Oh to be Lucian Grainge! As the sun came up after The Grammys last weekend, the big dog of music danced his way home, knocked back a couple of espressos, fired up his Olivetti and cranked out a few choice words about the glories of the most successful company in the history of the music industry.
Trotting out his now-traditional annual missive a little later than usual, Papa Grainge is ready and raring to take everything 2025 can throw at him, and then some.
However, with yesterday’s announcement that Universal Music Group will report its full year 2024 figures on 6 Mar, and today’s JP Morgan analyst upgrade that says Universal’s share price is “100% wrong” and calls the company undervalued, expectations are high for what big music’s pitbull might pull out of the bag next.
If the upcoming full year financials don’t address Universal’s poor stock market performance, which has seen the company’s shares see-saw wildly and struggle to maintain significant traction above its IPO level – despite some big deals to try and consolidate its market position – pressure may mount once more around the issue of Grainge’s €100 million megabonus.
But don’t worry – Lucian’s got a plan! Coming in at a couple of thousand words and then some, you could read the annual memo yourself – or you could just skim the list of corporate buzzwords that have been crammed in to pad out the unrelenting narrative that Universal is the greatest, the most powerful, the most visionary and just agonisingly, exhaustingly THE BEST.
To help, we’ve pulled out all of those buzzwords and – slightly reordered – used them to summarise the jist of things: this year at Universal is all about self-reinvention, realignment, agility, efficiency, execution, clear vision and momentum. So much momentum, in fact, that it’s mentioned a momentous four times in rapid succession. Buckle up!
There’s going to be cross-functional dovetailing to catalyse beneficial and authentic changes to enact positive change driven by a laser-focused leadership posture that will help the company organically expand its geographic footprint, expand ARPU, and grow monetisation, helping scale the artist-centric ecosystem underpinned by Universal’s driving force – its entrepreneurial spirit, its visionary vision and its remarkable superpowers – all whilst fuelling internal competition and enhancing the company’s unique worldview.
Phew! What an enviable position to hold! And what a load of corporate gobbledegook to boot.
But consider this! All of that dovetailing, realignment, self-reinvention and momentous momentum has driven the spectacular results and stunning achievements of a company that continues to lead the media industry, groaning with the brightest entrepreneurs and the most innovative creatives and finest resources that mean that Universal has consistently been the music industry’s leader and is aggressively growing its presence in high potential markets, which means that what the company does – and how it does it – is impossible to replicate.
Lucian is THRILLED to be on that journey – a raw excitement that will presumably only be matched if and when Universal’s share price hits the €30 per share trigger that will unlock the next tranche of the previously mentioned megabonus.
However, let’s be clear: Universal cares deeply about its artists, and is absolutely “not a financial institution that views music as an ‘asset’”, whatever some mean-spirited critics might say, and whatever pumping a huge chunk of change into Chord, a private equity backed music rights investment vehicle, might suggest. Nor is it simply an aggregator that views music as “content” – despite having just splurged hundreds of millions of dollars to buy one of the biggest music aggregators in the business. How dare anyone suggest such things.
In amongst the exhausting boomer buzzword bingo are some touching moments of poetry. Let’s not forget that Universal basically invented streaming – “an era whose dawn we were instrumental in ushering in”. Music, says Papa G, is a “vital – perhaps the vital – art form”, artists are the company’s “lifeblood” and “no other form of creative expression is more fundamental to human existence than music”, something that a “sea of noise and irrelevant content… threatens to drown out”.
What poetry! What glory! What achingly superlative achievement! The man should write songs.
Of course there is – as is so often the case – a catch. Tucked deep amongst Lucian’s lyrical paeon to his own glory there is the sharpened knife, and this time it’s being whetted for distributors.
Following on from a dizzying reminder of the great work that Universal’s ‘artist-centric’ initiatives have wrought – the demonetisation of whole swathes of indie artists using Spotify, and a ripping up of the rules of streaming for artists using Deezer – the big man assures us that Universal’s agenda to either buy up or hunt down anyone who stands in Universal’s way will continue in 2025.
“Platforms as diverse as Deezer, Spotify, TikTok, Meta and most recently Amazon, have adopted artist-centric principles in a wide variety of ways – principles that benefit the entire music industry from DIY to independent to major label artists and songwriters”. Unless, that is, you’re a DIY artist demonetised or demoted by Spotify or Deezer.
That work in cracking down on anything that isn’t in tune with Universal’s interests will continue. “Our work in driving these artist-centric principles will continue in 2025”, says Grainge, ominously.
“Not only do we want to ensure that artists are protected and rewarded”, he says, “but we’re also going after bad actors who are actively engaged in nefarious behaviour such as large-scale copyright infringement”. That well-thumbed thesaurus that sits in the cupboard inhabited by Universal’s SVP of Comms is clearly being put to good use.
To that end, Universal is laying down the law, drawing the red lines in the sand, and leading the way, setting out its rule book that those grimy content-obsessed aggregators should abide by.
“We’re setting forth the best practices that every responsible platform, distributor and aggregator should adopt”, warns Grainge. This includes “content filtering; checks for infringement across streaming and social platforms; penalty systems for repeat infringers; chain-of-custody certification and name-and-likeness verification”.
Most tellingly, the repeated emphasis is that “every platform, distributor and aggregator” should get on board; the implicit threat: if they do not, Universal could use its muscle to ensure that you sing to the UMG songsheet or you stop singing altogether. What a nice little distribution operation you have here; it would be a shame if anything were to happen that meant you couldn’t distribute music any more.
Now, of course, there are all sorts of ways that the world’s distributors, aggregators and platforms could – and should – do better. There are too many times bad actors have poisoned the well for others, and too many times the industry has let things pass that should not have happened in the first place.
However, the burden on the edge of the digital supply chain – smaller distributors, with less technical resources – could be costly, and in some cases so costly that smaller operators may be unable to comply at a technical or operational level with the vaguely defined “checks for infringement across streaming and social platforms” or the “chain-of-custody certification and name-and-likeness verification” that Grainge will apparently demand.
There are significant gaps – many of them easy to address – in digital distribution. Distributors of all sizes, and their upstream or downstream supply chain partners, need to stop dragging their feet on implementing proper Know Your Customer practices; it should be standard, not optional, that distributors clearly communicate how they hold client money, and there should be clear and simple rules about how client money is used – with guarantees that if a distributor goes bankrupt, client money is safe.
There need to be better attempts made to identify egregious infringement at the point of ingestion – though there’s a strong argument that platforms, whether streaming or shortform video – are best placed, and best equipped, to tackle that specific issue. There’s no doubt that obvious fraud can and should be stopped.
Having widely supported and adopted “kitemarks” around distributor, aggregator and platform best-practices and transparency would benefit everyone – but only if they were applied equally whether that distributor was a major-owned, CD Baby-sized giant, or a tiny boutique operation.
Some of the concepts being floated are a little more of a challenge, though: who would create the standards for chain-of-custody certification and name-and-likeness verification? And how would you implement – at scale – checks for infringement across streaming and social platforms, given the enormous volume of music being ingested, and shortform video being created?
If Universal used its muscle to ensure key platform partners surfaced open and meaningful APIs to facilitate these sorts of things – rather than simply creating another pay-to-play walled garden – then an “everyone do better” initiative would, indeed, benefit everyone.
The risk instead is that Universal lays down the law about how it would like distributors and aggregators to work, and begins to apply pressure to its platform partners to quite literally de-platform those that Universal doesn’t feel are up to scratch.
As a company that now – assuming there is no regulatory pushback – owns one of the world’s biggest aggregators, in the shape of FUGA, and one of the world’s biggest DIY distributors, in the form of CD Baby – there is a very real risk that a Universal Music-led attempt to shape the way that side of the market should operate will cause a further contraction in the non-major aligned options available to artists and labels.
When Lucian sneezes, everyone catches a cold.