Why Warner Music’s Incoming CEO Makes Sense for a New Era: The Ledger – Billboard


The Ledger is a weekly e-newsletter concerning the economics of the music enterprise despatched to Billboard Professional subscribers. An abbreviated model of the e-newsletter is revealed on-line.

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Means again in December 2008, Warner Music Group pulled its whole catalog from YouTube after the 2 corporations reached an deadlock in negotiations over what the streaming platform would pay to make use of WMG’s recordings and musical works.  

WMG wouldn’t settle for “phrases that fail to appropriately and pretty compensate recording artists, songwriters, labels and publishers for worth they supply,” the corporate mentioned in a press release on the time. The holdout didn’t final lengthy: every week later, YouTube announced in a weblog submit that WMG was returning with a brand new, multi-year settlement overlaying WMG’s full catalog together with user-generated content material.  

That when-controversial facet of YouTube’s enterprise mannequin got here into the highlight this week after WMG introduced that YouTube’s former chief enterprise officer, Robert Kyncl, will grow to be its subsequent CEO. Kyncl, well-respected all through the music business, will take over the function subsequent yr from Stephen Cooper, who has led the corporate because it was acquired by Entry Industries in 2011.   

It’s outstanding – and uncommon – that an govt from a disruptive streaming platform would lead one of many world’s largest content material corporations. In latest a long time, main music corporations have normally been run by individuals who constructed their careers on the inventive facet of enterprise – the trail taken by Common Music Group CEO Lucian Grainge and Sony Music Leisure CEO Rob Stringer. At a minimal, a serious label CEO had roots in content material creation. Previous to turning into EMI Music’s CEO, Roger Faxon was an govt at LucasFilm and a founding accomplice of a movie and TV manufacturing firm. Cooper was an exception to the rule: a confirmed supervisor with expertise main companies by way of transformative instances. 

Throughout WMG’s kerfuffle with YouTube, Kyncl was vp of content material acquisition at Netflix, serving to the corporate transition from a DVD mail supply firm right into a streaming service. He joined YouTube in Sept. 2010 to “safe offers with tv networks” and assist the fledging platform, bought by Google 4 years earlier for $1.65 billion, grow to be a web based vacation spot for content material from Hollywood studios, the Los Angeles Times reported on the time.   

Over the previous practically 20 years, dustups between YouTube and content material creators haven’t been uncommon. YouTube is constructed on a user-generated mannequin that enables folks to make use of music and different copyright-protected content material in movies they add to the platform. The Digital Millennium Copyright Act protects on-line providers from copyright violation claims in the event that they meet particular necessities, and main content material creators have put these tips to the take a look at. In 2007, Viacom sued YouTube for copyright infringement – its customers uploaded a whole bunch of 1000’s of its movies – and sought greater than $1 billion in damages (the events settled in 2014). The identical yr, Common Music Group issued a takedown request for a video of a dancing toddler that utilized Prince‘s “Let’s Go Loopy,” main the YouTube person to sue UMG for violating the Digital Millennium Copyright Act. The 2 sides settled in 2018.  

However these lawsuits are actually outdated historical past, and in 2022 Kyncl will not be a shocking selection to steer WMG, arguably probably the most energetic of the main music corporations in fostering in-house expertise, partnerships and investments in next-generation applied sciences reminiscent of NFTs and the metaverse. “Warner Music is a metaverse play,” says Ivan Feinseth, an analyst at Tigress Monetary Companions. He calls Kyncl “a good selection” as a result of YouTube “is transitioning to a metaverse expertise.”  

Kyncl’s expertise as a streaming govt is probably the most pertinent issue behind his hiring, nonetheless. YouTube has grown from a crucial promotional platform with weak royalties to an important enterprise platform that paid out $6 billion in music royalties within the yr ended June 30. Crucially, 30% of YouTube’s music royalties got here from user-generated content material. That offers Kyncl beneficial expertise in an business that’s more and more pushed – promotionally, but in addition commercially – by UGC at such platforms as TikTok and Instagram, a music govt tells Billboard. “He’s acquired a world perspective [and] understands the idea of the lengthy tail and its potential to be monetized.”  

To gauge the significance Kyncl locations on UGC, look no additional than Streampunks: YouTube and the Rebels Remaking Media, the 2017 e-book he co-authored that appears at YouTube’s function in shaping, because the e-book describes it, “a technology of auteurs and entertainers who’ve constructed their success on the platform, impressed by the problem to share their creativity with the world.” Kyncl’s contribution to world tradition wasn’t the Hollywood fare he was initially employed to license for YouTube; it was YouTube’s potential to construct an financial system to assist a brand new class of creators removed from the normal gatekeepers.  

Talking at a Goldman Sachs convention final week, outgoing CEO Cooper described an organization effectively suited to the incoming CEO. Lately, WMG has “scale back[d] our dependency on superstars,” mentioned Cooper. As a substitute, WMG’s A&R groups discover “artists initially of their profession” and construct careers “on a set of economics that we imagine are affordable and rational, versus economics that we frequently observe in different offers that frankly we don’t perceive.” Cooper didn’t point out that artists are more and more prone to retain possession of their rights and accomplice with corporations like WMG – turning a serious label right into a service supplier. If success sooner or later music enterprise requires WMG to function inside streaming’s economics whereas sharing a bigger share of revenues with non-superstar artist-clients, Kyncl is a smart decide to information the corporate into the subsequent period.

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