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The day the music died? Controversial move by UMG may reshape the music industry


By Laurie Fullerton, Freelance Writer

August 25, 2016 | 4 min read

The fragmentation of the music industry has been ongoing for 16 years since the advent of iTunes and record labels have seen 60 per cent of its revenue evaporate since that time. However, a new threat to musical artists and the music industry has just emerged according to Bob Lefsetz (via HighSnobiety), who runs an influential music industry newsletter. The report that Lucian Grainge, CEO of Universal Music Group, sent a statement - in the wake of Frank Ocean’s Apple Music exclusive Blonde - saying UMG's is banning the practice of exclusive streaming.

indie music photo
indie music photo

UMG is the former label of musician Frank Ocean who took his sound and his brand and broke away from his label recently. The move by UMG is a way to protect the music or musicians they have invested heavily in. The ban on exclusive streaming behind an Apple Music paywall means that music fans may no longer have quick access to Frank Ocean or their favorite or emerging artists. Additionally, for the unknown musicians releasing their first record, the move by UMG implies that it is less likely a consumer will pay for music without hearing it first and this move might squeeze new artists out of the industry entirely if record labels follow UMG's lead. Music is at risk of becoming the domain of manufactured pop stars and studo-backed youngsters and money makers, Lefsetz suggests.

"It is not hard to believe this is happening when Jimmy Iovine at Apple Music used to be a label executive, when Apple used to have monopolies via breakthrough products," Lefsetz writes "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."

UMG's move is to try and hold back the tide and protect the record labels. In other words, while A-list artists bring in a large chunk of revenue for the labels, it also allows labels to lock up younger artists who probably won’t move records on their first release with advances that they otherwise couldn’t afford. Because the music industry cannot afford to have their superstar artists leave the label system altogether for streaming services, UMG may be trying to prevent a power shift. The shift would be a move that the industry hasn’t experienced since iTunes hit the scene in 2003, Lefsetz suggests.

For streaming services, nothing changes. This is no different for them than doing a standard exclusive when the label is involved, although it’s probably easier to negotiate with a single artist compared to an entire company. The modern exclusive deal for an album release has allowed the artist to get paid an upfront sum from the streaming service — money from Apple, an ownership cut from Tidal — while the label gets no direct financial benefit from the deal.

UMG is the umbrella company to nearly 80 record labels including Interscope, Capitol and Def Jam, along with artist-ran minor labels like Kanye West’s GOOD Music, Cash Money, Dr. Dre’s Aftermath, Eminem’s Shady and J. Cole’s Dreamville, streaming their music may slow to a trickle.

To put this into perspective, the site reports that all five of this year’s album of the year Grammy nominees: Kendrick Lamar, Taylor Swift, The Weeknd, Chris Stapleton and Alabama Shakes, would have been affected under the change.

It remains to be seen whether other labels follow suit.

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