While the December stock market fluctuations have made everyone take a deep breath, 2018 was another boom year for the music business. A recovery that many of us could not have hoped for in our wildest dreams during the desolate years of the late 2000s continues to take hold, thanks almost entirely to streaming. According to an IFPI report issued in October, 86% of the respondents (1,000 to 2,000 people between the ages of 16 and 64 in 20 countries) said they engage with music via streaming, with 57% in the 16- to 24-year-old demo using a paid audio service. You can find more details here,
but what those numbers point to above all else is the near-miraculous feat of convincing a generation of music consumers, many of whom had never paid for music in their lives, that it’s actually something worth paying for (albeit much less than 20 years ago).
Leading that charge, of course, was Spotify, which has been the primary news-generator since it brought its above-ground streaming revolution to the United States in 2011. That remained true in 2018, although there were plenty of other headlines as well. And so, in the waning hours of 2018, in no particular order, we present the biggest music business stories of 2018 …
Spotify Goes Public
Despite the seemingly bottomless pockets of competitors like Apple and Google, 12 years after its launch Spotify remains the global streaming market leader. It went public with a roar back in April, although many top executives jumped ship shortly after they’d cashed in, it is years from showing a profit, and its valuation has shed billions (to be fair, along with many tech stocks) since its late-July peak of $35 billion. According to several sources, the company dropped to No. 2 in the U.S. at some point in the third quarter — behind Apple Music — and it made an excruciatingly high-profile misstep by attempting to ban from its playlists what it deemed artists who’d engaged in “hateful conduct” (which amounted to R. Kelly and XXXTentacion) before it walked back the policy just days later. Yet the Swedish company, more than any other platform, has led the streaming revolution that saved the music business. Whether it can remain on top is an open question, but the race is Spotify’s to lose.
Rarely have two words had as much impact as Grammy chief Neil Portnow’s awkwardly worded comment to a Variety reporter that female artists and executives needed to “step up” in order to receive greatest recognition. While a firestorm of criticism ensued, the Recording Academy made several moves in an effort to improve the situation — including appointing an internal task force led by former Obama administration official Tina Tchen — and the dramatic increase in female representation in the 2019 Grammy nominees announced earlier this month gives some cause for optimism. Whether that diversity will continue with the Grammy winners, and the industry at large, remains to be seen.
“Time’s Up” Impacts Music Biz With a Whimper
While the music business’ mantra of sex, drugs and rock ‘n’ roll persisted for decades, the housecleaning that followed the 2017 departures of Epic Records chief L.A. Reid and Warner Bros. SVP Jeff Fenster, due to allegations of sexual harassment, paled in comparison to the movie and TV industries. One notable exit, Republic Records president Charlie Walk, took place at the top of the year when the executive and the Universal Music Group label “mutually agreed to part ways” after he was accused of sexual harassment by five female former employees of Republic and two Sony Music companies where he was formerly employed. While rumors about other executives have continued to fly since Walk stepped down late in March, nothing of similar impact has gone public yet — and anyone continuing such behavior in the wake of the past two years’ events might as well pack up their desk and send a resume to the only place in America that publicly condones it: the White House …
Changing of the Guard at Sony/ATV
As Sony/ATV chairman and CEO Martin Bandier, indisputably one of the greatest music publishers of all time, approached and passed his three-quarter-century birthday, speculation grew about who his successor might be, with the company’s U.K. chief Guy Moot eventually emerging as the most-likely-to. Yet all of that came to naught in October, when the Sony chiefs in Tokyo abruptly informed Bandier that his contract will not be renewed in April, and in fact Warner/Chappell CEO Jon Platt, who worked under Bandier for many years at EMI Publishing, will be taking the helm. Despite the drama inherent in such a move, the succession has been outwardly handled with grace from all parties thus far — and, as such things often go in the small world of publishing, Moot is widely expected to take Platt’s CEO gig at Warner/Chappell, likely in a tag-team role with new COO Carianne Marshall.
Def Jam Gamely Rolls With Kanye
Any attempt to recap the 2018 events around Kanye West would stretch well into 2019, but one intermittently fascinating side-effect of his, er, unpredictable behavior over the past year has been the entertainment industry’s reactions to it. Granted, anyone going into business with him these days knows what they’re getting into — although two of his backing musicians on “Saturday Night Live” could be seen shaking their heads in unison during West’s pro-Trump rant after the show’s telecast had ended — yet the staff of Def Jam Records deserves a collective Purple Heart (and perhaps hazard pay) for standing by their artist non-judgmentally through some completely unprecedented events, including his pledge to release five albums in five weeks (two featured him as an artist, the other three he produced). To cite just one telling example: At the airport in Jackson Hole, Wyoming, the morning after a listening session for his “Ye” album — which West, his management and the label had frantically organized in less than week (over Memorial Day weekend, no less), flying in and putting up more than 500 people — a Def Jam executive who’d been up all night was heard saying, “I finally got the artwork — we just released the album.” “Ye” hit streaming services 10 or 11 hours after the usual midnight release time, and several of the other albums were a few hours or even a day or two late. But for better or worse, West’s label, and the industry at large, continues to provide a high-profile platform for his art.
Taylor Swift signs with Republic
The entire industry had known for years that Swift’s contract with Big Machine, the Nashville-based label that had been her home for her entire recording career, was up in November. But right up until the announcement was made, hardly anyone knew what her next move would be. Would she re-up with Big Machine in exchange for ownership of her catalog? Would she jump to another major — nearly all of whom she was reported to have met with? Would she craft some unprecedented direct deal with a giant like Apple or Amazon, roughly along the lines of Frank Ocean’s distribution deal with Apple for his “Blonde” album? Or would she do something no one had even speculated? In the end, she took a fairly unsurprising course — signing directly with known quantities, Republic in the U.S. (which distributes and helps market Big Machine releases) and its parent company, Universal, globally — but with a twist: Swift will own her master recordings going forward, and UMG pledged that it will share with artists the proceeds from the expected sale of its Spotify equity, and make them non-recoupable against the artists’ earnings, as Sony Music has done. It was another example of Swift, who in the past has strong-armed both Apple Music and Spotify into terms more favorable to artists, using her formidable leverage to benefit not just herself but other creators as well.
Vivendi to Spin Off Universal Music Group
Some saw it coming in August of last year, when Goldman Sachs, as part of a wildly optimistic series of reports about the music industry, valued the world’s largest music group, Universal, at $23.5 billion, $3 billion more than Sony Music, its nearest competitor. And just under a year later, parent company Vivendi confirmed rumors that it would indeed look to spin off UMG, putting up to half of the company on the market. Under chairman Lucian Grainge, UMG has continued to thrive, with the signing of a long-term deal with Taylor Swift — not to mention being the primary driver in Vivendi’s 56% revenue increase in the third quarter — the latest in a long string of coups. Yet it has also learned that, pardon the pun, the race often goes to the swift: While the other two major label groups and the indie collective Merlin all sold their stakes in Spotify, UMG has waited, presumably on the belief that the company is worth more with equity in the streaming company than without. It has since seen the value of that equity drop as Spotify’s valuation has fallen in recent months.
The Music Modernization Act Passes
The creative community has little to thank Donald Trump for, but at least he didn’t hold up the years-in-the-works Music Modernization Act, which includes payments to songwriters and artists for pre-1972 recordings, as well as increased compensation for works played on streaming services. “Certain entertainers have been taken advantage of, but no longer, because of Trump, can you believe it?” Trump said at the ceremony in an uncharacteristic display of self-awareness. Be that as it may, the MMA is a huge first step in a long journey for artists and creators to receive their due.
Country Music Industry Drops Mic (Huckabee)
Did “hate win,” as Mike Huckabee suggested when he was compelled to quit the CMA Foundation’s board of directors, just a day after his appointment to the Country Music Association’s charitable wing was announced? It seemed a lot more like a triumph of common sense, since polarizing right-wing political figures have not historically been sought out as great boons for nonpartisan arts fundraising — even in more conservative-friendly Nashville. Country music progressives upset about Huckabee’s anti-gay-rights activism quickly raised their voices, and with a promised conservative backlash against the supposed snowflakes of Nashville never materializing, a bullet was dodged.
The YouTube “Value Gap”
While Spotify is often cited as the world’s largest music-streaming service, that status comes with an asterisk: It’s the world’s largest paid music-streaming service. YouTube actually holds the overall title, and for more than a decade the music industry has railed against its relatively low royalty rates and its use of “safe harbor” laws as a way to sidestep policing unauthorized music on its site, which robs creators of countless millions in royalties. As the European Union’s proposed Article 13 threatens safe harbor, YouTube (and its parent company, Google/Alphabet), which have long insisted that their rates and copyright enforcement are fair, has doubled down on their messaging, claiming that Article 13 will hamper creativity and, in one rather far-fetched example, said that the global hit “Despacito” would never have happened in a post-Article 13 world because the publishing information was incomplete. These claims, championed by YouTube Music chief (and former adversary) Lyor Cohen, have been met with now-familiar howls of outrage from multiple music-industry organizations, and YouTube seems to be the only one defending them.
BONUS 2019 STORY: The Super Bowl Halftime Performance Debacle
It’s December 31st, and still no performer for the Super Bowl’s halftime — the biggest stage for a musician, with an audience of 100 million — has been officially announced. Back in September, word leaked out (probably intentionally) that it would be Maroon 5, and no one has denied it. Yet that news was met with a fierce outcry, partially because the big game is taking place in Atlanta, the capital of black music in the U.S. — but largely because of the NFL’s treatment of former San Francisco 49ers quarterback Colin Kaepernick, who has been essentially drummed out of the league for kneeling during the National Anthem (a move many feel is based in racism). Performing at the Super Bowl now amounts to an endorsement of the NFL’s policies, and sources tell Variety that multiple artists of color — ranging from Cardi B to Outkast and Mary J. Blige — have been approached to perform with Maroon 5, with none accepting as of yet (reports that Travis Scott will join them onstage remain unconfirmed). Justin Timberlake, who performed at the 2018 Super Bowl, was announced on the preceding Oct. 23; Lady Gaga, the 2017 performer, was announced on the preceding Sept. 29. Less than five weeks from the big game, how is the halftime performance still an unknown? Your guess is as good as ours.