Recording Academy Chief on the Grammys, Pandora and Getting Artists Paid (Q&A)

This story first appeared in the Feb. 15 issue of The Hollywood Reporter magazine.

The 1,200-square-foot office of Neil Portnow, president and CEO of the Recording Academy since 2002, is far bigger than those of most label heads. That is a fact not lost on some of the music industry’s higher-ups, whose artists help pay the bills for the LEED Gold Santa Monica space. Then again, the 64-year-old Great Neck, N.Y., native, a former member of ’60s rock group The Savages and longtime Jive Records staffer, is dealing with a constituency of 20,000 members and revenue of more than $65 million — not to mention putting on, as he calls the Grammys, “the biggest production on television.”

But even with their stress-inducing grandiosity, the 55th annual Grammy Awards, airing Feb. 10 on CBS from Los Angeles’ Staples Center, have the soft-spoken Portnow feeling confident and very much in control. Despite unanticipated challenges of shows past — Whitney Houston‘s death last year, the Rihanna–Chris Brown altercation that went public right as the Grammys started in 2009 — recent years have seen the telecast, which the Recording Academy oversees, regain its mojo.

Ratings have been on the rise — 39 million viewers watched in 2012, topping the 30 million mark for the first time since 1988 — as have ad rates, which last year neared $800,000 for a 30-second spot. CBS agreed in 2011 to pay $20 million a year to keep the show through 2021. Culturally, music’s biggest night has developed a reputation for what Portnow calls great “water-cooler moments,” such as pairing Elton John with Eminem in 2001 and last year’s six-string summit that saw Paul McCartney joined by Dave Grohl, Bruce Springsteen and Joe Walsh.

The success of the Recording Academy, whose mission is to “positively impact the lives of musicians, industry members and our society at large,” extends from nationwide events such as the Grammy Foundation’s Grammy in the Schools program to the MusiCares Person of the Year gala dinner. Held the Friday night before the big show, it benefits the MusiCares Foundation, which provides emergency financial assistance to the music community, and the MAP Fund, which offers addiction treatment and sober-living resources. (Springsteen is this year’s honoree and McCartney was last year’s.) The Hollywood Reporter caught up with Portnow, an avid collector of flea-market finds and appreciator of “the craftsmanship of things that were made years ago,” who explained the ins and outs of the music-biz institution.

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The Hollywood Reporter: How do you choose the Person of the Year?

Neil Portnow: You always have that wish list of people. When I started, there were three on it: Barbra Streisand, Sir Paul McCartney and Bruce Springsteen. It took almost seven years for Ms. Streisand to say yes, after which you ask yourself, “How do I follow that?” The audience’s expectation just gets higher. With Bruce, we had an early discussion during his Grammy appearance last year and got a sense that it might be a possibility. And here we are … maxed out for space at the Los Angeles Convention Center. In fact, with Bruce, we sold out before we even printed invitations, saving almost six figures in printing costs. That money will go to charity, which is wonderful. With Sir Paul last year, we raised a record $6.5 million for MusiCares charities. Bruce, being somewhat of a competitive chap, is determined to beat that.

THR: CBS broadcast this year’s nominations from Nashville. Will the big show end up there?

Portnow: There’s no rule on where the Grammys have to be held; we don’t have a contractual obligation to [Staples owner] AEG, although we have a very robust partnership. But the reality is: The show has to be arena-sized — there’s no going backward to a more intimate setting like Radio City or the Shrine. I think we’ll be in other places down the line. I’m a New Yorker; much of the industry and so many artists are there that it makes sense, although it costs millions more to produce there. Nashville is also a possibility. But the more likely scenario is having the nomination show be a traveling operation for us.

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THR: One of the hallmarks of the Grammys has been the show’s unique artist pairings. How do you put those performances together in so little time?

Portnow: It’s really challenging. If you get the nominations on Dec. 5 and the show is Feb. 10, it’s a very short time frame. And then throw in Christmas, New Year’s, MLK Day, and you easily lose two weeks because people are gone. The good thing is that 99 percent of the ideas we come up with work, sometimes incredibly well. The artist community has a level of trust with us, so you can come to them with something that sounds pretty left-field and they’ll at least entertain it.

THR: Last year, unknown singer-songwriter Linda Chorney got a nomination for best Americana album alongside thanks to Grammy365.com, where musicians can campaign for votes. This year, German artist Al Walser got one. Is this a legitimate way to get nominated?

Portnow: That’s a fair question. Grammy365 was intended to be a lot of things, including a way for people to communicate with other academy members. What we found over time is that there are elements that have become concerns, like the ability to lobby online. But none of what was done was outside of our rules and regulations — it was some very aggressive and savvy folks who got enough attention from our voting members. We had over 17,500 entries this year, so for that to be a nomination means a fair amount of people listened and voted for it. Now the question is, “How do you feel in hindsight about member-to-member accessibility in that fashion?” We’ve done a lot of research and are planning a redesign of the site, which will be renamed sometime in the spring, and we will then address the issue: that members feel like their privacy is respected and the ability to lobby is on an equal level.

THR: iTunes and streaming services have gone a long way toward stemming the tide of piracy, but how do you get kids to understand the concept of music being a paid entity?

Portnow: It is really educational, creating that sense of obligation and sense of morality. We have all advocated for the education of generations of young people about the value of paying for music and what it really means. When you sit down with a young person and they really have an understanding of the huge investment, whether it is time, money or energy, it takes to create music in the first place, then when they further understand how many people are involved and realize that not everybody is a superstar who has four houses around the world and has a private jet and seven cars — that is the vast minority of creative people. … When they understand that, I see light bulbs going on over their heads. They say: “You know what? That makes sense. I get it, and I am willing to pay for it.”

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THR: How do companies like Pandora affect the ongoing health of the industry?

Portnow: Internet radio is an important component of how consumers discover new artists. We are past the days of breaking an act being solely relegated to terrestrial radio. In theory, that is a good thing: more outlets, more opportunity, more exposure, the consumer gets more choices. The problem is, in the transition of all this, we have to remember that it all comes back to the men and women who are creating this wonderful music, and do they have a real ability to make that a full-time vocation as opposed to a part-time hobby?

THR: Do you see artists being able to earn a living as musicians?

Portnow: There are many millions of dollars of revenue being generated, so it really comes down to what’s fair. Can you expect in this new age, when you are talking about fractions of pennies — versus what used to be pennies and dimes and nickels — can there be a fair place here where the creator is compensated for their work? The consumer, more than ever, determines how the business model works. For a long time, record companies didn’t have much direct contact with the customers and didn’t really know a heck of a lot about what the consumer was thinking. Now that the industry is morphing from physical product to digital product, it’s really about how the consumers want to consume their music. How do they want to receive it? Where do they want to put it? And what are they willing to pay for it? One thing that’s clear: There’s not a one-size-fits-all answer. It’s a different game today, which is in many ways very freeing — and also a little scary.