The new list of music industry power players is out. No surprise as to the number 1 slot: "Lucian Grainge, chairman of
Universal Music Group, beat out "X Factor" host Simon Cowell and
the manager for teen pop sensation Justin Bieber as the most
powerful person in the music industry, according to a list
released by Billboard magazine on Friday." (Reuters). In year's past, a number of artists have made the list, but this year produced a derth of performers as the top power players are mostly music industry executives, music producers and artist / talent
managers. Universal Music chairman tops Billboard industry power list .
And the winners are;
1. Lucian Grainge, Chairman, Universal Music Group
2. Coran Capshaw, Founder/Owner, Red Light Management and
Starr Hill Presents
3. Martin Bandier, CEO, Sony/ATV Music Publishing
4. Michael Rapino, CEO, Live Nation Entertainment
5. Doug Morris, Chairman/CEO, Sony Music Entertainment
6. Len Blavatnik, Founder/Chairman, Access Industries
7. Rob Light, music head, Creative Artists Agency
8. Tim Leiweke, President/CEO, Anschutz Entertainment Group
9. Marc Geiger, music head, William Morris Endeavor
The bidding war is over and WMG won the contest. For a mere $762 million dollars! Assets include: Catalogs of such artist as "Coldplay, Radiohead, Kate Bush, David Guetta,
Daft Punk, Sinead O'Connor, Tina Turner, Tinie Tempah and Jethro Tull,
among many others. The Parlophone Group includes Chrysalis and Ensign Labels as well as EMI's recorded music operations in Belgium, the Czech
Republic, Denmark, France, Norway, Portugal, Spain, Slovakia and Sweden –
which will bring a significant boost to Warner’s international
Over a year ago I discussed Sound Exchange and the incredible
increase in digital radio royalty payouts from streaming. I have added the
recently released figures for 2012 to the original chart. As it stands,
the current explosive rate of growth has continued unabated -> great
news for the industry as a whole. Digital payouts for 2012 was $462
million, up from $290 million in 2011, and just $8 million back in
2003. The 2012 figure represents a 63% increase over 2011 figures! Now we are talking real money, and though not the direct panacea the industry needs yet, it is one solution that is building a solid growth pattern year over year. At current growth rates, streaming royalties may
defray a substantial amount of income lost from physical sales over time.
If you are new to Sound Exchange I encourage you to go to their website and learn more about what they can do for artists -> indies in particular.
Apple in the streaming music business could be a game changer for companies such as Pandora, Rhapsody and Spotify. Apple's market power, financial resources and vertical integration pose serious competitive disadvantages to all streaming/download companies. Word is Apple's service will be ad-supported, but more important questions arise. Including, what amount per stream will the content creators be paid? And the record company?
"Discussions are centered in part around how to share ad revenue and a
deal could be reached by mid-November, with Apple starting a service
within the first three months of 2013, said the people, who asked not to
be named because talks are still in progress. Shares of Internet-radio
leader Pandora Media Inc. (P) plunged the most since Sept. 7" (Bloomberg Business Week).
When the labels approved license agreements with Spotify, one of the concessions was a financial stake in the company to offset the paultry payout per stream -> $0.00966947678815. The labels will not get a stake in Apple which is obvious, but what will they receive for licensing?
"In addition to an upfront fee, record companies are seeking a percentage
of ad sales and the ability to insert their own commercials for
artists" (Bloomberg Business Week).
With a market share close to 40%, the new UMG/EMI is a powerhouse that will wield industry clout at radio, press, retail -online and brick and mortar-, touring...the list goes on. Truly we will not know the full measure of this merger for several years, but one can only guest the outcome. A sample of their new label force includes: " Blue Note,
Capitol Records, Decca, Def Jam Recordings, Deutsche Grammophon, EMI
Records, Geffen Records, Interscope Records, Island Records,
Capitol Records Nashville, Mercury Records, Motown Records, Polydor
Records, Universal Music Latino, Universal Music Nashville, Virgin
Records and Verve Music Group" - Billboard. To illustrate the complicated process of the merger proceedings check out this link: UMG/EMI Timeline
The UMG/EMI merger deal has been approved by the U.S. as well as the European commission. One concession UMG must make per the approval is to divest 25% of EMI including Parlophone. The following chart reflects the new ownership percentage (less 2.5% = EMI's 25% divested market share required per regulators). Thus the chart adds up to 97.5% since we do not know where EMI's 25% market share will end up - most likely in the indie market thus improving the indie number from 9.57% to 12.07%.
It was good to see Apple CEO Tim Cook include developments within iTunes during the Apple event of Sept 12th. Because of the news swirling around the iPhone 5, it could have been
easy to bury iTunes news to a quarterly conference call vs. this weeks Apple event. It proves there is still a commitment to the music industry by the new CEO and that is very good news. Some stats:
iTunes had sales of over $1.8 billion
iTunes Store launched in over 12
countries including Hong Kong, Singapore and Taiwan last month
New iTunes 11 (Oct 12')
iCloud integration - this is key!
Here is a link to the full conference: For the discussion on iTunes and iPod forward to 1:02 into the video: Apple Event Sept.12 2012
It is not historical precedence that a recording artist feels taken by the contract they signed with a major label. It could have been bad advice from their manager, the wrong type of attorney - an entertainment attorney is a must - or not even using an attorney when signing their first contract. Regardless, the responsibility clearly falls on the artist to determine and understand the deals points in their contract and to ask for certain concessions -> remember everything is negotiable. Def Leppard is an example of an artist that had the foresight to ask for a key concession -> the band has the final say in how their music is to be used and sold. A recent Hollywood Reporter article (8/10/12) "Pour Some Suger Again: Why Def Leppard is Rerecording Hits" explained in detail why this concession is important in the digital age.
Unhappy that their royalty from digital downloads would be approximately 30 cents vs. the labels 42 cents - this is actually on the high end as most acts receive only 9 cents per download - Def Leppard decided to use the "final say" clause to full use and blocked Universals request to use the masters online. Copyright rules dictate that the sound recording funded by Universal is the label's property, but because of Def Leppard's contract clause Universal cannot use the master recordings on any download sites without the approval from the band. Next in the saga, Def Leppard decided to take control and to rerecord "Pour Some Sugar On Me" and "Rock of Ages" to the point where a fan can barely differentiate between the Universal version and the new one. Now the band will keep about 70 cents per download on their rerecordings. Venerable producer Mutt Lange - Def Leppard, AC / DC - even stated he thought the rerecords were worthy and a "brilliant job."
Since going online back in June, the two songs have sold over 46,000 tracks. Not bad, but the real payoff could come from placements in film and TV. As an example, a Def Leppard track could garner anywhere from $100,000 to $250,000 per film. Placed in a TV ad could yield even higher amounts.
Though not the first act to rerecord their own songs, Def Leppard astutely timed it with the release of the hair-band throwback film "Rock of Ages" starring Tom Cruise. As the saying goes, "timing is everything." But the real question is will labels and former superstar acts be able to come to more equitable royalty terms in the digital age? Let's hope so, I would hate to see the courts used to mediate such an issue. But the real lesson here is to pay careful attention to your contract deal points remembering that you will have to live with them for a long time.