The battle between Lucian Grainge and Doug Morris heated up again in mid-February when Daniel Glass jumped ship from Sony to Universal Music Group for global distribution of his Glassnote label.
Sources suggest the deal could be valued between $10 million and $15 million, a figure that proved too high for Sony — whose RED has distributed Glassnote for the last seven years, re-signing a year ago for an $8 million advance — and also for another suitor, Warner Music Group. But sources with knowledge of the negotiations say that money was less of a sticking point than Sony and Warner’s demand for equity in Glassnote, a nonstarter.
UMG chairman-CEO Grainge, 54, and Sony chairman-CEO Morris, 75, have swapped blows the last three years. After Morris defected to Sony, Grainge poached Barry Weiss from RCA and then Steve Barnett from Columbia. Morris, for his part, raided Joel Kleinman from Republic and snapped up Antonio “L.A.” Reid when he left Island Def Jam.
Their styles differ. Grainge has bet big on acquisitions. Morris prefers to grow organically by creating joint-venture label deals instead of buying established labels. Morris has boasted that he added 0.4% in album plus track-equivalent albums market share in 2013 without buying anything — a dig at the $1 billion UMG spent to acquire EMI.
But UMG now controls nearly 40% of the U.S. market (factoring the 0.6% share Glassnote posted in 2013). And in addition to bragging rights, market share plays a key role in determining payouts from digital services providers like YouTube and equity stake in others like Spotify.
In leaving Sony, Glassnote CEO Glass, 56, parts company with Morris, the boss who fired him as president of Universal Records in 1997, to reunite with Grainge. The two have a history dating back to the 1980s, and more recently, Glass turned to Grainge when first setting up Glassnote’s distribution in Europe, Australia, Canada and other territories. Universal also handles administration of Glassnote’s publishing company, Insieme.
Glassnote has one of the industry’s best averages in developing artists and selling records in the indie sector, and was named label of the year by the American Assn. of Independent Music. The label licensed Mumford & Sons from Island in the United Kingdom when none of UMG’s U.S. labels were interested; last year the group sold 1.5 million albums in the U.S., according to Nielsen SoundScan. Glassnote’s roster also includes Phoenix, Childish Gambino and Chvrches. Billboard estimates Glassnote’s annual revenue at $30 million.
While the terms of the UMG deal weren’t disclosed, sources say Glass gets an advance to be used as an incubator fund for a new company, Resolved. Besides expanding the A&R reach of Glassnote, the creation of Resolved also gives Glass, who has long expressed a desire to mentor young executives, the chance to invest in and create joint-venture partnerships with up-and-coming producers and indie executives.