Universal Reportedly Bans Its Artists From Any More Streaming Exclusives

Universal Reportedly Bans Its Artists From Any More Streaming Exclusives

A couple weeks ago, Chance The Rapper’s manager, Pat Corcoran, talked to Billboard about the Chicago rapper’s decision to release his recent mixtape, Coloring Book, as an Apple Music exclusive. It’s an interesting piece that offers a bunch of insight, but here’s the best quote, via Corcoran:

There was this big discussion about how to put out Coloring Book: “What’s the best platform? Who is going to give us the most firepower?” I spoke with everyone — Spotify, Tidal, Apple Music, even Audiomack — and it came down to, “What is going to put us in the best position for the most people to hear it?”

It’s telling that Corcoran poses that question, but doesn’t quite provide an answer. We’re led to believe that Apple Music was eventually determined to be the outlet putting the artist “in the best position for the most people to hear” the music, but that’s empirically dubious. Apple Music currently claims 15 million subscribers spanning 114 countries worldwide, and its exclusive content is available only to those 15 million subscribers. That’s a larger customer base than the one offered by Tidal (reportedly roughly 4 million subscribers), but a fraction of Spotify’s 100 million global users, and a tiny percentage of the world’s population (7.4 billion). We went over this at length when discussing the strange behavior driving Drake’s VIEWS, and I was admittedly pretty skeptical of the strategy and its alleged results. Now, it appears some major-label execs are also unconvinced.

So they’re finally stepping in. According to industry analyst Bob Lefsetz’s newsletter (via The Guardian) today Universal Music Group CEO Lucian Grainge instructed all UMG-owned labels to stop arranging exclusivity agreements with streaming services. Writes The Guardian:

UMG, which boasted seven of 2015’s 10 best-selling albums and 38.5% of the year’s recorded-music sales, will be the first major label to ban the practice, which many feel has begun to diminish rather than enhance the way music is distributed and consumed.

The list of artists to whom this edict might apply is almost endless — I’m not even going to count down all the labels under the UMG umbrella because we ain’t got all day here. Of course, how this will play out in practice remains to be seen. The Guardian named Taylor Swift as one of the artists affected — and that would be delightful, considering how hard Swift has shilled for Apple over the past year — but Swift’s Big Machine Records is only distributed by UMG, and therefore, presumably isn’t subjected to Grainge’s directive.

Forbes seems to confirm Lefsetz’s report’s accuracy. In an earlier email Lefsetz suggests that Frank Ocean’s Blonde was the tipping point here, because Ocean was signed to Def Jam, which is owned by UMG. However, that seems unlikely: According to The Fader, Ocean is no longer under contract with Def Jam, and Blonde was an independent release (per Pitchfork, Friday’s “visual album” Endless fulfilled the terms of Ocean’s agreement with the label, although a former Apple employee suggests otherwise). If Ocean’s deal with Def Jam extends beyond Blonde, though, then this is perhaps the last Ocean album that will get the “Apple exclusive” treatment. (This assumes Apple Music, on-demand streaming, and the internet itself still exist when Ocean’s next album is ready, sometime in the 2030s.)

But maybe not? Even if Ocean is still affiliated with Def Jam yet somehow controls his own streaming rights, then Def Jam has no say over his decisions in that regard. Now, it’s pretty unlikely that Ocean would control his streaming rights if he were signed to a major, but Grainge’s hardline stance might backfire on him in other ways: Most notably, it might deter artists from signing with UMG, especially if they share Chance’s view that an Apple Music exclusive puts them in “best position for the most people to hear [them].”

They’d be wrong, of course, but they might make a few bucks in exchange for a lot of ears.

To be clear, I think Grainge is making a smart call, but I’m suspicious of his motives. UMG owns a significant stake in Spotify, and it stands to make a lot of money when the service goes public next year. The true test here will come after the IPO, when UMG has divested its shares. Because right now, Apple Music exclusives threaten to chip away at Spotify’s market appeal and eventual valuation, and by banning exclusives, Grainge is — whether by coincidence or design — protecting a very large payout that will be safely in his pocket very soon. And once it’s in his pocket, his priorities might shift.

That’s not to say they will shift, and it is definitely not to say Apple Music exclusives will ever put any artist in the best position to achieve anything. They absolutely won’t; it’s insane to think they will. BUT if they can bring in some extra scratch for the labels after the labels have cashed out on Spotify? Well then Lucian Grainge might change his tune. That’s free money and none of it is owed to the artist!

So it’s a positive development in the short term, but give it time. Wait for the dust to settle and the checks to clear. When all is said and done, that next Frank record might be locked in Apple’s garden after all.

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