Un Verano Sin Ti, The Orchard), Harry Styles (Harry’s House, Columbia), Beyoncé (Renaissance, Columbia) and Future (I Never Liked You, Epic), it’s helped push Sony Music Entertainment to a 28.46% current share in Q1. That’s up from 24.0% at this point last year and places Sony at its highest mark since the end of 2016, according to Luminate.
Those are the biggest takeaways from a first quarter that has thrown up plenty of surprises so far, as labels have settled into another year of a changing marketplace. Sony’s surge has seen the second-largest major close the gap in current share on market leader Universal Music Group, which essentially held steady at 33.59% in Q1 2023 from 33.58% at the same point last year. The indie sector also had a strong quarter of releases, accounting for 21.15% of the market, while Warner Music Group came in at 16.81% in current share. (Warner and the indies do not have a direct year-over-year comparison due to WMG-owned distributor ADA being shifted under Warner’s umbrella midway through 2022.)
In current share, Interscope and Atlantic both receded from the first quarter of 2022 to 7.75% (from 8.91% last year) and 7.22% (from 10.57% last year), respectively, coming in second and third. (Interscope’s market share encompasses Verve Label Group, while Atlantic’s includes the combined 300 Elektra Entertainment Group). Surrounding RCA on the list is a trio of labels who all also boosted their current market share year over year, with Columbia coming in fourth (5.85%, up from 5.78%), Capitol Music Group coming in sixth (5.56%, up from 4.13%) and Warner Records finishing in seventh (5.23%, up from 4.22%), marking encouraging starts for those labels over the first quarter of 2022. (Columbia’s share includes some labels from indie distributor RED; Capitol includes Motown/Quality Control, Astralwerks, Blue Note and indie distributor Virgin; and Warner Records includes catalog label Rhino, Warner Latin and the bulk of Warner Nashville.)
Coming in eighth in current share is Sony Nashville at 2.30%, bolstered by the continued success of Luke Combs and his brand new album, Growin’ Old. That’s up big from the 1.51% it had in Q1 last year before Growin’ Up was released last April. In ninth place is Epic Records, which at 2.06% saw a boost from 1.83% at this point in 2022. Sony Music Latin rounded out the top 10 among current share with 1.92%.
In overall market share, which factors in current as well as a label’s catalog, Universal Music Group’s dominance extends to more than 10 percentage points, at 37.65% over Sony’s 27.62%. That gap has narrowed, however, as Sony picked up nearly two full percentage points year over year, posting its best number since the end of 2016. Warner, in overall share, flipped back above the indies, at 18.55%, with the latter posting 16.81% for the first quarter.
Among the individual labels, Interscope was No. 1 in overall share, at 9.44%, coming in just ahead of Republic’s 9.16%. That represents a slight dip for IGA (9.76% in Q1 last year), while Republic’s strong current share boosted it significantly from the 7.91% it posted in the first quarter of 2022, when it came in third. Dropping from second to third in overall share this year is Atlantic, at 8.31%, down from 9.49% this time last year.
Also making a jump in overall share is Capitol, which rebounded from sixth at this point last year to reach fourth in overall share in Q1 this year with 6.68%, up from 5.91% in 2022. Following in fifth and sixth are Columbia (6.55%) and Warner (6.38%), respectively, each up slightly year over year. RCA’s strong current figure this year allows it to stay in seventh, albeit with a larger 5.50% versus 4.92% in Q1 2022. Epic (2.63%) and Sony Nashville (2.03%) follow in eighth and ninth, while Def Jam’s stronger catalog figure lands it in 10th at 1.96% overall.
Additional Notes
— Because 300 Elektra Entertainment’s market share is included under Atlantic, they were excluded from breaking out in the rankings so as to not double count the figures. But its combined overall share comes out to 2.24%, which would have been good enough for ninth overall on its own. And that’s without digging into the success of Bailey Zimmerman, who has a top 10 record on the Hot 100 right now with “Rock And a Hard Place.” Zimmerman is signed to Elektra, which has its market share run through Atlantic, but is worked at radio through Warner Nashville, which has its market share split between Warner Records and Atlantic.
— Island, which runs through Republic, had a 1.51% overall share on its own, which would have been good enough for 15th had it been broken out thanks to a current share that has grown from 0.51% to 0.70% year over year. Similarly, Motown, which runs through Capitol, came in at 1.04% overall, driven by a big leap in current share from 0.71% in Q1 last year to 1.48% in Q1 this year thanks to releases from Lil Yachty and Lil Baby, among others.
— Elsewhere, Alamo continued punching high. Despite the fact that it’s the youngest label with probably the smallest roster of any label that made the rankings, it ranked 15th in current market share, at 0.88%, higher than several much larger and older labels.
On March 4, hundreds of metalheads stormed into Pierce the Veil’s pop-up store in Glendale, Calif., scooping up T-shirts, hoodies and other merchandise. In the process, they helped boost sales for an ostensibly dying product: compact discs. “Kids would look at the display and pick every single one of our records on CD,” says Michele Abreim, the band’s manager. “It definitely felt like CDs were a merch item, not just a means to listen to music.”
A relic of the record industry’s pre-Napster boom period thanks to megastars like *NSYNC, Britney Spears and Eminem, U.S. CD sales accounted for $13.2 billion in 2000, their peak year, according to the RIAA. But though the format has been in steady decline throughout the streaming era, retail, manufacturing and management sources say the digital discs have gained in popularity as keepsakes. More portable than vinyl albums and less affected by manufacturing delays due to supply chain issues, CDs are once again becoming merch table mainstays, and in the first 10 weeks of 2023, sales are up slightly over the same period last year, according to Luminate — 6.8 million in 2022 to 6.9 million, a 2.5% increase.
This growth could be a sign of a growing coolness factor, similar to the unexpected, and sustained, vinyl revival that began in the early 2000s, which is fueled by limited-edition releases pressed on colored vinyl and other bells and whistles. Taylor Swift took a page from that playbook when she put out Midnights CDs in different collectible colors last year, and BLACKPINK is among the many K-pop acts to sell elaborate CD box sets.
“There are ways to do CDs that are incredibly impactful,” says Carl Mello, brand engagement director for Newbury Comics. “You can get more revenue out of it, so it’s not like a ‘Will this do $7.99?’ thing. You’re selling a $30 thing that a customer will be really happy with.”
Bill Wilson, senior vp of operations and innovation for MNRK Music Group, which oversees 50 independent labels, says specialized CD-buying audiences are keeping the format afloat. “There are still pockets and subgenres of music [fans] — like metal — who like holding and cuddling CDs — and they’re not vinyl collectors,” he says.
For those who can’t afford box sets or to spend upwards of $20 for a standard-issue vinyl album, “the CD is a much more budget-friendly item,” says Tony van Veen, CEO of New Jersey-based vinyl/CD manufacturer Disc Makers, who crunched the latest RIAA sales data and found that vinyl album prices rose last year by 13.5%, to $29.65, while CD prices went up 15.3%, to $14.45. “Music fans are deciding with their wallets.” He adds that his company’s CD sales stabilized in 2022 after years of decline.
CDs are generally far cheaper than vinyl albums — especially classic-rock catalog releases, which labels occasionally put on sale in the format. Creedence Clearwater Revival’s Chronicle: The 20 Greatest Hits goes for $13.99 on Amazon, compared with $28.31 for vinyl; a Foo Fighters Greatest Hits CD sells for $11.49, slightly more than half the $21.91 vinyl price.
Although pandemic-related manufacturing delays for vinyl are easing, they have prompted touring acts to stock their merch tables with CDs. “I had a conversation with somebody yesterday, and they’re about to go on tour,” says Ric Sherman, owner of The Production Department, a consulting company that works with artists, labels and record plants. “Trying to get vinyl on time was impossible, and they defaulted to CDs immediately.”
The profit margin for vinyl albums is slightly higher than CDs — a $15 CD would yield roughly $13.50 in profit; a $30 vinyl album, $15 — but Sherman adds: “Vinyl’s expensive to manufacture.” According to van Veen, 100 CDs cost $150 to manufacture, compared with $1,500 for 100 vinyl albums.
“If artists are touring, it’s easier to cart those around than vinyl,” says Mello. “There are utilities to it, for sure.”
Despite the small sales uptick so far in 2023, the 20-year decline in CD sales shows no sign of dissipating: Sales dropped from 40.6 million units in 2021 to 35.9 million last year, an 11.6% decrease, compared with a 4.2% rise in 2022 vinyl sales, according to Luminate. (That said, vinyl’s sales growth has slowed considerably from the 51% increase it logged in 2021.) Major labels are also reluctant to bet on CDs to drive significant revenue in the future. Says a major-label source: “I haven’t heard of the idea that somebody’s so committed to buying a physical product that they’re just going to move over to the CD if they can’t get a vinyl product.”
Then again, 35.9 million in annual sales is not nothing, and CDs will probably be around for a long time. “They’re highly valued and sought-after,” Mello says.
As Cindy Mabe officially takes the reins as chairman/CEO of Universal Music Group Nashville (UMGN), she is pledging to make some changes that could radically grow the label she inherits from Mike Dungan.
In a staff memo titled “Our future starts today,” obtained by Billboard, Mabe — Billboard’s 2019 Country Power Players executive of the year — lays out several areas of expansion for the company.
Among her plans are to “dramatically expand our partnerships with independent labels and entrepreneurs.” Mabe states, “Inspiration and new ideas are coming from everywhere. Much of that innovation is coming from the independent sector, but by the same token there is so much more they could do if they partnered with us in key areas. Universal Nashville will actively take a role to position ourselves as the best partners to expand their growth and help develop and support these artists.”
She also vows to expand the label’s space in film and TV. “While we are the leaders in recorded music, I want us also to lead in the music-based film and TV space,” Mabe writes. “Our artists stories are powerful and not linear and so the means of telling their stories should have a wide reach. This means growing our presence in audiovisual to develop our Country culture and our artists stories in film and television.” She gives no further specifics, but UMG launched a film and TV studio in 2020.
As country music grows globally, Mabe also plans to take advantage of that explosion. “We will collaborate even closer (and more creatively) with our label colleagues around the world where we can leverage each other’s strengths to break artists who are either signed to their rosters or ours,” she writes. “There’s so much more we can do together.” Label artists like Keith Urban and Kip Moore already have considerable international followings.
Mabe ascended from president, a role she has held since 2014, to replace Dungan, who retired after 43 years in the music industry on March 31.
Mabe joined UMGN in 2012 as senior vp of marketing, leading marketing initiatives across Capitol Records Nashville, EMI Records Nashville, MCA Nashville and Mercury Nashville — UMG’s expanded suite of country labels following its acquisition of EMI. Prior to that, she spent five years at Capitol Records Nashville as senior vp of marketing.
UMGN is home to, among others, Urban, Carrie Underwood, George Strait, Parker McCollum, Little Big Town, Dierks Bentley, Priscilla Block and Brad Paisley. The company finished 2022 at No. 1 on Billboard’s year-end Top Country Labels chart.
Read Mabe’s memo is in full below:
Good morning team!
We have worked alongside each other and in the trenches together for a while now but today is my first day as Chair and CEO of UMG Nashville. It’s a responsibility that I do not take lightly. To succeed Mike – a mentor and one of the most accomplished executives in the history of Nashville – is humbling. And to be surrounded by our incredible, world class artists and to be working alongside you, the best team in Country music, and with Lucian’s unwavering support, is an honor that gives me a great sense of pride, responsibility and excitement.
It is with that sense of excitement, I want to share with you my vision of how we’re going to build on the incredible work that we’ve done together and position this company for creative and commercial growth in what is a rapidly changing and expanding market. This is the next era of Universal Music Group Nashville!
First, we’re going to continue to sign and develop the best artists in Country music. Our roster reflects what we value the most: GREAT ARTISTS. And with those artists we will push the boundaries and reach of Country music and widen our artistic lens by signing and developing artists who have important stories to share and who shape our culture no matter where they are from and whomever they are influenced by. Country is—and will remain—a genre of deep roots grounded in great storytelling and truth that incorporates creative influences across music styles and genres and fans everywhere have shown us they are open to what our evolving genre has to offer. From Nashville to the world.
Second, we will dramatically expand our partnerships with independent labels and entrepreneurs. The marketplace is in flux with innovation. Inspiration and new ideas are coming from everywhere. Much of that innovation is coming from the independent sector, but by the same token there is so much more they could do if they partnered with us in key areas. Universal Nashville will actively take a role to position ourselves as the best partners to expand their growth and help develop and support these artists.
Third, we will broaden our storytelling to include film and TV. While we are the leaders in recorded music, I want us also to lead in the music-based film and TV space. Our artists stories are powerful and not linear and so the means of telling their stories should have a wide reach. This means growing our presence in audiovisual to develop our Country culture and our artists stories in film and television.
Finally, we will collaborate even closer (and more creatively) with our label colleagues around the world where we can leverage each other’s strengths to break artists who are either signed to their rosters or ours. There’s so much more we can do together.
In my excitement, I wanted to give you a glimpse of what the next era of Universal Nashville is going to look like. I’ll be sharing more about all of these areas in the coming weeks and months, but I wanted you to get a sense of where we’re headed and how excited I am to be working with all of you in this next chapter.
Our future starts today. Let’s build it together!
Cindy
Record labels have been around for decades and, for a long time, being signed to one meant that an artist made it in the music industry. But what does a label actually do, how do they make a profit and how are they evolving? The latest episode of Billboard Explains answers all those questions.
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There are two types of labels: major labels, which are organized into umbrella companies called label groups, and independent labels. The three major labels in today’s industry are Universal Music Group, Sony Music Entertainment and Warner Music Group — with each having their own subsidiaries. Independent labels differ from major labels, as they operate on their own funding. They can also outsource distribution and publishing, while majors do that themselves.
“When you think about a record label now, it’s really important to focus on the fact that they have massive marketing and publicity muscle,” says Dan Rys, Billboard‘s senior writer. “They are the ones who are able to put a billboard up in Los Angeles. They’re the ones who can get you placement on streaming services.”
Labels typically make money on songs’ master recordings one of three ways: through music sales, downloads and streaming of an artist; brand partnerships where an artist endorses a product; and master licensing, using the exact recording of a song for a commercial, movie or TV show. Labels can also make money on touring, merch and other opportunities based on deals signed with artists.
Thanks to social media, the way labels recruit artists has changed drastically. “There was a time when record labels were the only way that anyone could actually get their music out to the public,” says Keith Caulfield, Billboard‘s managing director of charts and data operations. “They controlled all the marketing and distribution of getting your music into stores. Today, that’s greatly different because you have the Internet.”
Watch the latest Billboard Explains above. After the video, catch up on more Billboard Explains videos and learn about the origins of hip-hop, how Beyoncé arrived at Renaissance, the evolution of girl groups, BBMAs, NFTs, SXSW, the magic of boy bands, American Music Awards, the Billboard Latin Music Awards, the Hot 100 chart, how R&B/hip-hop became the biggest genre in the U.S., how festivals book their lineups, Billie Eilish’s formula for success, the history of rap battles, nonbinary awareness in music, the Billboard Music Awards, the Free Britney movement, rise of K-pop in the U.S., why Taylor Swift is re-recording her first six albums, the boom of hit all-female collaborations, how Grammy nominees and winners are chosen, why songwriters are selling their publishing catalogs, how the Super Bowl halftime show is booked and why Olivia Rodrigo’s “Drivers License” was able to shoot to No. 1 on the Hot 100.
Classical music has been in the news this month, with the launch of Apple Music’s new classical-specific streaming app and Universal Music Group’s purchase of classical label Hyperion Records. But under the hood, another notable classical music story was brewing: for the first time in its history, Decca Records has nine of the top 10 songs on the classical U.S. on-demand audio streaming songs chart, according to Luminate.
The achievement is the fruit of several different strategies to help boost those artists, including Ludovico Einaudi, Max Richter, Cody Fry, Chad Lawson and Lang Lang, across streaming services, from reworks, playlisting and, of course, TikTok. And it helps earn Decca Records U.S. senior vp of marketing and artist strategy Joseph Oerke the title of Billboard’s Executive of the Week.
Here, Oerke tells Billboard about several of those strategies, which go beyond boosting individual artists and songs but also includes growing the genre’s footprint at streaming — which will be helped by Apple Music Classical, but also Deutsche Grammophon’s own streaming service, Stage+, that it launched last November to showcase DG and Decca’s roster of artists. And the growth of classical streaming is becoming apparent in the numbers: on-demand audio streaming of classical music has grown by double-digit percentages in each of the past three years, and outpaced the growth of the on-demand audio streaming business at large in 2022, according to Luminate.
“There is a massive population of people who listen to instrumental and classical music during activities like meditation, yoga, cooking dinner, studying and so much more,” Oerke says. “We’ve intensely focused on these spaces and created opportunities to highlight the genre.”
This week, Decca has nine of the top 10 on-demand streaming audio songs in the U.S., according to Luminate, the first time in the label’s history it has achieved that feat. What key decisions did you make to help make that happen?
It is quite an exciting week for us. There is an amazing team here at Decca Records US and across the larger Verve Label Group, led by President/CEO Dickon Stainer. This is a tribute to each department. While we always study the charts, our focus remains on artist development and bringing classical music to the widest audience possible. Each track had its own journey to the chart including TikTok virality, the undeniable talent of the artist, the perfect alignment of music and function and so much more. There is no one plan that works for every track, so we constantly analyze audience and streaming data to inform how we tailor each approach. For example, prolific pianist-composer Chad Lawson embraces the healing power of music and writes works that are not only beautiful to listen to but also can inspire mindful moments. We’ve worked with Chad to not only position his music as classical but also as music that can serve a purpose.
Additionally, we’ve released alternate versions of key tracks including sleep re-works that have helped expand the audience. Working with such a collaborative and flexible artist as Chad has increased the opportunities we have for success. We’ve also fully embraced a global outlook and these nine tracks represent artists from the U.S., Iceland, U.K., Italy and China which gives us even more music to work with and broaden our overall appeal. We have the honor to represent classical labels including Decca Classics, Deutsche Grammophon, ECM New Series and Mercury KX as well as working with artists locally signed around the world. This industry-leading wealth of artists and music is a key to our success.
With streaming’s dominance, many people have lamented the struggles that genres like classical and jazz have had in breaking through such a crowded and pop-heavy marketplace structure. How have you guys positioned yourselves to succeed at streaming in particular?
Rather than lament I’ve always chosen to fully embrace how listening habits have evolved over the years and find every possible outlet and platform for classical music. With instrumental music we work with both artist-forward listening as well as more passive forms of consumption. It’s this combination of listening styles that has helped us to grow our market share consistently over the last few years. One approach is to create moments or events that draw attention to our artists and music, with one example being World Sleep Day. We partnered with the World Sleep Society and curated a selection of new music from a range of artists around the world. We then worked with our commercial partners to drive overall awareness for the genre, which many people consume as part of their daily lives, which then drives increased consumption. There is a massive population of people who listen to instrumental and classical music during activities like meditation, yoga, cooking dinner, studying and so much more. We’ve intensely focused on these spaces and created opportunities to highlight the genre.
Deutsche Grammophon also launched its new streaming service, Stage+, in November. How has that service fared so far and what has it allowed you to do with the catalog?
Stage+ is a beautiful platform where you can enjoy some of the greatest musical performances from around the world. I’ve always been a fan of classical music and I attend operas and concerts in New York weekly, but I almost never get to see the Vienna Philharmonic at home, and I’ve only been to the Concertgebouw in Amsterdam once in my life. There is so much amazing work being done in concert halls around the world and now classical audience members everywhere can enjoy performances that we might only ever hear about. We are working hand in hand with Deutsche Grammophon to continue growing the audience for Stage+ and look forward to bringing these performances to many more fans in the years to come.
There seems to be more and more interest in classical-specific streaming lately, not only with Stage+ but with the official launch this week of Apple Music Classical. How do you leverage these types of platforms, and how does that help you break through with your fan base?
There has been, wrongly, a stigma that most streaming platforms only carry pop music but not classical or not all of classical music. That’s incorrect, but the perception remains. These classical-specific platforms highlight just how vast the available catalog is and can present recording information in a clean and easily understandable format. Personally, it makes me as a listener feel seen and heard which is not something classical music fans who grew up digging around CD bins in the back of a music store have enjoyed. I think part of our job now is to educate listeners that you can have the entire music store with one tap and find both popular and obscure recordings quickly and easily.
Several streaming services also have added additional data, such as performer, composer and conductor data. What else would you like to see added to better reflect the classical space?
One thing that was missing but now is less of a problem is improved sound quality. The dynamic range of classical music is so vast that higher quality audio was an issue in the past, but now most services offer it which is a huge benefit. While metadata display is an on-going conversation, I’d like to see more contextual information offered to listeners, such as a booklet or liner notes. Classical music has traditionally been about numerous artists recording the same piece — just imagine how many recordings of Beethoven’s Fifth Symphony there are — and so each artist’s individual interpretation is the key and listeners are keen to know the back story and the artist’s thoughts on the repertoire. With opera, which is really a challenge at streaming, there is a need for a libretto to understand what is being sung. This extra material helps with a richer listening experience deepening a listener’s connection to the genre.
You guys have also had success leveraging TikTok, particularly with Ludovico Einaudi’s 2013 track “Experience,” which went viral on the platform last year and is still the No. 1 on-demand streaming audio track in the U.S. this week. What was the story there and how have you been able to utilize platforms like that to benefit your artists?
In November 2020 our vp of digital analytics and advertising spotted the increasing uses of “Experience” on TikTok and that it was driving more streaming. We quickly identified the video where the trend started, which was of a student listening to “Experience” which dramatically helped increase his focus while writing a paper. It clearly resonated with a large audience and we could see the potential. From there we quickly delivered the official audio to Einaudi’s TikTok profile, ran influencer campaigns to boost engagement, drove awareness for Einaudi’s own channels, and then encouraged him to deliver an alternate solo piano version of the song. We had already been planning a YouTube livestream for December and decided that a performance of “Experience” needed to be added ASAP. I think most importantly, we looked at how people were engaging with his music and the cultural conversation around it to tailor our approach at broadening and consistently growing the audience.
In general, we are constantly monitoring trends and daily activity on social platforms like TikTok, Reels and Shorts and with our deep understanding of fan behavior we can double down on our consumer-led marketing. Elevating UGC with initiatives like influencer campaigns and plugging our artists and music into relevant cultural trends are just a few ways we work to position our artists at the forefront of online culture to give their music a chance to stand out amongst the thousands of tracks released every day.
How do you keep growing the genre moving forward?
We need to make sure artists and their music are present where fans are and that means a lot of content both premium and casual. The decline of classical music has and always will be lamented but despite that it is still here, both in the concert hall and coming through our speakers. I attended the opera earlier this week and soprano Lise Davidsen gave one of the most thrilling performances I’ve heard and now my job is to make sure others know about her and excite their curiosity to seek her out. She’s but one example of the countless performing and recording artists today who are giving phenomenal performances night after night, and they are the catalyst for moving the genre forward while we are here to amplify their art.
Previous Executive of the Week: Mike G of UTA
The board of directors at Universal Music Group (UMG) has extended the contract of chairman and CEO Sir Lucian Grainge until May 1, 2028, the company announced Thursday (March 30).
The updated agreement transitions Grainge from an all-cash compensation package to one that combines cash and equity; the latter of these includes performance-based objectives that align with the interest of shareholders and correlate with the company’s long-term growth strategy. The majority of the compensation package’s value will be paid in UMG equity and performance-based stock options. As a result, Grainge’s annual salary will be reduced by more than two-thirds from his current salary, down to $5 million. He will be eligible for an annual bonus with a target of $10 million. The EBITA bonus from his previous contract has been eliminated, and he will only be entitled to the contingent bonus under his prior agreement on a pro rata basis until Friday (March 31).
The equity components of the compensation program include annual grants of $20 million, comprised of as much as 50% performance share units (PSUs), with annual PSU goals set by the board of directors; the remainder will be comprised of restricted share units (RSUs). Grainge will also receive a one-time transition equity award of $100 million, comprised of 50% RSUs and 50% performance stock options (PSOs). The PSOs will be paid out only if the company surpasses stock price hurdles — 1/3rd at 26.50 euros ($28.90), another 1/3rd at 30.00 euros ($32.71) and 1/3rd at 38.00 euros ($41.44) — within the term of the agreement.
UMG went public in September 2021 with a listing on the Euronext Amsterdam Stock Exchange.
“UMG is the world´s most successful music company and there are incredible opportunities ahead for a company with the right leadership and vision,” said UMG chairman of the board Sherry Lansing in a statement. “The UMG Board is resolutely committed to converting those opportunities and maximizing shareholder value for the long term. Only the right kind of chief executive can help achieve that goal and Lucian is just the one to do it. Through his clear vision and strong execution in building UMG into the industry leader, Lucian has also essentially created a new category of music company. This agreement is designed to drive both the sustainable success of UMG and long-term shareholder value.”
To align Grainge’s term as executive director and chairman/CEO with the term of the extended contract, the board will put forth a proposal to reappoint him as executive director for a term ending on May 1, 2028, at UMG’s 2023 general meeting on May 11; it will also seek approval for a supplement to UMG’s existing executive directors remuneration policy with respect to his new compensation.
Grainge got his start in the music publishing business in 1979 at age 18. He joined Universal Music in 1986 when he launched PolyGram Music Publishing in the U.K. and steadily climbed the ladder from there, rising to chairman/CEO of UMG’s international division in 2005 and chairman/CEO of UMG in 2011, succeeding Doug Morris. He placed atop this year’s Billboard‘s Power 100, marking his seventh appearance at No. 1 on the list; in 2020, he was named Billboard‘s executive of the decade.
In 2022, UMG’s overall revenues increased 21.6% to 10.34 billion euros ($10.96 billion), boosted by solid returns from recorded music subscriptions and streaming. It remains far and away the largest recorded music company by market share.
New Warner Music Group (WMG) CEO Robert Kyncl didn’t take much time to make an imprint on the company. On Wednesday (March 29), fewer than three months into Kyncl’s tenure, WMG announced it would lay off 270 employees, or 4% of its workforce.
The layoffs will save the company $22 million in fiscal year 2023 ending Sept. 30, 2023, and “$50 million on an annualized run-rate basis in fiscal year 2024,” according to an SEC filing released Wednesday. That’s equal to 4.2% of WMG’s adjusted earnings before interest, taxes, depreciation and amortization in the fiscal year ended Sept. 30, 2022.
Like many other companies, WMG is becoming more mindful of its resources as the music industry tries to extend an eight-year growth spurt. Prior to announcing the layoffs, WMG said a “financial transformation program,” to roll out in fiscal 2024, is expected to produce annual savings of “$35 million to $40 million once fully implemented,” CFO Eric Levin said on the company’s Feb. 9 earnings call. Universal Music Group’s Motown Records announced layoffs in February as the label was reintegrated under Capitol Music Group. Downtown Music Holdings, Spotify and SoundCloud have also reduced their headcounts in recent months.
WMG had “to make some hard choices in order to evolve” and position the company for “long-term success,” Kyncl wrote in a memo to employees. The cuts were thoughtful and purposeful, he added, not a “blanket cost-cutting exercise.” The layoffs “should be substantially completed by the end of the next fiscal quarter” ending June 30 and will result in cash expenditures of about $46 million by the end of fiscal 2024, according to the filing.
News of WMG’s layoffs didn’t sway investors, however. WMG’s share price rose just 0.6% to $32.63 on Wednesday despite the restructuring’s ability to improve its bottom line. Year-to-date, WMG’s share price has fallen 6.8% while overall stocks have broadly rebounded from a dismal 2022. The S&P 500 is up 4.9% and the tech-heavy Nasdaq composite is up 13.9%. The New York Stock Exchange composite is down 0.4%.
While WMG will reduce headcount in some areas, the company is also building for the future — with an eye on tech. Kyncl, who quickly hired ex-YouTube executive Ariel Bardin for the newly created role of president of technology, said in his memo that WMG would be “reallocating resources towards new skills for artist and songwriter development and new tech initiatives.”
WMG expects to expand its gross margin by 50 to 100 basis points — equal to one-half to one percentage point — in fiscal year 2023. Aside from cost cuts, the nature of the changing music business helps the bottom line. WMG’s margins improve as it sells less of “margin-declining” physical product and “high-margin growing” digital business accounts for a larger share of its total revenue, Levin said at the Deutsche Bank 31st Annual Media, Internet & Telecom Conference on Feb. 28.
“We still see solid margin growth in 2023” despite declining ad-supported streaming revenues, Levin added. “When we see ad-supported start to stabilize and hopefully rebound and grow, it may create an environment for very favorable margins.”
German record label and publisher BMG had its biggest year in its 15-year history, the company reported Thursday (March 30), saying 2022 revenues were up more than 30% on strong publishing and recorded music growth and the half a billion invested in music catalogs and artists signings.
BMG reported that it generated 866 million euros ($912.6 million) in 2022 compared to 663 million euros in 2021 ($784 million). The company’s publishing division, which makes up 60% of BMG’s revenues, grew by 26% to 518 million euros ($546 million) on new hits by Bebe Rexha and Lewis Capaldi and iconic works by Blondie and Nirvana.
BMG’s recorded music business, which contributes 40% of the company’s overall revenues, grew by 38% to 348 million euros ($367 million) on collaborations from Jason Aldean and Carrie Underwood and the continued streaming strength of Rick Astley‘s “Never Gonna Give You Up.”
With financial backing from its parent company Bertelsmann and $1 billion joint investment partnership with private equity firm KKR, BMG launched an “investment offensive” in 2022, in the words of Bertelsmann. BMG spent more than 509 million euros ($536 million) signing publishing deals with artists like Elvis Costello and Halsey and acquiring 45 catalogs including rights to works by Peter Frampton, John Lee Hooker, Primal Scream and Simple Minds. In August, BMG announced it acquired the German indie label Telamo, expanding its footprint in the world’s fourth largest music market.
BMG executives said the company is on target to achieve its financial goal of generating one billion euros in revenue starting in 2024.
BMG chief executive Hartwig Masuch attributes the record-setting year for revenues to the company’s investments in technology and services to set it apart with artists and focus on “known quantities” of successful music.
“Our strategic differentiation is focusing on the repertoire that grabs more and more share from consumers, which is established repertoire, known quantities,” Masuch tells Billboard. “And in attracting artists, the focus on qualitative differentiation when it comes to accounting, servicing, our daily role, (is) a strategic differentiation between our major competitors and BMG.”
Masuch, who has led BMG since its launch in 2008, is stepping down at the end of this year, leaving the top job to his current chief financial officer, Thomas Coesfeld.
Coesfeld, who has played a key role in BMG’s catalog acquisition strategy, said the company’s investments last year will “bear fruit in the years to come.”
“Why we are focused on iconic artists is because we are firm believers in the cultural relevance — the earnings permanence,” Coesfeld says. “These returns are stable, less volatile and growing because the streaming environment is still growing a lot — less than in the last two years, but still growing. Our strategy is keep going because we are firm believers that this is the right thing to do.”
Citing a need to make “hard choices in order to evolve,” Warner Music Group chief executive Robert Kyncl announced on Wednesday a slate of cost-trimming measures that includes a 4% reduction in staff and a reallocation of resources towards tech initiatives and “new skills for artist and songwriter development.”
Kyncl, who took over as CEO earlier this year, said in a staff memo seen by Billboard that approximately 270 people will be let go and that there will also be reductions in open positions and various discretionary spending at the company to “provide us with additional flexibility for our future.”
Affected employees will hear from their managers in the next 24 hours, Kyncl said, adding that the actions are not a “blanket cost-cutting exercise” and that “every decision has been made thoughtfully by our operators around the world, who considered the specific needs, skills, and priorities of each label, division, and territory, in order to set us up for long-term success.”
Read Kyncl’s full memo below:
Hi everyone,
As I mentioned at our first All-Hands meeting last month, I’m committed to direct and honest communication with all of you. The music business is filled with new possibilities: more fans are engaging with artists and songs than ever, our reach is enormous, and new business models are constantly emerging. WMG is positioning itself for this new phase of growth at the intersection of creativity and technology.
In my discussions with our leaders across the company, many of them came to the same conclusion – that to take advantage of the opportunities ahead of us, we need to make some hard choices in order to evolve. Consistent with this direction, we’ve made the tough decision to reduce our global team by approximately 270 people, or about 4%. At the same time, we’re reallocating resources towards new skills for artist and songwriter development and new tech initiatives. We’re also reducing discretionary spending and open positions to provide us with additional flexibility for our future.
I want to be clear that this is not a blanket cost-cutting exercise. Every decision has been made thoughtfully by our operators around the world, who considered the specific needs, skills, and priorities of each label, division, and territory, in order to set us up for long-term success. The leader of your division will either be holding a town hall or sending an email to explain more about this path forward.
I’m also acutely aware of how unsettling this can be. Having to say goodbye to talented colleagues is always difficult. For those of you who will be leaving WMG, please know that we’re deeply grateful for your hard work, dedication, and all you’ve contributed to this company. In all territories, except where you are explicitly told there will be a review or consultation period, anyone affected will hear from your leaders, supervisors, or People team reps within 24 hours. I know this transition will be tough, but we’re committed to supporting you during this process.
In times of great disruption in our world and society, artists and songwriters who have something original to say, who rise to the occasion, will resonate the loudest. Equally, the rapid changes in our economy and ecosystem create the conditions and opportunities for innovation and breakthroughs. I learned when I joined WMG that this is a gritty, incredibly resourceful, and highly impactful team that I want by my side every day of the week. We deliver for our artists, songwriters, and labels with laser focus, inventiveness, and care. And now, more than ever, we need to double down on that.
I’ll have more to say about all of this at our next All-Hands meeting, including more details on our plan.
Let’s support each other with empathy and integrity as we work through this process.
Thank you,
Robert