Q4 Label Special: Capitol's Steve Barnett, Greg Thompson Reflect on First Year Under Universal, Returning to 'the Tower'

Capitol Records chairman and CEO Steve Barnett, photographed in Los Angeles

Ben Clark

TOP RELEASES, YTD
"NOW That’s What I Call Music Vol. 45"
475,000 copies, 0 TEA

"NOW That’s What I Call Music Vol. 42"
254,000 copies, 163,000 TEA

2013 Grammy Nominees
335,000 copies

BIG Q4 RELEASES
Katy Perry, "Prism" (10/22)
Arcade Fire, "Reflektor" (10/29)

THE DARK HORSE
U.K. rockers Bastille, who’ve already sold 300,000 singles of “Pompeii” and nearly 70,000 units of debut Bad Blood. “They have the makings to be one of the great British rock bands,” says Greg Thompson. “They did a version of the single in the Capitol studios here that Ron Fair put together with a string section -- it’s breathtaking.”

ALSO WATCH
Also Capital Cities, who cracked the top 10 of the Hot 100 with “Safe And Sound” and is nearing the 65,000 mark for In A Tidal Wave of Mystery, and recent signing Naughty Boy, whose single “La La La” featuring Sam Smith is already the U.K.’s biggest selling single of 2013.

In a special feature package in the most recent issue of Billboard, Ed Christman and Andrew Hampp examined the leading labels heading into the crucial fourth quarter of 2013.

In the final installment of our Fourth Quarter Label Special, chairman and CEO Steve Barnett sits down alongside EVP Greg Thompson to talk about Capitol Records' triumphant return -- after being absorbed by Universal Music Group's acquisition of EMI last year -- including a banner year for the company's structure, initiatives and releases, as well as their plan to finish 2013 on the strength of a foundational year.

THE INSIGHT

The last time Capitol released a Katy Perry album on the back of a huge No. 1 single, "Teenage Dream," the first-week sales were a surprisingly low 192,000. But with the hotly anticipated "Prism," the label has reason to think the tides have turned. “What 'Teenage Dream' is to me is an education to all of us in the music business about a paradigm shift in consumption and to stop thinking that people under a certain age are going to consume music the way people over a certain age do,” says Greg Thompson. “But Katy did what smart artists do and she went out there and worked and promoted and did insane singles and the overall TEAs were great. Now the benefit to the consumer is, ‘I’ve heard a couple tracks, I know Katy Perry’s gonna deliver me an album where I like everything on it.’” Beyond Perry, much is new to Capitol in its first full fourth quarter under the Universal umbrella, with Steve Barnett approaching his one-year anniversary as the new chairman of Capitol Music Group. “We’re 10 months into the story of rebuilding this company, and confidence is contagious -- we have to be consistent,” Barnett says. “We also have to be flexible.” That includes finding ways to distribute and market hot releases like Arcade Fire’s "Reflektor," and revitalize old imprints like Priority, which has “Harlem Shake”r Baauer leading its roster.

Much of Capitol’s market share comes from catalog -- it ranks second behind Interscope -- as well as a portfolio that includes 60-plus indie labels distributed by Caroline. But the future belongs to new acts like Tori Kelly and Naughty Boy, gospel breakouts Mandisa and Chris Tomlin, and still-building new albums from career acts Elton John and Rod Stewart. “It’s the time of year where you have to be your smartest,” Barnett says.

KEY EXECS

Michelle Jubelirer and Greg Thompson, executive VPs, Capitol Music Group; Dan McCarroll, president, CMG; Ron Fair, chief creative officer/executive VP Virgin Records; Don Was, presidet, Blue Note; Todd von Mende, CFO, CMG; Bill Hearn, president/CEO Capitol Christian Music Group; Dominic Pandiscia, president, Caroline.

Fourth Quarter Label Special

Q&A WITH GREG THOMPSON AND STEVE BARNETT

Does the fourth quarter still matter?
Greg Thompson: I think it matters for, number one, the volume of [music consumption] is still significantly higher in the fourth quarter than other quarters. Also, it’s the last quarter of the year, and clearly music’s always been a great component to the gift-giving season during the holidays. Obviously we see huge lifts starting with Halloween and Black Friday, and the week after Christmas is so significant. There’s a lot of high-tide moments for music during that period.

Steve Barnett: It’s the time of year where you have to be your smartest. You have to realize what the opportunities are, and I think it’s the most exciting time of the year. Things you feel great about and can really sell in just America are not the same in every country. It’s about the importance of having those plans balanced and feeling right, feeling pervasive while still being true to the integrity of the art.

How are you stacking the decks for the holidays?
Thompson: Obviously Katy this week, and we’re very excited about the Elton Jon record that debuted in the top 5, spent two weeks in the top 10 and will have a nice, steady sales pattern throughout the holidays. It’s been a very critically acclaimed album for Elton, and we’re very proud to be part of that with him. And Rod Stewart, we were proud to be associated with an album that debuted in the top 10 its first week, and continues to sell every week, and will continue to do things. Rod’s one of those people who’s had so much success every year that that’s an album which still has a sense of discovery to consumers. And then we will be acting as a partner to Arcade Fire and Merge. Michelle Jubelirer’s relationship with the manger Scott Rodger has allowed us to become a partner, and releasing that record with our marketing and promo teams.

We’ve also been developing some great stories with some of our breaking acts, so we’re very excited about what we’ve been able to do with Capital Cities this year. Obviously we’ve still got a really long way to go, but we’re really excited to be sitting with 1.6 million singles sold, almost 65,000 albums to date and a campaign that will take this record into 2014.

One of our other exciting stories is Bastille, which came form the U.K. and just landed at No.1 on the modern rock chart. The album “Bad Blood” is already passing 70,000 sales, and U.S. singles are past 300,000. The band’s very committed to the U.S., with a string of holiday shows in December, and they’ll be back several times into 2014. We think the album’s very deep and that they’re a brilliant young band.

Of course we’re still very committed and passionate about Emeli Sande. She’s been the company’s labor of love and she’s been one of our significant artists on the label. We’ve been working diligently as she has to build her foundation in the U.S. “Next To Me” is at about 1.2 or 1.3 million singles. I saw someone cover it on “The Voice” recently, so it’s woven its way into the fabric of Americans’ hearts. “My Kind Of Love” did another 75,000 singles already, and Emeli’s about to come into the U.S. and do some touring for the next couple weeks [as well as] some holiday shows. We’re really proud of the work we’re doing with her, and it shows the commitment of the re-energized Capitol Music Group. Our chairman [Steve Barnett] and Universal’s chairman [Lucian Grainge] have been so incredible with giving us every resource we could need with bringing Emeli to the U.S.

Barnett: We have a complicated fourth quarter on our hands. EMI needed to be reinvigorated and needed to be reimagined for the future.Throughout the year the company’s really been evolving, so it becomes very important to us. We live in a very complicated world, so for us, confidence is really contagious. We need to really launch the Katy Perry album and for it to be a truly global, pervasive campaign. The balance of getting that right and for a number of different records will become vital to us as we look to the future. We know we live in a world where every artist has their own plan. It’s a demanding, complicated world, where everything has to have its own plan that’s carefully curated. For us we had to be very patient and very present, and also have to be very flexible. We‘re in a system full of hits.

Any new signings that might be potential dark horses for you guys 12 months from now?
Thompson: We have a U.K. artist called Naughty Boy. His song “La La La” has 145 million views on YouTube. He’s really prolific as a writer and we think there’s a big audience for him in the U.S. The whole concept of [his album] “Hotel Cabana” is really special, and obviously “La La La” being the big single that exploded around the world and the biggest selling single of the year in the U.K.

I’m also excited to be in business with Tori Kelly, who’s managed by Scooter Braun. She has a YouTube channel of over 650,000 subscribers and she’s an incredible artist. She’s done an incredible job of building a following and community around her. She’s so passionate and so diverse and people are so appreciative of her incredible gifts as an artist. If you’d never heard of her and saw her perform, it’s like “Wow, I’m in.” So we think she’ll be a really big thing for us.

On the Harvest label, we have two great new artists with Banks, who has over 3 million plays on SoundCloud and over 1.6 million YouTube views. She’s gonna be a special artist who the team is working to develop. We also have a great Australian band, The Preatures, whom I think are destined for some really big success here in the U.S. On the Priority label, you saw the Baauer and Just Blaze record come out, already 725,000 streams on “Higher,” the track’s done really well. That’s been a great way to relaunch Priority. At Blue Note, Don Was has done such an amazing job. Robert Glasper won a Grammy last year and he’s back with “Black Radio Part 2.” We just put out an Amos Lee record for the fall, and we’ll have new music from Thelonius Monk, David Sanborn and Roseanne Cash next year.

Barnett: I’m very excited about Bastille -- it’s a great modern rock record. It’s a fantastic job by the Virgin team, and now that record’s gonna go to pop, the same way that Capital Cities became a top 3 pop record. Emeli Sande is an absolutely huge priority for the company. We’re very, very excited about Naughty Boy and love the whole of “Hotel Cabana.” We're in final talks to sign another artist affiliated with that project. Tori Kelly is very important. On Astralwerks, we’ll have a Deadmau5 record that’s become vital. With Caroline, who’ve done a really brilliant job of establishing themselves as a real position of important music within that independent world, it’s a global solution with Five Finger Death Punch and Korn and Alter Bridge. That’s a very strong initiative for us. Blue Note, we have Robert Glasper, and the re-imagining of Priority. We’re now 10 months into this story of rebuilding this company. Confidence is contagious and we have to be persistent. And also very flexible, and that’s where the opportunity to work with Arcade Fire came from -- that flexibility.

We’ve also just done a few joint ventures, including Troy Carter and Atom Factory for his bands Ceremonies and Basic Vacation. Troy’s a super smart guy and he becomes very important to our future moving forward. We have to surround ourselves with as many smart people as we can. We took on board the Red One deal, the T Bone Burnett deal, we’re in business with John Grady in Nashville, Rodney Jerkins and Tricky Stewart, in business with Tim Blacksmith [of Stargate]. The whole evolution of how the company was structured and its legacy, we want to continue that and make the Tower a creative hub again.

How are you feeling about your first full year under Capitol’s new structure under the Universal banner?
Thompson: We’ve got a long way to go, but we’re really excited about some really great artists. And I’m excited not to be owned by a bank. Not that I have anything against the banks, but it’s nice to be able to work for guys who are music guys. It was always strange -- Citibank understood what they knew and what they didn’t know. We’ve got some great artists to build on and some great stuff to be involved with, and this Katy record will be another one of those records. She’ll just produce hit singles.

Barnett: We’ve just got to be patient. It can’t be a sprint for what we’re trying to do. It’s been a complicated year but I feel we’ve made a lot of progress. I certainly feel much better now than I did at this time last year. But if you look at the whole company and various partnerships we’ve been able to create, I feel we’re going into the right direction.