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As the country music community continues to grapple with ways to increase diversity and inclusion, the Black Music Action Coalition (BMAC) and Academy of Country Music have come together to launch OnRamp, a program set to empower the next generation of Black leaders.
The OnRamp partnership will take 20 young, Black artists and music industry professionals in Nashville through a year-long program that includes access to top leaders, community mentorship and professional development. Vitally, the program comes with a guaranteed $1,000 monthly stipend for the 12 months.
Applications will be available starting in late Spring with the program kicking off in June during Black Music Month. Candidates can sign up for email notifications now at acmcountry.com/onramp to learn more.
This inaugural program will be funded by BMAC, the Academy and industry partners, and aided by social impact agency BreatheWithMe. The hope is that Nashville companies will make financial contributions to fund future years.
“The Academy has a rich history of fostering diversity and inclusion in the country music industry both on stage and behind-the-scenes, and we see this partnership as a particularly impactful way to continue our committed work to making the statement ‘Country Music is for Everyone’ a true reality,” said ACM CEO Damon Whiteside in a statement. “We’re excited to work with BMAC on this pivotal and transformative work for our Nashville community by increasing opportunities for young professionals from diverse backgrounds in our industry.”
The Academy relocated from its longtime home in Southern California to Nashville last year.
The guaranteed income component was critical, BMAC co-founder/co-chair Willie “Prophet” Stiggers tells Billboard. He studied such initiatives including a program started by former Stockton, Calif., mayor Michael Tubbs a few years ago that guaranteed $500 a month to 125 residents for 18 months and has now spread to more than 50 cities.
“All the data showed how people were lifting themselves out of poverty and realizing their dreams, not just from the cash relief, but the mentorship and wrap-around programs,” Stiggers says. “I said to myself and the BMAC team, with the billions of dollars the entertainment industry generates, we can, without government support, have these programs happen across the country and really begin to close the wealth gap that is targeting Black and Brown people.”
OnRamp comes several months after BMAC released its Three Chords and the Actual Truth report last June. The report called for the country music community and the city of Nashville to commit to change and equity through partnering with BMAC. The Academy was among the first companies to come aboard.
“They were really the first to raise their hand and says, ‘we’re prepared to stand with you and launch this program in Nashville and then call on the other companies up and down Music Row to partner with us.’ So this initiative can grow and become a sustainable part of the Nashville community,” Stiggers says.
The Academy’s LEVel Up: Lift Every Voice program will help facilitate OnRamp. LEVel Up is a two-year professional development program, originally launched last year and fully funded by the Academy, for rising leaders in country music. The members of the current LEVel Up cohort will play a hands-on role in the application review process and drive the candidate selection work, proposing a recommended slate of candidates to the Academy and BMAC teams.
Each of the 20 members of the inaugural OnRamp cohort will have a program designed specifically for them with their own facilitating team with the help of LEVel Up members and the Academy’s DEI task force. “For instance, if you’re a young person trying to become a manager, we’ll pair you with a manager who is killing it in that space and allow you to shadow them,” Stiggers says.
“It’s my pleasure to stand alongside other industry leaders to support this important program,” said ACM DEI Task Force chair/ACM board member and BMI executive Shannon Sanders, in a statement. “The Academy continues to play a pivotal role in ushering in a new era in country music by truly supporting and lifting up those underrepresented in the industry.”
Additionally, there will be money management and mental health components activated on a weekly or monthly basis. “The idea is to build the communities around each of these individuals that they need to help them realize their dreams,” Stiggers says.
Ultimately, the idea is to transform the country music industry across the board. “Five years from now when you’re able to have a few hundred young people who have been provided access in the training, resources and connections they need in the country music space I think we see a more diverse pool of artists and executives,” Stiggers says. “I think we see more Black women faces showing up on the executive side and I think we’ve opened this up to allow the charts to be reflective of the community that enjoys the genre, which isn’t the cast today.”
Earlier this year, the Country Music Association launched a diversity and inclusion fellowship program to provide an immersive experience in the country music industry initially through the CMA’s communications team in conjunction with the 50th anniversary of CMA Fest this June. Fellows will then work for six weeks with a country music publicity firm. Set to launch this Spring, the program is open to all students from underrepresented communities through Plank Center for Leadership in Public Relations and the University of Alabama, with additional collegiate partners including the University of Tennessee, Knoxville and Nashville’s Belmont University.
Such programs, as well as The Hubb, a professional development summit started by CAA in 2018, have Stiggers feeling optimistic. “I am encouraged to see people actually moving past the hashtags and trying to implement sustainable programs that are really going to create a more level playing field.”
Korean music company HYBE is more than getting by with its primary artist, BTS, on hiatus and its members pursuing solo projects and preparing for military duty. In 2022, HYBE’s revenue grew 41.6% to 1.78 trillion won ($1.41 billion at the Dec. 31, 2022 exchange rate), the company announced Tuesday (Feb. 21).
Adjusted earnings before interest, taxes, depreciation and amortization rose 23.9% to 328.8 billion won ($260.5 million). Margins were thinner that in previous years, however. Last year’s operating margin (as a percent of revenue) fell to 13.4% from 15.1% in 2021 and 18.3% in 2020. Adjusted EBITDA margin dropped to 18.5% from 21.1% in 2021 and 20.2% in 2020.
HYBE breaks revenue into two main categories: artist direct-involvement and artist indirect-involvement. Direct involvement revenues cover such things as recorded music, touring and management. Recorded music sales improved 47% to 553.9 billion won ($438.9 million) and was the largest single revenue source. Concert revenue jumped 470.1% to 258.2 billion won ($204.6 million) as artists returned to touring after scaling back performances during the pandemic.
BTS may be taking a break but it’s still HYBE’s sales leader in album-loving Korea. Four HYBE artists were in the top 10 of Korea’s year-end album tally: BTS was No. 1 with 5.75 million units, Seventeen was No. 3 with 5.56 million units, Tomorrow X Together was No. 5 with 2.78 million units and ENHYPEN was No. 8 with 2.64 million units. Le Sserafim was the No. 15 artist with 1.29 million units. As a point of comparison, the top album in the U.S. last year, Taylor Swift’s Midnights, sold the equivalent of 1.8 million units.
Artist indirect involvement revenue grew only 9.7% in the calendar year. Merchandising and licensing improved 24.8% to 395.6 billion won ($313.5 million) and fan club revenue grew 47.1% to 67.1 billion won ($53.2 million).
In the fourth quarter, HYBE’s revenue grew 16.9% to 535.3 billion won ($424.2 million) in the fourth quarter of 2022. Recorded music revenue jumped 76.4% to 149.1 billion won ($118.2 million) and was the largest single source of revenue.
BTS’s global success has allowed HYBE to diversify itself and rely less on the K-pop super group. In 2017, Korea accounted for 72% of HYBE’s revenues compared to 14% for Japan and 9% for North America. In 2022, HYBE had grown 19-fold from 2017 and had almost evenly balanced business between its three main markets: Korea (33% of revenue), North America (32%) and Japan (28%). The rest of the world contributed just 7% of HYBE’s 2022 revenue — but that could change if the company’s newest investment works as expected.
HYBE’s recent acquisition of a leading stake in competing K-pop company SM Entertainment is an opportunity to develop in markets where it currently has little presence. CEO Park Jiwon explained during Tuesday’s earnings call that HYBE artists can benefit from SM Entertainment’s strong network and infrastructure in China and Southeast Asia. Likewise, HYBE believes it can help SM Entertainment in the North American market.
HYBE latest acquisition didn’t impact 2022 results but will help expand its presence outside of Korea in 2023. On Feb. 8, HYBE purchased QC Media Holdings, the parent company of Atlanta-based hip-hop label Quality Control Music, the home of Migos and Lil Baby, for $300 million. Quality Control will sit under HYBE America and the leadership of CEO Scooter Braun, whose Ithaca Projects was acquired by HYBE in 2021.
One of the bigger surprises of 2023 so far has been the music of Lil Yachty, the Atlanta-based rapper who released his first project in three years earlier this month. But rather than delving into the hip-hop styles for which he’s known, Yachty branched out with Let’s Start Here, releasing an album that is more psych rock than trap rap — and receiving some of the best reviews of his career in the process.
The album debuted at No. 9 on the Billboard 200 and No. 1 on the Top Rock Albums chart last week, and has stuck around in the top 40 of the former and top 10 of the latter in its second week on the chart. And helping guide the stylistic switch up and land Yachty with some of the most intriguing collaborators he’s worked with in his career has been Motown Records vice president of A&R Gelareh Rouzbehani, who earns the title of Billboard’s Executive of the Week.
Here, Rouzbehani discusses the switch for Yachty from hip-hop to alt-rock, and the somewhat unexpected success that the album achieved, given how difficult it can be to change the narrative for an artist who is nearly a decade into his career at this point. “It goes to show that great music still reigns supreme,” Rouzbehani tells Billboard. “Working with Yachty on this album was more about adding ideas rather than taking things away. He had a really strong sense of the record he was making and, for me, it was about bringing session ideas to the table, people I felt like could add to his vision.”
This week, Lil Yachty’s Let’s Start Here spent its second week in the top 40 of the Billboard 200 and the top 10 of the Top Rock Albums chart. What key decision did you make to help make that happen?
The beauty of this album’s success thus far is that it has organically resonated with people around the world. It goes to show that great music still reigns supreme. Working with Yachty on this album was more about adding ideas rather than taking things away. He had a really strong sense of the record he was making and, for me, it was about bringing session ideas to the table, people I felt like could add to his vision.
This album represented a stylistic switch for Yachty, from rap to rock. What did that entail from the A&R side?
I remember when I first met Yachty in Atlanta and we shared a love of Tame Impala and music that inspired him as an artist and me as an exec. He has always wanted to make an alternative record and I was itching to A&R an alt-leaning album. We didn’t necessarily sit down and say, “Hey, let’s do this now.” The stars just aligned. He had met Pony, Patrick and Jacob and just started creating. I’m grateful that Yachty trusts me with his art. As much as it’s vulnerable for an artist to put themselves in that position, it’s also something I don’t take lightly. To be able to call him and bounce ideas back and forth is something I enjoy. He was open to meeting and working with Teo Halm, so we invited him to a session at Mac Demarco‘s studio. They started vibing, Teo was playing chords and Mac was on bass. Nami, another extraordinary creative, came to that session. Credit to Yachty for saying yes. That day, “drive ME crazy!” was created, which is now the No. 1 most consumed song [from the album].
How is it different A&R’ing a hip-hop record vs. a rock record like this?
The initial process for me is always the same. The way we go about making the records may be different and, of course, sonically there are differences, but there’s always very similar underlying characteristics. Being aligned with an artist’s vision is the most important part for me. Once that foundation is set, it’s like painting on a blank canvas, whether it be rap, alt, pop, rock. I’m most inspired when I’m giving creative input and it just flows.
What challenges exist in shifting genres like this, and how do you overcome them?
I think the challenge really lies outside of the world you build. There wasn’t necessarily a challenge going into making the record; that came very naturally to Yachty. Since he’s a multi-genre artist, he can literally make any genre of music, he’s just that type of creative. It was about making sure we don’t alienate his core fans but also grow and reach new audiences. It was also really important for the alt/rock community to grasp this type of record coming from Yachty, who has evolved so much musically.
The album debuted at No. 9 on the Billboard 200 and No. 1 on the Top Rock Albums chart with a strong critical reception. What did you do to help it succeed out of the gate, and how do you keep the momentum going now?
Having every department aligned on our goals was key for the rollout of this project. Everyone was really excited hearing the record, but the challenge was how to get it out to the world in the most meaningful and genuine way. That energy has to match the music, from marketing to international to creative. The goal was to have people listen to the album top to bottom, no skips, since it’s really a journey from the very beginning to the last track. Now, it’s about getting the live element in place and going into the second phase of marketing and our plans around ex-U.S. markets.
How has the job of an A&R changed over the course of your career?
Every A&R is different. It depends on each individual and what their strengths are and really focusing on those strengths. I’m very hands on and like to be a part of the creative process from inception, then putting a different hat on once we deliver the record.
Previous Executive of the Week: Debra Rathwell of AEG Presents
Former Roadrunner Records executives Dave Rath and Cees Wessels are spearheading a fresh rock label, Blue Grape Music (BGM), Billboard can exclusively reveal.
Rath, former head of A&R at Roadrunner Records, and Wessels, founder and ex-CEO of Roadrunner, have a long — and loud — history with the harder-edged stuff. The pair played their parts in shaping the careers of Nickelback, Slipknot, Type O Negative, Killswitch Engage, Fear Factory, Sepultura, Turnstile and others.
The first signing to BGM is Code Orange, the two-time Grammy Award-nominated hardcore punk band from Pittsburgh, PA, and whose first release through the label is What Is Really Underneath?, a 14-track companion to 2020’s Underneath, a collection that is part-remix, part-soundtrack.
“I have been lucky enough to be on the ground floor with Dave Rath and Co. watching them build the foundation of Blue Grape Music,” comments Code Orange frontman Jami Morgan in a statement, unveiling the new project. “There is no group of people that I have more faith in to create a fresh, forward leaning home for rock music and beyond.
Expect BGM and its roster to operate in the harder lane.
“The focus of the label will lean toward all forms of rock music, along with music that may reflect the attitude that made rock music what it is,” Rath tells Billboard.
Blue Grape Music “strives to be a place where artists have the latitude, support, and resources to grow and create something meaningful,” he continues. “We look for music that takes the culture it came from and moves it forward to new places.”
Sony Music’s The Orchard handles distribution for BGM, which has the “muscle and reach of a major” with the “attention and dedication of an indie,” reads a statement. Each signing can expect to work with a team “carefully crafted to best serve their creative vision and goals,” the message continues.
To reach those goals, the venture taps Roadrunner alumnae Suzi Akyuz as senior vp of marketing, and Paolo d’Alessandro as executive vp of international.
Rath spent 21 years in the A&R and creative departments of Roadrunner, where he A&R’d albums by Slipknot, Korn, Gojira, Coheed and Cambria, Slash, The Amity Affliction, Trivium, Stone Sour, Dream Theater, Megadeth and more.
Wessels left Roadrunner in 2012, some 17 months after the completion of the rock and metal specialist’s sale to the Warner Music Group.
Blue Grape is headquartered in New York City with its European operation in Amsterdam. Additional signings will be revealed in the coming months.
“The collective history of BGM’s staff understands when to be patient, and when to move quickly,” Rath adds. “Our focus on providing artists with the support they need to express the best version of themselves is, first and foremost, our priority.”
Staff at Motown Records were hit with news of layoffs Thursday (Feb. 16) as the label gets reintegrated under the Capitol Music Group (CMG) umbrella, multiple sources tell Billboard. The number of people and departments affected are unknown as of press time.
A spokesperson for Motown Records confirmed the layoffs to Billboard. “As Motown returns to the Capitol family, certain positions that had been created when we became a stand-alone label have since become duplicative,” the person said in a statement. “These employees are leaving the company and our People, Inclusion and Culture department is helping them find new opportunities — either within or outside of UMG.”
Layoffs were feared by staffers since chairwoman/CEO Ethiopia Habtemariam’s sudden announcement of her departure on Nov. 29, at which point the future of Motown — which had been spun out of the Capitol Music Group into a standalone label in March 2021, with Habtemariam promoted to the top title — was unclear. In the weeks that followed, it emerged that Motown would be consolidated once again into CMG, at which point the prospect of layoffs loomed.
Motown had been under the CMG umbrella since 2014 when Universal Music Group (UMG) dissolved the Island Def Jam Music Group and moved Motown to Los Angeles to operate out of the Capitol Tower. Habtemariam, who had been president of Motown since that year, oversaw the shift from New York to L.A. and in 2015 led the signing of Motown’s landmark partnership with Atlanta-based Quality Control, which brought Migos, Lil Baby, Lil Yachty, City Girls and others to the label. That led to a surge in interest, signings and market share for Motown, resulting in the establishment of the label as a standalone frontline in 2021, with Habtemariam given the chairman/CEO title.
However, just 20 months after assuming that role, Habtemariam announced she was leaving UMG entirely to “pursue new endeavors,” departing a label that had been energized in recent years without a clear leader. As a standalone label, Motown maintained its own A&R and marketing departments, though it shared services such as radio promotion with Capitol.
CMG is run by Michelle Jubelirer, who was promoted from COO to chair/CEO in December 2021, succeeding Jeff Vaughn, who lasted just a year in the role. Jubelirer oversees a record group that also encompasses Blue Note, Astralwerks and Capitol Christian Music Group, in addition to Motown. While its market share remains under CMG, in September indie distributor Virgin was consolidated alongside Ingrooves and mTheory into the Virgin Music Group, whose co-CEOs report directly to UMG chairman/CEO Lucian Grainge.
However, Capitol will not have Quality Control in its purview moving forward, as the label was sold to HYBE America in a deal that was announced Feb. 8. That means that while Capitol will oversee Motown, it will not have any future releases from some of Motown’s biggest stars of the past decade.
Motown is the latest music company to undergo layoffs in recent months, as the global economy’s outlook remains uncertain. The tech sector was hit particularly hard in that respect, with Amazon, Google/YouTube, Spotify, Twitter, SoundCloud, BMI and others shedding jobs; many cited the dwindling advertising market, which has stubbornly retracted. In October, Grainge himself addressed the advertising market’s downturn when speaking about UMG’s third quarter financials, noting that ad-supported streaming revenue grew slower than expected, up just 5.2% over the third quarter period of 2021, though it was offset by increases in other sectors such as subscription, licensing, tour merchandising and publishing.
In 2022, Motown had raised its overall market share to 0.97%, up from 0.90% in 2021. In terms of current market share — music released over the most recent 18 months — Motown grew its share from 1.18% in 2021 to 1.33% in 2022. It had remained part of Capitol’s market share during that period, despite its ostensible status as a standalone entity. Capitol’s overall market share declined from 6.81% in 2021 to 6.40% in 2022, while its current share dropped from 5.64% in 2021 to 4.97% in 2022.
Additional reporting by Gail Mitchell.
Daniel Mora has been appointed managing director of Warner Music Andes, where he will oversee the company’s operations in Colombia and Peru, and will report to president of Warner Music Latin America, Alejandro Duque, the company announced. Mora replaces Maria Montejo who left the company earlier this month.
Mora first joined Warner Chappell Music in 2013 as an A&R/Sync consultant at the Colombian office and was later promoted to managing director of WCM Colombia in 2019.
“After spending so many enjoyable years at Warner Chappell Music, I’m pleased to be staying within the WMG family and stepping into this role on the Recorded Music side,” he said in a press statement. “Latin music is in my blood, and I’m delighted to see how it’s currently growing and connecting with people around the world. There are so many great opportunities for our artists to become global stars and I’m looking forward to helping them achieve their dreams. I’d like to thank Alejandro for this new opportunity, and Gustavo Menendez, Guy Moot, and Carianne Marshall for all their support during my time at Warner Chappell Music.”
In addition to his experience as an industry executive, Mora is also an artist and entrepreneur. He previously toured Latin America as part of the tropipop band, Bonka, which made waves with their debut single “El Problemón” (2006) and freshman studio album Lo Que Nunca Nos Contamos; and launched his own audiovisual company in Bogotá, producing films and commercials for brands such as Chevrolet and Adidas, to name a few.
“Daniel is a brilliant exec who has experience of being on both sides of the fence – first as an artist and now as a leading industry figure,” Duque added. “His understanding of both perspectives makes him the perfect fit for Warner Music and our artist-first philosophy. His appointment will enable us to work even closer with our partners at Warner Chappell Music and will open up more opportunities for collaboration. Latin music is exploding around the world and I’m excited to see how Daniel can further propel our Colombian and Peruvian artists internationally.”
Newly minted Warner Music CEO Robert Kyncl and his wife, psychotherapist Luz Avila Kyncl, have signed on for another five years of scholarship support for select computer science and engineering students at their alma mater, SUNY New Paltz.
The five-year-old Robert Kyncl ’95 and Luz Avila Kyncl ’96 Computer Science & Engineering Scholarship Fund is designed to benefit underrepresented students, especially women and minorities, seeking careers in STEM. Each year, at least six new transfer students or current Hawks will be selected for the scholarship, which offsets tuition costs.
The success of the scholarship has led to the creation of a group of alumni called the Kyncl Scholars.
“State education provided us with great opportunities, both professionally and personally, and we want to help more students access those same benefits,” said the Kyncls in a joint statement. “In turn, this talented next generation will help drive change and contribute to a more representative workforce in dynamic industries.”
The Kyncls’ most recent gift also supports the Fund for New Paltz and the AMP/CSTEP (AC²) Program Fund, which provides economic support for a number of traditionally underrepresented students who earn degrees in STEM fields and certain other majors such as Psychology.
SUNY New Paltz is a short drive north of New York City in Ulster County. As the name of the scholarship suggests, Robert graduated in 1995 (International Relations) and Luz a year later (Psychology).
“The Kyncls’ generosity in this area sends an important message to prospective and current students that people in leadership positions believe in their ability to succeed,” said Erica Marks, vice president for development & alumni relations and executive director of the SUNY New Paltz Foundation. “The University is continually evolving to remain competitive in offering high-quality computer science and engineering education that prepares students for their future. Each year, a powerful new cohort of Kyncl Scholars will be equipped with the training to be effective and collaborative contributors in the community.”
Robert Kyncl joined WMG on Jan. 1 after a decade as chief business officer at YouTube and seven years as vp of content acquisitions at Netflix. Read his first interview as CEO here. Luz Kyncl is a longtime licensed psychotherapist, and a certified health coach and mindfulness teacher. She is also the author of Liberate Yourself.
The Disney Music Group (DMG) and Andscape are partnering on a new record label, Good Company Records. Oscar- and Grammy Award-winning songwriter/producer D’Mile, talent manager Natalie Prospere and Grammy-winning mixing/audio engineer John Kercy are the founders of the new global venture.
In addition to signing and developing artists, Good Company will collaborate with other Andscape divisions on various projects. First up will be the Andscape documentary Shyne. The forthcoming film will chronicle Shyne’s life and journey from rap artist on Sean Combs’ Bad Boy label to becoming a member of the Belize House of Representatives.
Announcing the partnership with Good Company today (Feb. 14), Disney Music Group president Ken Bunt stated, “It’s special and unique to have a shared vision for the future of music, and the opportunity to visually tell new stories with Andscape. We can’t wait to collaborate with D’Mile, Natalie, John and the Andscape team to deliver on this goal.”
Added DMG head of creative Mio Vukovic, “We could not be more excited about working with the talented team behind Good Company and our partnership with Andscape. It allows us the dream of creating a home to cultivate and nurture Black artists through storytelling.” Disney Music Group houses Walt Disney Records, Hollywood Records, Disney Music Publishing and Disney Concerts.
Andscape is the 2022 rebrand and expansion of ESPN’s former media platform The Undefeated. Dedicated to exploring all facets of Black identity, Andscape encompasses several divisions including editorial, book publishing, film/television and music publishing.
“D’Mile, Natalie and John are special individuals – each true to Andscape’s vision: deep and dimensional multi-hyphenate storytellers,” said Andscape vice president/editor-in-chief Raina Kelley in the announcement release. “We’re thrilled to welcome them to the Andscape family. This incredible partnership vaults forward Andscape’s evolution as a content creator across The Walt Disney Company.”
Prior to creating Good Company, D’Mile became the first songwriter in Grammy history to win back-to-back song of the year Grammys: for H.E.R.’s “I Can’t Breathe” in 2021 and Silk Sonic’s “Leave the Door Open” in 2022. Also in 2021, he won the Academy Award for best original song for co-writing and producing “Fight for You,” performed by H.E.R., from the film Judas and the Black Messiah. A producer of the year nominee at the 65th Grammy Awards on Feb. 5, D’Mile has also worked with Rihanna, Bruno Mars, Mary J. Blige and Janet Jackson, among others.
The longtime manager of D’Mile and fellow Good Company co-founder Kercy, Prospere has also managed Grammy-winning artist Lucky Daye and songwriter/producer DJ Camper. She is also the creator of the Friends Only collective, focusing on forward-thinking business development and artist partnerships throughout the Caribbean and Black diaspora. Kercy’s resumé includes collaborations with Daye, Lil Wayne, Disclosure, Diddy, Ty Dolla $ign, Normani and more.
In a joint statement, D’Mile, Prospere and Kercy said, “We are so excited to partner with Disney/Andscape on Good Company. Disney is a place where we believe all of our creative ideas can come to life, and we are looking forward to where this partnership takes us!”
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On Feb. 1, days before the Grammy Awards, Billboard honored HYBE chairman Bang Si-hyuk with the Clive Davis Visionary Award at the annual Power 100 event for creating a company that, as Bang put it in his acceptance speech, “challenges the traditional boundaries of music and entertainment.” Fittingly, just one week later, Bang put the global music industry on notice with two major deals that further solidified HYBE’s status as more than the home of BTS and a budding empire and force in pop culture.
First, HYBE America, the U.S. division led by CEO Scooter Braun, acquired QC Media Holdings, the parent company of Atlanta-based hip-hop label Quality Control Music, home to Migos, Lil Baby, Lil Yachty, City Girls and others. Quality Control gives HYBE a hip-hop presence to complement its core K-pop acts (BTS, TOMORROW X TOGETHER) and HYBE America’s pop- and country-leaning rosters from SB Projects (Justin Bieber, Ariana Grande) and Big Machine Label Group (Tim McGraw, Thomas Rhett), respectively. The deal also further diversifies HYBE beyond K-pop and helps alleviate the loss of BTS while its members pursue solo projects and enter government-mandated military service.
Now the No. 1 K-pop music company by market capitalization ($6.5 billion), HYBE on Thursday (Feb. 9) announced it spent $334 million for a 14.8% stake in K-pop rival SM Entertainment, the company behind NCT 127 and SuperM. In buying the majority of founder Lee Soo-man‘s shares, HYBE became the top shareholder in the third-largest Korean music company. With a market capitalization of $1.85 billion, as of its closing price on Friday (Feb. 10), SM Entertainment ranks only slightly behind JYP Entertainment’s $1.9 billion and is more than double YG Entertainment’s $780 million.
Becoming SM Entertainment’s top shareholder can further HYBE’s leading position in South Korea, an increasingly important music market worth $6 billion in 2021, according to the U.S. Department of Commerce. A 15% stake doesn’t give HYBE control over SM Entertainment, but it creates opportunities to work for mutually beneficial outcomes. One could see SM Entertainment artists taking advantage of HYBE’s Weverse social media platform, for example.
The Quality Control deal was worth $300 million in cash and stock, according to HYBE’s regulatory filing. Valuing the company at a multiple of 12 times earnings before interest, taxes, depreciation and amortization — the midpoint of the 10 to 14 times enterprise value-to-EBITDA multiple typically seen in deals for similar music companies — implies Quality Control has annual EBITDA of roughly $25 million. That should provide a nice boost to HYBE’s bottom line. In 2021, HYBE had adjusted EBITDA of $232 million. Through the first nine months of 2022, HYBE’s adjusted EBITDA was $220 million. That implies Quality Control could provide HYBE with a 7.5% to 10% boost in adjusted EBITDA if it finishes 2022 by merely matching its adjusted EBITDA from the fourth quarter of 2021 — and that’s without considering any cost savings resulting from the merger.
HYBE’s annual EBITDA puts it in a middle ground between the three majors and large independent companies. Universal Music Group’s calendar 2021 EBITDA was $2 billion (1.68 billion euros). Warner Music Group’s EBITDA for the year ended Sept. 30, 2022, was $1.2 billion. Sony Music Entertainment does not report EBITDA but paces well ahead of HYBE. After the majors, however, there’s a large gap. BMG’s 2021 EBITDA was $170 million. Hipgnosis Songs Fund posted EBITDA of $130 million in its year ended March 31, 2022. Reservoir Media’s EBITDA in the year ended March 31, 2022, was $41 million. If HYBE matches its EBITDA from the fourth quarter of 2021, it would exceed $300 million in calendar 2022. Had HYBE owned Quality Control during 2022, its EBITDA would have been in the area of $325 million (assuming $92 million in fourth-quarter 2022 EBITDA).
HYBE’s two moves this week are proof the music industry is more competitive and dynamic than some market share numbers might suggest. While the three major labels dominate the record business, independent companies — some distributed by the majors — are flourishing. HYBE certainly has its connections to the majors: Its music is distributed in the United States and other regions by UMG, it has a joint venture with UMG’s Geffen Records and many of its management clients are signed to major labels. But HYBE is ultimately independent of the majors. Based in South Korea, not London or New York, it’s a nimble outsider with a unique approach to melding music and technology.
Perhaps most important to HYBE’s continued growth — and what sets it apart from much of its competition — is how it’s going about doing it. Whereas catalog (music older than 18 months) has taken a larger share of consumption and the industry’s biggest deals and investments have involved established catalogs from Bob Dylan, Bruce Springsteen, Paul Simon, Sting and others prized as safe investments — billions of dollars are flowing into the music industry to acquire intellectual property that’s often many decades old — HYBE is paving its way through entrepreneurism of a different sort.
Like 300 Entertainment (purchased by Warner Music Group in 2021), Alamo Entertainment (purchased by Sony Music Entertainment in 2022) and LVRN (recently valued at more than $100 million), HYBE builds new artists from scratch, sets trends and influences pop culture — beyond TikTok, at that. Now, as it rapidly builds its empire, Bang, Braun and the rest of the company are starting to show what that looks like at scale.
BERLIN — Universal Music Group Germany made a distribution deal with the rock band Weimar — then dropped it this week after an article in German magazine Der Spiegel revealed that the group has ties to the right-wing scene in Germany and that at least one of its members previously performed in a neo-Nazi band.
The group’s lyrics refer to violence and portray the media as “bought puppets” as well as wolves and rats — echoing anti-Semitic imagery used by the Nazis. At least one member of Weimar previously played in a band with outright racist and anti-Semitic lyrics, according to Der Spiegel. Another member, Christian P., has been accused of illegally possessing weapons and spreading neo-Nazi propaganda, according to Der Spiegel. Universal has said that Christian P.’s name wasn’t on the band’s recording contract and his exact role in the group is unclear — partly because the band often performs and poses for photographs in masks.
The group’s album came out in May and went to No. 5 on the German albums chart, and its website lists spring tour dates. The band did not respond to an inquiry from Billboard sent to its Twitter account.
“Based on the information we recently learned from a journalist’s inquiry, we terminated our relationship with Weimar, which consisted of distribution of one album,” Universal Music Group says in a statement. “That has been stopped with immediate effect. The information that has come to light made clear that any relationship with the band was absolutely unacceptable to us and inconsistent with our values. We feel deceived by the band. If we knew then what we know today, we would never have released the album in the first place.”
UMG’s decision comes one week after The New York Times revealed how German label BMG signed a rapper known to have Holocaust-denying and anti-Semitic lyrics, Freeze Corleone, to a one-album deal in 2021 and then abruptly terminated the relationship the day before BMG was due to release the project’s first single. BMG executives had debated internally the pros and cons of signing the French artist and had known that UMG had signed and then dropped Corleone in 2020 after distributing his previous album, La Menace Fantôme (The Phantom Menace), for a week. BMG executives in Berlin ultimately overruled their French team after thoroughly reviewing his older music.
In the case of Weimar, several members come from the neo-Nazi scene in the state of Thuringia, according to Der Spiegel. Konstantin P., who Der Spiegel says goes by the name Till Schneider in Weimar, was previously in Dragoner, a neo-Nazi band that recorded songs that denied the Holocaust.
Dragoner was watched by the German Office for the Protection of the Constitution, a domestic intelligence organization charged with protecting German democracy. Steffen P., who Der Spiegel says goes by the name Kurt Ronny Fiedler in Weimar, came to the attention of Thuringian law enforcement when he attended a right-wing concert in 2005.
It’s unclear what Christian P’s role in the group is, but Der Spiegel says he has known both Steffen P. and Konstantin P. for years, and that they previously played together in the group Uncore United, which has songs that sound similar to those of Weimar. Christian P. has been accused of illegal weapons possession and “forming armed groups.” Der Spiegel says that in 2002 he released an album under the name Murder Squad that featured a swastika on the cover and included anti-Semitic lyrics that denied the Holocaust took place — both of which could make it illegal to distribute in Germany.
Weimar’s relationship with Universal was a one-album distribution deal through the band’s label, Harder Entertainment. The article in Der Spiegel suggests that the deal might have been made by the manager of Frei.Wild, a band from South Tyrol, Italy, that has been associated with right-wing imagery but has distanced itself from right-wing politics. UMG did not comment on this at publication time.