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This story first appeared in the Feb. 19 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.
Lucian Grainge won’t be nervous when the coveted album of the year award is revealed Feb. 15 at the 58th annual Grammy Awards. “We have every nomination in the category,” notes Grainge, chairman and CEO of Universal Music Group, the world’s largest music company, referencing UMG artists Alabama Shakes (Sound & Color), Kendrick Lamar (To Pimp a Butterfly) Chris Stapleton (Traveller), Taylor Swift (1989) and The Weeknd (Beauty Behind the Madness). “That’s one where the camera needs to be on my face, not the artists, because four of them will be chasing after me.”
Grainge, 55, is not shy about accolades for his 7,500-employee company, home to iconic labels Capitol, Republic and Interscope and such chart-topping artists as Rihanna, Lady Gaga and Maroon 5. The Brit’s Santa Monica office is adorned with plaques, mementos and photos of rock stars and dignitaries from his years working his way up from an A&R scout in London (his first signing was The Psychedelic Furs) to No. 1 on Billboard‘s annual Power 100 executive list.
In 2011, Grainge succeeded now-Sony Music CEO Doug Morris to become UMG chairman, and in 2015, the company accounted for seven of the year’s 10 best-selling albums and 38.5 percent of the recorded-music market. Revenue, meanwhile, has increased 2.1 percent to about $3.9 billion for the first three quarters of the year on a currency-adjusted basis over the same period in 2014, which parent Vivendi rewarded by extending Grainge’s contract through 2020.
Navigating the shift to digital streaming (he couldn’t comment before a Feb. 18 earnings report on whether UMG, like Sony Music and Warner Music Group, would share with artists a windfall from a Spotify IPO) and finding ways to leverage the company’s catalog both of master rights (The Beatles, Beach Boys) and publishing (Adele, Justin Bieber) is a priority for 2016. So is increasing the company’s partnerships with Hollywood studios, which resulted in an Oscar nomination for the UMG-produced documentary Amy about the late Amy Winehouse, whom Grainge signed while running Universal’s U.K. operation. Grainge, who has a son from his first marriage and a daughter and stepdaughter with his second wife, Caroline, relishes his full schedule, as he does keeping his ranks on their toes.
UMG recently hired producers David Blackman and Scott Landis to head up film, TV and theater with Vivendi’s Studio Canal. Why the investment in visual products, which is not your core business?
Because there’s stuff that no one’s ever seen, and you can put a different spin on it. Look at Empire on Fox, or Straight Outta Compton or Fifty Shades of Grey, whose soundtrack was one of the best-selling albums of 2015. It’s an audiovisual, storytelling world, and there’s opportunity. We’ve got so many brands within the company — Capitol Studios, Motown, a Def Jam story would be pretty compelling, as would the impact that Island Records made to British culture in the ’60s, ’70s and ’80s. We have access to all this, and that means we can really double down.
You moved to Los Angeles in 2010 and serve on the board of DreamWorks Animation. Has Hollywood opened your eyes to working in this realm?
A thousand percent. Here, you’re part of the creative, commercial and financial conversation. L.A. is a very special place. It’s the epicenter of creative content and creative output globally. Being here has opened up many opportunities for us as a company and for our executives.
The recorded music business is at a pivotal point as streaming stands to overtake digital sales. Yet the so-called “freemium” model advocated by Spotify and YouTube persists. How do you see it playing out?
For the artist — who is going to earn eight or nine times more in a premium subscription model for one play than during an ad-funded play — as well as the investors, the value gap is too great. We have to get the balance right. And I hope we’ve set a different conversation because the business model is not sustainable. There won’t be any investment. It’ll be over. At the same time, there are probably 45 million to 50 million paid subscribers in music at the moment, and they’ve appeared in a relatively short span of time. YouTube has launched a subscription model for the first time ever. There’s been an enormous amount of discussion, open-mindedness and strategic thinking.
Adele’s latest album on Sony’s Columbia Records, 25, has sold 8 million units, including 5.5 million physical copies, numbers that haven’t been seen in a decade. What does that say about today’s music business?
That we’re not really touching the true addressable market. I’m thrilled that it’s happened because talent won, but for me, the way in which the consumers buy is a tactical detail — it’s this month’s conversation. Adele is very enchanting as an artist and has got one of the greatest voices we’ve seen in the last 50 years, but, you know, I worked with Shania Twain, who sold 39 million albums [worldwide], and Adele’s not going to sell that. Taylor Swift sold a few records, too. (Laughs.) But whatever Adele does sell is proof of the importance of music and great brands to consumers and peoples lives. And we have [Adele’s] music publishing as well.
What is your management philosophy?
I believe in a decentralized structure and allowing my senior creative executives the same kind of freedom, both financial and otherwise. For me, it’s observing what people do really well and also where people have done appallingly badly. Sometimes I’ve learned more from the bad stuff than from the good.
The UMG labels are incredibly competitive with one another, and word is it comes from the top. True?
Competition breeds champions. It’s drilled in — there’s a big, juicy steak on a plate, and some guy next to you with a big fork is waiting to take it off. I like when they’re all at it and for them to tee up simultaneously. Like synchronized swimming. I wouldn’t expect anyone to do anything that I wouldn’t have been prepared to do when I had that job.
Why did it take Taylor Swift (who is signed to Big Machine Label Group, which UMG distributes) to nudge Apple Music on the issue of proper compensation? Isn’t that something you could have done as CEO of a major music company?
I can’t discuss our negotiations with our partners, but suffice it to say, a lot happens behind the scenes that’s not public. With that said, it takes an enormous amount of courage for an artist to speak out on these issues, and Taylor has been a powerful and thoughtful voice on the subject of fair compensation for artists. To be clear, I think that Apple has had a good track record of trying to do the right thing for artists and labels.
In the U.S., catalog sales are accelerating at a rate where old music could soon overtake new music. What would that mean for Universal?
The breadth and depth of our catalog is unmatched, so for us, the more catalog consumption the better. But I’ve always believed that the key to success is continually investing in new artists and breaking acts. The new artists today are the catalog of tomorrow, and our job is to make sure that Universal’s catalog continues to be the best in the world.
What is your best Grammy Awards memory?
In 2008, when Amy Winehouse won five Grammys. I was so proud of her, and it was great to see her being recognized as both a performer and writer. It was a very emotional moment for many reasons.
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