When Steve Barnett left New York City for Hollywood to take over the chairmanship of Capitol Music Group in 2012, the industry was still fully invested in downloads, which provided a steady flow of revenues as physical product gave way to the digital world. Five years in, everything has changed as streaming has become the go-to music source, counting upward of 160 million users worldwide. Just between 2016 and 2017, on-demand audio streams have grown by 50%, according to BuzzAngle Music, and today 80% of audio streaming is done via a subscription service. Of course, the profit margins pale in comparison to the CD boom, but growth is positive and Barnett, who spent seven years at Sony Music (at Columbia and Epic) before joining Universal Music Group, is more bullish on music’s future than he’s been in some time.
Variety visited with the British native on the penthouse floor office of the Capitol Tower. The Capitol Records label finished out 2017 in the No. 7 spot for total consumption on the back of successes by Migos, Halsey and Sam Smith.
What has been the biggest shift you’ve seen in the business over the last five years?
We’re back in a global world which had gone away. Mexico is the third-biggest streaming market in the world today; Brazil is five; Holland is eight. And in the top 20 you’ve got Argentina, the Philippines, Chile and Poland. That’s what’s changed. So we’re in the process of modernizing the company and the best way for me to explain that is if you think of the modern music company and those structures that came into place in the ’70s. Every major label in the world is set up with a domestic marketing team, an international marketing team, and a sales team and then ten years ago they added in a digital team. We’re in the process of breaking all that down so that it’s going to be one global team that covers all those areas. We’ve got to become nimble and fast. It doesn’t matter what came before. The world has changed. Forever, I think.
What does that mean for a business like UMG to be based out of the U.S.?
America is more important than it’s been in maybe 20 years because so much originates from here. The reality is, you need to have the right support above you. For me personally it’s incredibly empowering to work for [UMG chairman and CEO] Lucian Grainge, who is always looking for a reason to say “yes.” His faith is greater than his fear.
Is there an example of a global streaming breakout from the CMG roster?
CCMG, which is our Christian label run out of Nashville, had a great 2017. But I’d always said to Bill Hearn [who died Dec. 10], “You need one breakout act, almost as a proof of concept.” Four years ago we saw this young artist called NF that Bill had signed. He developed as an artist and built a strong following. He had a really good management team behind him. But the proposition of a white Christian rapper from Detroit — if it was going to be led from here — might have been challenging. So it started in Sweden, then Norway, then Denmark. It became explosive in those territories. The song, “Let You Down,” is now top 10 globally and one of the great breakout stories of the year with 15 million streams a week. And there are other examples of that. We’ve seen a huge explosion in gospel music in markets like Brazil. Amazon Prime and Alexa has been great for Christian music.
“We’ve got to become nimble and fast. It doesn’t matter what came before. The world has changed.”
How do you foresee voice recognition impacting music?
Obviously voice recognition is a big thing for the future. You can get into your car and say, “Play me the Sam Smith album,” and it comes up instantly. Alexa changed a lot of things. And it took Amazon, who had been out of the game, and put them back in, and in a profound way. And if you think that Alexa is only live in about nine countries, wait until it’s in 50 countries.
Niall Horan has emerged as the standout star of One Direction with three hit singles having already charted even before his album is released. To what do you credit his success?
Obviously I was incredibly fond of [One Direction] and had a good relationship with them and their team. We had the support of [manager] Richard Griffiths in buying into the idea that we’re going to be three singles deep before we release the album, and he’s going to go around the world three times and try to touch those fans. Niall is really a unique young man, who’s developed a great relationship with the whole company. He’s beloved at this label.
He clearly seems to be embracing Nashville and a very classic sort of sound, from “This Town” through to “Too Much to Ask.” What is connecting with 1D fans?
There’s a vulnerability and an authenticity about it. The band’s fans could relate to that. Those transitions [from boy band to solo star] aren’t easy.
Katy Perry’s “Witness,” though it sold more than 840,000 albums, according to BuzzAngle, seemed to struggle to find an audience. How did she finish out the year?
It’s an interesting story. I love her and have forged a great relationship with her. I talk about how engagement is so important and I don’t believe you can have big cycles between projects [as Katy did]. I think that’s changed. And so you sit down and have tough conversations with her and management. As successful as you’ve been, you learn. Personally I’ve learned more from our mistakes than our successes and I believe our artists are in the same category as that. But she has a plan, and we have a plan, and I feel good about it.
|“She’ll be brilliant on ‘American Idol,’” Barnett says of Katy Perry. “She’s funny, self-deprecating and has good people instincts.”
What’s your view on the sexual-harassment allegations and #MeToo campaign, which drove much of the conversation in the fall?
It’s not anything I’ve ever seen firsthand, and it is something that I, obviously, would have frowned upon. I don’t remember an instance where someone who worked with me brought that to my attention ever. That’s not to say it’s a perfect world in music. My personal opinion is that what’s happened has to be a good thing — as brutal as it is. So many brave people came out and told their stories. For the long-term good of everybody, as bad and horrific as it was, how it all unveiled is quite a remarkable story.
There is renewed focus on hip-hop at CMG. How would you rate the last year in terms of the urban genres?
It’s not all been smooth sailing, but from where we started, everyone is proud of what’s happened for Lil Yachty. We’re incredibly excited for the Migos album that’s going to come out in [the first quarter]. Our relationship with Quality Control and all that [Motown Records president] Ethiopia Habtemariam has done to make that what it is today. And, of course, No I.D. joining the company as executive vice president.
With the success of Portugal. The Man and Greta Van Fleet, will rock return?
Rock music is hard. You read about companies like Fender and Gibson, their sales are down massively. Kids aren’t buying guitars. And that’s a great concern to purists like me. I can remember the first time I heard Oasis and there was just something special about them — a potential greatness there. I think we need to get back to that. Things go in cycles. We need a Seattle movement. We need a grunge movement to get that back. That’s definitely a challenge.
In total consumption for 2017, Capitol is wedged between fellow UMG labels Republic and Def Jam, while Interscope sits at No. 1 …
We feel really great about it, but it’s never enough because you’re in the Universal system and you compete against Republic and Interscope and Island and Def Jam and everybody else. But Capitol was an opportunity that, if I hadn’t taken it, I would always have regretted. I love this label and this building and I’m not sure I’ve loved the other places I’ve worked. I feel a tremendous responsibility when I come to work every day.