Universal reportedly outlaws streaming 'exclusives' after Frank Ocean release
IT | Aug 25, 2016 | Master3395
Just two days after Frank Ocean’s Blonde, one of the biggest releases of the year, was released on Apple’s iTunes, Lucian Grainge, CEO of Universal Music Group and widely regarded as the most powerful executive in the music industry, has reportedly ordered the company’s labels to stop the practice of making “exclusive” distribution deals with streaming services.
According to Bob Lefsetz, author of an influential music industry newsletter, Grainge sent out a company-wide email on Monday. 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 directive will affect dozens of bands under the UMG umbrella, including all five of this year’s album of the year Grammy nominees: Kendrick Lamar, Taylor Swift, the Weeknd, Chris Stapleton and Alabama Shakes.
The practice of artists offering exclusives to competing streaming and download services, including Apple and Tidal, has been gaining traction this year. Both Beyoncé and Rihanna launched their recent albums through Tidal, the streaming service part-owned by Beyoncé’s husband, Jay Z.
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The ultra-hyped Frank Ocean release coming exclusively through Apple, coupled with a deal announced earlier this month between Apple and Cash Money Records, whose artists include Lil Wayne, Nicki Minaj, Young Money and Birdman, appears to have been sufficient to provoke label executives to action.
Lefsetz, like many others in the business, believes making exclusive distribution deals is anti-competitive and ultimately harms the consumer and the artist.
He says the Cupertino hardware giant whose music arm, Apple Music, is steered by former Universal head Jimmy Iovine, should be investigated by the government over anti-trust concerns “because there’s a conspiracy between Apple Music and the industry to change the game, to get everybody to pay for a subscription by putting hit content behind a paywall”.
But, he continues, the truth is few care. “Most people don’t give a crap about the new Frank Ocean album. We’ve got an industry that promotes marginal products that appeal to few and makes them unavailable to most people? That’s hysterical!”
Unhappiness over Apple’s exclusive control of the Frank Ocean release comes a year after Taylor Swift wrote an open letter to Apple and its CEO, Tim Cook, finding it to be “shocking, disappointing, and completely unlike this historically progressive and generous company” that the firm was refusing to pay artists streaming revenue during its free, three-month trial period. Apple ultimately backed down.
Previously, Apple had been forced into an embarrassing apology after loading half a billion Apple iTunes users with the latest U2 album during an iPhone launch. The download, for which Apple paid the band a reputed $60m, proved to be a PR disaster for the company and the band.
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The company’s dispute with Swift predates the current trend for “exclusives” among streaming services – often accused of paying pitiful rates to copyright holders – as part of an effort to drive up subscriptions. For some artists, the war for subscribers has proved highly profitable even if, as many argue, the services ultimately serve to restrict rather than enhance broader consumer appeal.
Last year, Apple paid the Canadian rapper Drake a reported $19m for an exclusive deal – a figure Apple has since disputed – to steal him away from signing with Jay Z’s Tidal. “I think that’s just his competitive nature, and I don’t know if he’s looking at the bigger picture: that it’s not about me and it’s not about him. It’s about the future of the music business,” Jay Z later said of Iovine.
But as the battle for artists, especially those from the hip-hop/R&B world, heats up, can Grainge – recently named the music business’s most powerful executive – or any other label rival hope to compete?
“Upfront money talks,” points out one former record company head, cautioning that the deals work for the streaming services but not necessarily for artists and labels.
But with industry leader Spotify competing against the deep-pocketed tech giants Apple, Google and Amazon, hungry for market share, the stage is set for a new showdown over control as streaming becomes the dominant means of distribution.
To Lefsetz, exclusives represent a misreading of the market that will ultimately alienate consumers. “Apple Music is a me-too product that works badly that’s locked behind a paywall and the music industry wants it to be the dominant platform so the fan is squeezed and indie acts are pushed down to the bottom where they belong.”
But as the music industry awaits confirmation that UMG is pulling out of streaming exclusives, Lefsetz is also taking artists who sign exclusive distribution deals to task.
“Shame on you Frank, and shame on everybody else who takes money from Apple and screws fans. There’s enough money in music without taking every last buck, and the joke is on you, for thinking so short term, you want your music available to everybody, because in these days of information overload we need nobody, everybody is superfluous, you don’t want to enter the marketplace with one hand tied behind your back,” he wrote.
Keywords: Universal, reportedly, outlaws, streaming
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