Billboard Power 100: Lucian Grainge Q&A
Joseph Llanes

If “power” means moving markets or greenlighting massive spends, Universal Music Group chairman Lucian Grainge demonstrated a staggering penchant for it when UMG completed its $1.9 billion acquisition of EMI’s recorded-music assets in September 2012. Grainge is a fierce and tireless advocate for the recorded-music business.

“If you look at the profitability pool for all of music,” he says, taking time to speak with Billboard from his suite at the Four Seasons on a recent visit to New York, “I’d think recorded music would be responsible for 60%-70% of it.”

Grainge has structured Capitol Records Group, which came as part of the deal, as its own major label, plucking former Columbia COO Steve Barnett (No. 32) as chairman/CEO of CRG. “You should go in there and see whether I delivered in a matter of 12 or 14 weeks everything I said I was going to deliver,” Grainge says. “I’ve taken EMI back to where it was 10 or 15 years ago, back to when [former president] Ken [Berry] and [wife/EMI executive] Nancy were there . . . when the label was alive.”

Today, UMG’s album market share is up to 40.6%, and as you’ll see below, Grainge believes there’s a lot of opportunity ahead.

Who are your mentors?
I don’t think that one can be specific. I’m 52. By the time you get to 52, you’ve had so much life experience, both positive as well as negative, that they’re the things that round you. There are philosophies that you learn from mentoring, and it doesn’t necessarily have to be one individual.

The thing that I’ve learned the most from the two or three people who I’ve respected the most is that music, A&R people—the people that create music, that can spark, identify . . . bring things that sell—that’s the king.

Is there a philosophy that has been a guiding principle for you, or that you think is very important throughout your rise to power?
Keep going. Charge. Just keep going.

When you’re running an organization the size of the one that you’re running, how do you create a culture of accountability?
I have one very simple philosophy that I think people who have worked with me have heard me say many times, which is that the fish stinks from the head.

So what does that mean to you?
That everybody in the organization should, frankly, operate the same way that I operate. And, that if they don’t internalize it, when people behave badly, everybody else in the organization is likely to behave badly. If you behave well, then that filters down . . . I don’t think that that’s about this business or my job or this company. That’s a philosophy in life.

The recorded-music industry—do you feel like it is in the middle of a turnaround? Do you feel like it’s hit a bottom?
We’ve thought it before. We may not have expressed it. Different people may have implied different things depending upon what their corporate structure is. If you’re in a public company and you make forecasts, you can’t do that. So, I’m trained not to say things that can’t be substantiated. I can only answer it in one way: You can see by my actions that I believe in this business. I believe in the economics. I believe in the data that I’m seeing because we invested.

When you look at the Nielsen SoundScan numbers for the last couple of years, the music business has basically been flat on the sale of albums, with singles up a bit. This year, it’s early going, but you’re up a few percentage points. If you look at the full revenue picture that is the potential of a recorded-music company, is it much better than that?
It’s a very good question, and it’s something we talk about internally a lot. You look at market share and fixed overheads and your variable overheads and you end up with a number. That is now not the case. Market share is not an indicator of profitability, whereas before it may have been. In terms of these businesses, our challenge as an industry is to monetize the usage of our product, of our content, of our right—that is not being monetized. The data shows and has proved that the enjoyment, the pleasure, the use, the interest in music has never been higher. Ironically, our ability to monetize that through distribution has never been lower. That’s why I’m confident. That’s why we continue to invest both in [mergers and acquisitions], strategically, in new artists, in our catalog development—everything. So, there are pieces of the income stream that are coming in. We’re monetizing things that we’ve not monetized before, and they’re coming in elsewhere in the balance sheet.

Can you give examples?
Video monetization is a small example. Videos for the first 30 years were a promotional cost. And now, it gives me great pleasure to hear our marketing people say, “We can spend a bit more on the video, make it better, because our assumption is that we’re going to get it in this way.” That’s an obvious one. Performance rights. Neighboring rights. Satellite radio rights. All crucial to a part of what we’re doing.

I want to talk a little bit about power.
Power is about who calls who and whose call you take. That’s power. Power is a combination of the ability to write checks, the ability to make things happen, the ability to block things—political power, the ability to testify and the requirement to testify at a senate hearing and have five commissioners against zero in favor of what you said. Power is the ability to buy and sell businesses. Power is the ability to stop new services. Power is the ability to create new services. That’s power.