With the Exit of Senior Execs, UMG Reassesses Its Digital Strategy

On the heels of two exits by senior executives, music's biggest company reconsiders and decentralizes.

Universal music group has touted its digital initiatives throughout the Lucian Grainge era -- from licensing pacts, like the just-announced Vessel video service, to its investment in Beats, to its soon-to-launch ultra-transparent artist portal -- so it came as a surprise when, in one week, two senior digital executives left the UMG fold.

Rob Wells, president of the global ­digital business team and a 14-year veteran of the company, announced on Feb. 23 he was leaving to pursue ­"entrepreneurial opportunities." Executive vp David Ring followed four days later.

The exits come on the heels of a series of internal reviews by a group of consultants including Boston consulting group and Michael Lang and his Lang Media Group, prompting internal whispers that the events were related (a UMG representative denies such an assertion).

But others insist the directive comes from chairman/CEO Grainge, who wants individual labels to "have skin in the game in terms of the digital strategy," according to one source, and be involved in cutting deals with digital music services. At the heart of his business ethos: "Freemium" doesn't fly.

"There are no regrets about initially supporting that business model," says one UMG insider. "But it's time to figure out how to drive up the value of our content."

In short: Instead of worrying about getting the best penny rate in a deal, the company needs to look at digital in a broader media perspective and on a platform level, adds the UMG source, which is why leadership began questioning the big, centralized digital business structure.

So what happens next? Insiders ­speculate that the versatile Amanda Marks, global head of digital accounts, shows up in another capacity within the company. Lang also is expected to stay in the mix, but Wells' position is, in effect, being eliminated.

This article first appeared in the March 14 issue of Billboard