This week In the Hot Seat with Larry LeBlanc: Randy Lennox, president/CEO, Universal Music Canada.
Randy Lennox retains a remarkably balanced overview of the creative and business interests of the music industry.
For more than three decades, this highly focused label executive has been a central figure in the marketing of music in Canada as well as being a leading player in enabling Canada’s music industry to develop acts for home and abroad.
Under his 16-year stewardship as president/CEO, Universal Music Canada is Canada’s undisputed music leader with a current market share just a shade under—wait for it--50%.
Under Lennox, Universal’s Canadian operation, headquartered in Toronto, was among the first territory to break such international acts as Lorde, James Bay, Sam Smith, Lady Gaga, Black Eyed Peas, LMFAO, the Killers, Live, Keane, and many others, as well as such Canadian international heavyweights as Carly Rae Jepsen, K’Naan, and the Weeknd.
Among the leading independent imprints distributed by Universal Music Canada are Glassnote, Big Machine, Walt Disney, Concord Music, Eagle Rock, Rounder, Roc-A-Fella, Hopeless, PM:AM Recordings, DEP, Maple Music/Open Road, Arts and Crafts, Anthem, Last Gang, Dine Alone, 604, Last Gang, Anthem, Secret City, Sleepless, Eleven Seven Music, S-Curve, Zero, Dare to Care and others.
The company’s domestic artist roster includes Hedley, Mother Mother, Bobby Bazini, the Tragically Hip, Sam Roberts, Jann Arden, the Tenors, Nikki Yanofsky, July Talk, Adam Cohen, and others. Affiliated signings of Canadians include Nickelback, and the Weeknd with Republic Records; and Wes Mac with Big Machine.
Lennox began his career with Universal in 1978, when it was MCA Records of Canada, working in the mailroom—for free. He soon became a customer service representative. By 1981, he had been promoted to Ontario branch manager; and became senior VP/GM in 1993, handling the company's day-to-day domestic business. He was named president/CEO in 1998.
Lennox was inducted into the Canadian Music and Broadcast Industry Hall of Fame in 2010.
He is presently the talent chairman, and executive producer of Canada's Walk of Fame, and a member of the Board of Governors, and the talent co-chairman of The Corporation of Massey Hall and Roy Thomson Hall..
Universal Music Canada-affiliated artists delivered 10 out of the 11 performances at the recent Juno Awards, and took home the overwhelming bulk of Juno trophies. How does it feel knowing that?
I feel great about it.
You have a sizable responsibility in overseeing so many Canadian artists.
I am a responsible guy. I set about trying to be successful in Canadian music, and although the traveling attendant to that (exporting Canadian artists abroad) has been challenging, locally we are very proud of our roster.
What percentage share of the Canadian music market does Universal Music Canada hold?
We are running a little under 50%.
As you build a Canadian story with any new domestic act, are you also seeking out international opportunities?
Very much so. We all understand Lucian’s mandate (Lucian Grainge, chairman/CEO of Universal Music Group), as well as our local mandate, which is to find the next Lorde in Canada, and we are determined to do that. We have had some singles and some doubles. We have yet to have a homer. The great news is that we have had international participation with artists in that we have had a very relevant part in negotiating (deals for) the Weeknd, Carly Rae Jepsen, Nickelback etc., but we have yet to have a wholly-owned, home run. We’ve done a ton of rev share (revenue sharing) deals with our U.S. and U.K. labels, and that has worked out well.
How many direct domestic signings does Universal Music Canada currently have?
We have 21 fully-signed artists.
How many people does the company employ?
We have 150 staff.
Do you have a strong A&R team?
A very very strong and committed young A&R team, yes. Consisting of Rich Castillo (the former head of A&R for UMTV, and All Around The World Records) who I brought in from the UK, as well as Fraser Hill, Shawn Marino, Cole Stephenson, Ivan Evidente, and Don Kitchen. They are excellent A&R people. Some of them are in their 20s, and are just starting (in the music industry).
How hands on are you with A&R?
Oh, I live there (laughing). I’m there with a baseball bat, a ball, and a catcher’s glove. All at the same meeting.
As a teenager, you worked in a record store, and were absolutely excited by music. Do you have the same enthusiasm for music today?
My love for music is very much alive. What I have learned to do having been in music for over 35 years is to make sure that it remains sacrosanct. At my cottage, and downstairs in my music room (at home), I do intense listening of the old and the new, keeping it separate from my vocation, and it seems to work.
Can you still listen for pure enjoyment?
I absolutely do. When I hear a great song I immediately need to explore the album. It’s like seeing the movie snippet, and then enjoying the entire (film) process. Today, I listen as I always did. I also listen to other labels’ (music) as well.
With such a high level of involvement in so many other areas of the company needing your concentration, why such focus on A&R?
A&R is the engine that drives any successful president. I learned how to do marketing for 25 years. I learned how to do the other things along the road. So when you have been doing all of this, you have to go to where the energy is. The real reward is the parenting process of the artist.
You played a significant match-making role in Carly Rae Jepson’s international success starting with her break-out track, "Call Me Maybe."
It has now sold in the vicinity of 14 million tracks world-wide.
[According to the IFPI’s Recording Industry In Numbers Report 2013, released in 2013. Carly Rae Jepsen's "Call Me Maybe" was the top-selling single of 2012 worldwide.]
How did that breakthrough develop?
Jonathan Simkins of 604 Records (in Vancouver) very smartly put Carly Rae Jepsen together with Josh (Josh Ramsay, producer and lead singer of Marianas Trench), and with Tavish Crowe, they wrote this classic song. Scooter (Braun) called me, and said, “I see you have the #1 track on iTunes in Canada.” We had probably been running at #1 for three weeks at that time. I suggested at the time that we get “likes” internationally. Scooter and I immediately got on the telephone with Jonathan Simkin for a three-way call. Other (American) labels were in Vancouver trying to sign Carly Rae. We then added Interscope into that call with Steve Berman (vice chairman of A&M Records at Interscope Geffen). We did the deal for Carly Rae Jepsen within 24 hours. She ended up with Scooter (on the School Boy Records label with international distribution via affiliated Interscope Records).
Currently, she’s riding the charts with “I Really Like You.”
Absolutely, and she (played) this year at the MMVAs (MuchMusic Video Awards in Toronto on June 21, 2015) etc. She remains a friend, and Scooter is doing a fantastic job with her, and Jonathan Simkin remains involved. The credit is where it’s due. He started it, and Carly Rae remains on 604/Universal in Canada.
[According to media reports, Carly Rae Jepsen will release her new album “Emotion” August 21st, and has plans to drop a new single, and video for "Run Away With Me" in July.]
You are also more associated with the Weeknd’s success than most people credit you for. Just how involved were you?
Labels were coming in like a line-up to a prom dance. I was talking quietly to Abel (Abel Tesfaye aka the Weeknd), and working very closely with Monte Lipman (chairman/CEO, Republic Records).
[In 2010, Abel Tesfaye anonymously uploaded several songs to YouTube under the name the Weeknd. He issued three 9-track mixtapes in 2011: “House of Balloons,” “Thursday,” and “Echoes of Silence” which drew critical raves. The following year, he released the compilation album, “Trilogy,” consisting of remastered versions of the mixtape tracks plus three added tracks. “Trilogy” was later released under his own label imprint XO, and by Republic Records. In 2013, the Weeknd released his debut studio album “Kiss Land,” which supported by the singles "Kiss Land", and "Live For,” debuted at #2 on the Billboard 200 album chart in the U.S.]
What attracted you to what the Weeknd was doing?
I just loved him. I loved him from minute one His voice, his resonance and, most importantly, his spirituality. This guy is special. When you sit in a room with him he has a piercing stare, yet he’s grounded, and his gift is phenomenal. Look at “Earned It” (the lead single from the soundtrack to the 2015 film, “Fifty Shades of Grey.”).
[When the Weeknd walked out on the Grammy stage at the Staples Center in Los Angeles to introduce Pharrell while strands of "Earned It" played, cheering and hollering erupted from the industry audience.]
His career has been a dramatic progression from one career platform to another.
Well, yes. And he’s to be credited for that in the early days. Charlie Walk, who works for Monte Lipman at Republic (as executive VP of Republic Records), I think has been a really strong architect as well. He’s been exceptional as an architect of this second, more successful phase, after the first three mixtapes, and all the (underground) history.
When did you first see the Weeknd perform?
I saw him in New York with Monte Lipman just when we signed him. He sold out two Radio City Music Hall shows. We were 10 months away from his “debut album.” I turned around, and looked (at the audience). I couldn’t believe that there were 6,000 people twice for a guy who had never had a formal album release. Back home (in Toronto) not three weeks later, he does two Massey Hall shows, and a Sony Centre show. There I stood again thinking, “What’s is going to happen when this guy gets ‘the hit?’”
Was the build-up primarily word-of-mouth fueled like Drake’s early musical career?
It was word-of-mouth, and he’s the master. He’s one of the artists that his on-line strategy will be considered historic as we look back. He did it 100% himself. All we did was pay attention.
Does Canada’s music market differ from the U.S.?
Very much so. We are dealing with a market in Canada in mid-May 2015 that is still 50 plus percent physical, and a market in the U.S. that is down to Wal-Mart and Target. We are dealing with a market here that is painfully underdeveloped in streaming, while (streaming is) very much ahead of the curve in the United States. We are completely teeter-totter in how music is sold, and in what proportion.
How do music sales in Canada break down?
To give you quick numbers, we are 50% physical, 40% digital, and 10% streaming in Canada. That’s 10% streaming, Larry. America is coming on 35% streaming, around 30% digital, and 35% physical in mid-May 2015. They are about a third, a third, and a third. So the markets are completely different from each other.
Spotify came late to Canada. Less than a year ago.
Well, they opened in 57 countries before they opened here. We were very late for a number of reasons. Pandora came to Canada, and left. Rdio came, and invested early. Deezer also made an early investment and exited. So we have had some false starts that are of concern. That’s why I make the point to be (only) 10% streaming in a mid-May 2015 market is a very big concern.
Will Canada catch up to America with streaming?
When Apple Music opens shortly (June 30th in 100 countries), and as Spotify continues to grow exponentially and they will, we will catch up with the United States, but we are just going to out-of-pacing by about an 18 month span.
Given all the social media activity available, and with the potential for significant traction by downloading and/or streaming tracks on the internet, how do labels gauge promising new acts? What do you want to see?
Unfortunately, analytics are a huge part of the decision making. We all know that today. Can a singer/songwriter still walk into my office today like (French Canadian singer/songwriter) Bobby Bazini did, and can we fall in love with the said artist, and sign them? The answer is yes. That is becoming more and more rare, however. The first thing that you do (with a new act) is you check their socials. You check any previous activity that they may have. (Toronto singer) Shawn Mendes is a great example (picking up millions of views and followers by posting snippets of renditions of popular songs on YouTube) that led to him getting great attention from Island Records.
The next thing you knew Larry there was a deal for Shawn, and deservedly so.
So there is sort of a plethora of ways to look at (new acts) but because we are trying to sell our wares to international, if we don’t have the analytics to support it--be it social or streaming analytics--then it’s a non-starter. Everybody knows that who is trading internationally in our business.
So when you go to your international affiliates with a new act one of first things they do is check out the internet-related activity? Assuming that there’s great music, and a belief in the artist there from you.
Absolutely. As matter of fact, they’ll smile when you finish playing them the track in the office in London, and then that is the next question. So you better have the right answer. That is to make sure that you built the artist at home so you can show them that there is some kind of a success on a micro basis.
Two decades ago, labels told artist managers, “Here’s your marketing plan.” Today, managers have bolstered the caliber of their staff, and expanded into marketing while labels are working with far less staff. Labels seem to be more into partnership relationships with managers today.
I agree. That speaks volumes for the sophistication of today’s management companies. They really are soup-to-nuts with their artists. But you know we have opened Rise Branded Entertainment which is branded marketing agency. We have 22 people inside this Rise strategy at Universal Music Canada. We provide production services. We do live. We work closely with the agents, and the managers producing events now.
[Rise Branded Entertainment’s strategy is to leverage Universal Music Canada’s roster of artists in order to provide content marketing services to clients, primarily in the form of videos, including documentaries, and web series. Rise Branded Entertainment, under managing director Ryan Apps, also provides such traditional agency services as social media management, creative and design and experiential activations.]
For a period 360 deals were the norm at all major labels. They wanted a piece of non-recording income. Just about everybody knew that the concept wasn’t going to fly.
The old cliché of 360 bored me even back then. We all knew that it wasn’t going to work. So we have another way. We have now realized that this is what we do well, and we are very much focused on that.
You found out as a label you weren’t suited to be the merchandiser and other things?
Instead of calling it (the newer deal) the 360, let’s call it the 140. By the way, it’s a really focused 140.
As well, the balance of power shifted largely because managers and artists have a clearer vision of what they want today, and because there’s less personnel at record companies to service what they are seeking. Also tour support by labels isn’t as much a factor today as in the past.
Ah, the 360. They call that “a 40 year precedent.” For example, when Doug Morris invented Vevo (in 2008) he was like Peter Finch in the (1976) movie “Network.” He wasn’t going to take it anymore. We all know the story about MTV (building a business on the backs of labels). Also in 2008, that was when the 360 was the sexy new term. Then every manager said, “Hold on. Not on my watch.”
There was just too much push back within the industry.
So we have since re-focused ourselves to do what we obviously do best, and we deserve to have more rights than the traditional ones (in traditional label deals) but, in truth, somewhere in the middle is intelligence. It’s what I call the teeter totter effect between management and label. That is a proper sharing of rights. As you know, when the artist goes on tour, and does 32 Canadian dates 7 months after the album has peaked, it is the agent, the manager, and the tour company that call us to do the marketing around the tour on an album that is 7 months dead. So everybody has to understand that if you are going to ask us (the label) to be the piñata of your marketing then there needs to be skin in the game in terms of strategy and timing. So we are spending a lot of our time with all of our partners with respect to a better timing strategy because the longevity of an album is very rarely anywhere near 7 months in this age.
Album cycles used to run 7 months to two years. How short are album cycles today?
There are albums that will last that period of time. There are probably 100 albums a year that you and I can say have scale; that would sell significant amounts of worldwide units in that they will have a 12 to 24 month lifespan. About 100 albums that I think are significant. Not a thousand. Not even 200.
You have been CEO/president of Universal Music Canada for 16 years, and you have been able to grow and evolve. What led to you being given that autonomy?
Performance. First off, Lucian doesn’t get up in the morning wanting to stress over Canada. So let’s be modest about that. Secondly, if the guy who is running Canada delivers (sales) numbers that are a significant share higher, and evident higher market share than, maybe, other territories, then he wakes up in the morning, and thinks, “We have other things to focus on. I think that Lennox is okay up there.”
Have you not been offered opportunities from within Universal Music Group outside Canada over the years?
I have had opportunities and for very specific family reasons have declined those opportunities. Also because I’m very much engaged here, and I do enjoy the career trajectory that I have had here.
What are the pluses of running an entertainment business from Toronto?
Everybody who comes here loves this city. Everyone who comes here loves the honesty of the music scene in this country. (Working from here) you feel like an ambassador, and I do. I have a great legit sense of pride. If I went to LA when I was supposed to a couple of times, would I be living on favors today? Who knows?
Meanwhile, you have immersed yourself in Toronto’s cultural scene with your positions at Canada's Walk of Fame, and Massey Hall and Roy Thompson Hall.
I have roots here. I understand the good fortune of having a three decade career working in this city.
You have most certainly evolved. From starting out in the mailroom to being the president/CEO overseeing all the facets of a very complicated, technology-driven business.
I believe that anyone who today is in their mid-50s loving our business will share the view that to be adaptive is energizing. To be adaptive and motivating the 27-year olds that fill our office, there is a joy in that, and a joy in learning that I never thought that I would appreciate at this stage. Our business has defined the need for adaptive learning behavior, and I love it.
What are some of the core issues in selling music today?
Essentially anyone running a territory will tell you that it’s three level chess. We have to keep the foundation on the first level, and the traditional model of doing business. Two, we have to educate those around us to make sure that they are acclimated to the changes that we are undertaking; and three, we have to make darn sure that not only are we on top of technology, but that we understand how to monetize it.
Almost all of the technological advances in the music industry in the past decade have been affiliated with distribution. Any difficulty keeping up?
Not at all. Distribution is distribution. The fact that we are now enjoying 30 plus percent streaming, and that digital is almost 50% of the business, it just makes the earlier point of adaptation. Strong music and great songs, irrespectively of distribution, is then about paying attention to the vehicles, getting them, and making sure that that we have the right partnerships out there. Distribution vehicles are irrelevant to me.
A flashback, if I may. While Napster oversaw the birth of music on the internet, it failed to monetize its activities. Who really missed the big opportunity in monetizing music was MySpace.
It’s historically correct that we missed Napster, and MySpace missed us.
They failed to devise a musical e-commerce system.
It’s dead easy to do so. Initially, it could have been ad-based, and they would be very present today. This is the old story. It’s analogous to physical retail many years ago. It started out with 37 retailers, and netted down to three. That’s precisely what we are going to be seeing in the streaming market. Dozens today. Some are regional. Most are world. This is going to end up a three-horse race.
As the popularity of music grew on the Internet, you were one of the first label executives to embrace the emerging phenomenon. In 2004, you oversaw the launch of Puretracks, Canada’s first commercial online music business.
Yes, iTunes was out after 2000 (in the U.S. but not launched in Canada in 2004), and we felt that they (Puretracks) had an MSN platform that we could set up, not to compete (with iTunes), but to accentuate. We did very, very well with that business in partnership with Bell Canada.
Despite the continued transition to digital with music, CD sales remain an important revenue source, according to The International Federation of the Phonographic Industry (IFPI), in such markets as Germany, Japan, and parts of South America.
It’s 70% physical in Germany, and 78% physical in Japan.
[Neither Spotify or Apple has launched a streaming service in Japan, despite it being the world's second biggest music market after the United States with just under $3 billion in overall annual sales. IFPI reports that 78% of music sales in Japan remain in physical formats like CDs.]
While the music industry’s global digital revenues grew by 6.9% in 2014 to $6.9 billion (US), according to the IFPI, they are only now on par with the physical sector
We have to be grateful for this. We have to be grateful world-wide, including Canada. Fifty percent of our revenue is still derived from physical because we do not have a scalable solution sitting here in the middle of 2015. So we have to make sure that we are paying attention in order to sustain us for another two years when we are able to scale streaming, and we get it to the numbers we need to aggregate our business. As you know, the music business was at one time a $30 billion business, and now it’s around $14 billion.
For a few years more I think that if people want to buy or listen to music they will be able to have it as a stream on subscription, buy it as a download or as a physical good as well.
Oh, that has already existed for a couple of years, and it will exist for a very long time. Physical is not going away in either vinyl or CD form for a very long time.
With vinyl sales climbing can we look back and, perhaps, conclude that the music industry dumped vinyl too quickly in the late ‘80s.
Only to have it resuscitated later. Vinyl is running a clear 5.5% of my total business. If we can get vinyl day and date (of release), it would be closer to 7%. The challenges that we have worldwide with vinyl is that we can’t get it within 90 days of a new release. If we could get it day and date. Of course, the adopters (early buyers) are those who are streaming, but they are also buying vinyl. And we are under serving the most active music buyer. What do they need first? They have to have it first, and we are giving it to them dead last. So if we can just correct that it’s not going to be such a bad niche business at 7%
One with a considerable margin for everyone as well.
Digital music sales offer better margins than physical formats because the costs of manufacturing, storing, and distributing physical product are eliminated.
If you take a digital album, and a physical album, and you bench the margin difference for the artist and the company, the digital album wins because there’s no physical product to be made. There’s no physical distribution. So it’s very clear that apples to apples that digital wins. The challenge is not that. The challenge is that we are in a song culture, and we have been quietly for 18 months, and the memory of a sustained album career for an artist and the concept album is going to be a distant memory. That’s the issue.
I’m not sure that true across the board. Yes, certainly that’s the case with pop music where it is similar to the ‘50s, and early ‘60s when singles ruled.
Well, the great news that saves that (album popularity) a little bit that I think needs to be said is that the number three most active Spotify list is singer/songwriter. That shows that there is an absolute hope for James Bay, and Hozier, who are very successful artists. So the fact is that there is some useful interest in the album in that particular genre.
How about with jazz and classical?
Jazz is not translating nor is classical in terms of streaming as yet.
Jazz and classical have always been niche sales genres, but the industry watered down those genres to hit the pop audience center. In doing so, the two genres may have lost their distinctiveness.
Also age is commensurate with adoption. You are dealing with the average singer/songwriter who is 23, and so is his audience; whereas with jazz and classics it’s is 30 years north of that. So understand that they (those fans) are going to take a lot while longer to make the transition. Diana Krall’s album (“Wallflower”) is still way more disproportionally physical than it is in any other form.
As is the case with albums by Adele, Michael Bublé, Il Divo and others.
Yes. There are all looming in and around the 70:30 ratio even today in mid-‘15.
How about country which is currently attracting younger demographics with artists melding country and rock? Has country become more tracked-based in digital sales?
No. I would say that country is much closer to singer/songwriter and it is disproportionately consumed by albums. It is not track-driven. It is track-driven at radio, but individual track sales on iTunes and streaming in country, to my experience, are proportional to the album. So where you are winning on the album is certainly on jazz, classic, singer/songwriter and country.
Many in the music industry have long grumbled that ad-supported music services would not work in any significant way. The services have had a difficult time monetizing music to advertisers. It was Lucian Grainge who recently stepped up to declare that free funded and ad-funded services need to move to a subscription model for the music industry to be healthy.
What Lucian is doing is paying attention. We are looking at a ratio here of 25% paid, and 75% free on Spotify (for the) world. You know the numbers. That’s 15 million against 60 million, total. I don’t think it’s any secret that we are collectively concerned---not just Universal, but all of us—at the unit conversion on that 15 million paid against the 45 million non-paid. So this is an evolutionary question. In other words, if there’s evidence that the free-tiered does result (in conversion to paid subscription) fine, but the problem that I understand is 8% of the Spotify users that pay do go back down to the free tiers because there’s not enough point of difference between free and premium. So if you are losing your constituency right back to your own free tier then you obviously need to have a bigger point of difference. That’s all that Lucian is saying.
[Spotify has 15 million paying customers, making up a quarter of the service's 60 million active users who listen to the ad-supported service.]
Subscription is the best long-term model, if only because the consumer is already acclimated to it with cable television, and mobile phone billing.
It’s not a surprise that the advertising model didn’t work. We could sense that many, many years ago but, because we had to be dragged out of the cave, we had to live with that model for a period of time, Now we are trying to evolve it because, as you know, we are not rich. We are monetizing tens of millions of songs streaming and not being properly remunerated. That’s a key point.
Universal Music Canada has a history of utilizing its domestic distributed labels, as well as its ownership investments in MapleCore in Toronto, and DEP in Montreal, as farm clubs in developing Canadian acts.
We do that. We have DEP in Montreal that we own a little under 40% of, and we have MapleCore here. Both companies are autonomous from the mothership, but they are, in fact, out there in the salt mines looking for artists to develop like we are. So really there are three A&R sources: Universal Canada, Maple, as well as DEP. As to your point we are proud to say that we are associated with pretty much all of Canada’s top independent labels who have very vibrant A&R rosters.
If you looked at the net incomes of most Canadian independent music companies, you’d wonder how some of them survive. They depend on government financial support. There is not a viable independent sector in Canada, anymore. It is a sector that relies almost fully on government support.
It’s hard for me to comment because I empathize with Canadian independents. Considering the fact that 6 is the new 10 (what once sold 100,000 units now, at best. sells 60,000 units), I think that it’s really important that Heritage Canada assists them, and they can compete on an even playing field, based on 6 being the new 10. So I certainly emphasize.
[As Canada’s music business has evolved internationally, government-based funding has also dramatically broadened. The bedrock of Canada's independent music sector is The Foundation to Assist Canadian Talent on Records (FACTOR), a non-profit organization that operates with contributions from Canadian radio broadcasters as well as the Canada Music Fund administered by the Department of Canadian Heritage.
In 2013-14, FACTOR funded a total of 2,334 projects across its 14 programs. In total, FACTOR administered $16.6 million (Canadian) towards the development, production, and promotion of Canadian music.]
Most Canadian independents have returned to the traditional label model of being as much management firms as they are music production companies. Still, take away government support, and these Canadian imprints could not operate.
How do you rationalize Universal Music, Sony Entertainment, Warner Music--the three multinationals in Canada--recently receiving substantial support funding from the Ontario government? Universal received $1.2 million. Why?
Well, essentially this. We have a choice. We could be branch offices of the United States, and have 85% of our repertoire be Lady Gaga, and Maroon 5, or we could have exponentially higher amount of our business be Canadian repertoire, and have a contribution to culture music in Canada. So we appealed to the government that because 6 is the new 10...
[The Ontario government recently awarded $14 million (Canadian) to 123 music companies in the second round of provincial funding from the Ontario Music Fund for 2014-15. All successful applicants are required to provide matching funds. Among the recipients were all three major labels, Universal Music Canada Inc. ($1.2 million), Warner Music Canada ($750,000), and Sony Music Entertainment Canada ($475,000).]
This is the Ontario provincial government, right?
This is the Ontario Music Fund, and the Ontario government. We appealed to the head of Cultural Industries in Ontario (Michael Coteau, Minister of Tourism, Culture & Sport, Ontario), and we appealed to the premier’s office. We shared this view with the independents that this (need for financing) was not in isolation. In fact, we are in need of empathy as well too, given the fact that 6 is the new 10, and that the costs of making these records is not less (for the majors) given the ROI (return on investment). So the government said, “Look, if your are putting out 60% to 70% of the successful records in Canada and that’s at risk then we don’t want you to be branch offices either.” I don’t think there’s anyone who could argue that we shouldn’t have our proportional share of that (funding). Modestly, if I take a look at Universal Music Canada directly and indirectly I would probably say that we are representing north of half of the music in this country.
No question. I would concede that if you were operating a major shoe supply company you’d get similar support from the Ontario government as well. But being that this is a cultural industry issue, it rings alarm bells with people.
Absolutely, it does, except what has to be said is that if you at look at the fact that there’s a $14 million fund, and you take the majors’ share of that fund which is not more than $3 million, that leaves $11 million for everyone else. So proportionally we are 20% funded, and everybody else is 80% funded, even though it’s inversely proportional to how much money that we spend in A&R.
You started at MCA Canada in Toronto in 1978.
Yes. I was 18. I walked in and I annoyed the bejeezus out of them until they would let me work in the mailroom.
Who was then running the record company?
Scott Richards was the head of the company (as record division GM). He didn’t know who I was for a good year. So I sat in the mailroom, and smiled at everyone. Three weeks later, to get me off their backs, they hired me. The morning they hired me for promotion I went to pick up the head of promotion who had lost his license for six months. I found myself driving around the head of promotion who had no license. I did the promotion job for one day. George Burns (VP, MCA Records, Canada) who was my immediate boss, pulled me into the office and said, “You know what? I think that you are a bit of a sales guy. So let’s put you over here.” I said, “I’ve only had the one day. Give me a few more days (in promotion).” He said, “No. We are going to move you now.” They were deciding what the heck that they wanted to do with me.
At 18, you probably didn’t have any idea of how a record company works.
I didn’t know what promotion was. I didn’t know what sales was. I just knew that I wanted to be there (at the company). The irony was that every day from my parents’ basement when I cold-called all of the labels, it was Polygram and EMI that I was calling--two labels that we purchased in later years--and not so much MCA because I liked their rosters better.
This was a period when MCA had the Who, and Elton John and little else.
They also had Olivia Newton-John. So I wasn’t jumping up and down yet which is why I was calling Polygram and EMI.
In 1981, you became Ontario branch manager at MCA. Was that your first taste of business?
Yes. I certainly didn’t know anything in those (previous) three years other than getting everybody coffee. The branch manager oversaw promotion and publicity and all of the fundamental things that you do. Now I was starting to say, “Okay, I see that there is a business here.” I would say that by 1981 I started to realize that there was an acumen that I might have on the business side.
That led to you being named VP and GM in 1993.
Right. At that point we had taken over Island, Chrysalis, and Geffen. We had U2 as early as “The Unforgettable Fire” (1984). At that point we were breaking Aerosmith, and we later had Nirvana’s “Nevermind” (in 1991). I had done the (joint venture) deal with Cargo Imports and Distribution on the independent side. So we had Offspring, and there were a number of independent deals that we had done. We were really having fun by ’93.
[In 1983, Island Records opened up in Canada with MCA as its distributor. Soon afterwards U2 released “The Unforgettable Fire” followed by “The Joshua Tree” which sold two million units in Canada. Also in 1983, MCA acquired Chrysalis as Spandau Ballet’s “True” was climbing the Canadian chart. MCA soon had hits with Pat Benatar, Billy Idol, and Huey Lewis. While Chrysalis left in 1988 when EMI purchased a 50% interest in the label, and Island left in 1989 after being purchased by Polygram, MCA's buyout of the Geffen label in 1990 resulted in a sizeable boost in business for the Canadian affiliate.] Montreal’s Cargo Imports and Distribution oversaw distribution in Canada for Sub Pop and other great alternative indie labels.
Cargo had the most eclectic roster. That idea was a lot of fun for 5 or 6 years until it imploded (filing for bankruptcy with nearly 500 unsecured creditors in 1998 listing debts of $3.77 million (Canadian) and assets of $3.4 million). It was great that we had Nirvana’s “Bleach” with Cargo.
[In 1990, Randy Lennox spearheaded MCA’s joint venture distribution deal with Montreal’s Cargo Imports and Distribution, then Canada's foremost independent import distributor and domestic one-stop. The company distributed more than 50 independent alternative-styled international labels including Caroline Exports, Sub Pop, and Dischord. It also handled releases by such Canadian alternative acts as Shadowy Men On A Shadowy Planet, Asexuals, Change Of Heart, and NoMeansNo.]
Cargo was then the epicenter of the alternative indie rock movement in Canada distributing labels that weren’t trying to be Geffen or trying to knock it out of the park.
I learned the value of the independent (sector) business based on that joint venture with Cargo. We came out of that period not only with great music, but with great success. That then parlayed a whole new look (for the company), and we grew almost to 50% (in sales) that wasn’t coming from Universal at that point. That was coming from local deals that we did based on the learning coming out of Cargo.
Your management style is largely credited for the smooth integration and restructurings of the company that followed the Universal/PolyGram merger in 1998; and more recently EMI Music in 2013. Was the successful integration of EMI in Canada easier given what you had encountered earlier with Polygram?
It’s never easy to merge (companies) when you are in a such a community as Canada where you like and know all of the people involved. From a purely business standpoint, Polygram took me from being a boy to being a man. It was 1998. I hadn’t had any real business experience. Doing that merger and the learning attendant to that merger, Larry really took me to manhood.
Working in a far different culture going forward as well.
A different culture that had to be assimilated. We still have many of the (former) Polygram people with us today I am proud to say. In regards to the integration of EMI, I will say again that it is never easy. There are a great many people I respect there that we couldn’t integrate for economic reasons. From a purely logistics standpoint, it was easier because we had integrated Polygram, which, at the time, was a larger company than ourselves who bought them. So the assimilation of EMI was practically easier in that way, but as I said it is never easy. You are dealing with people who love this business. Who, through no fault of their own, lost their jobs as a result of these things.
There was a sizable repertoire learning curve for your staff which had to assimilate the Polygram and A&M catalogs. Any surprises in the EMI catalog? Like having access to the Beatles, and going, “wow.”
First off, Deane Cameron (former president, EMI Music Canada) ran an outstanding company. So we are very respectful of EMI’s legacy. Like ourselves, Deane was immensely immersed in Canadian music. We were very fortunate to pick several EMI (Canadian) artists on the way who are with us today like Adam Cohen and July Talk.
With EMI being in Canada since 1947, there’s a wealth of catalog on hand.
You are right. It is far more than the Beatles. For a guy like me who loves the (EMI) legacy, it was like a dream. I couldn’t believe that I woke up, and we had EMI’s music within our company. It hasn’t been that long actually. Two and half years, and it’s (the catalog has) been joy to dive into it.
Your music collection at home suddenly got a lot bigger?
(Laughing) I had already done some horse-trading over the years, but the answer is, yes.
Do you recognize the young kid who in the mid-‘70s had all his buddies over to his parents’ basement to listen to Genesis’ “The Lamb Lies Down On Broadway” album? If they talked, you’d berate them because it was so important to you that they hear what you were hearing?
I do the exact same thing in my office today.
You are still a 100% music fan?
No question. But the guy who went to the mailroom because he loved music actually,—you know when I said at Polygram the boy became a man—I ended up loving business just as much. The great test is being able to marry the two. Anybody reading this agrees with this or they wouldn’t be reading this.
What international label heads have you respected over the years?
I have to say Mo Ostin. I would have to say Chris Blackwell. I spent a lot of time with Chris Blackwell because I have been associated with Island for 30 years. That guy is real. So is Mo Ostin who I admire. He was at Warners when it was running on all cylinders.
Who do you currently admire in the music industry?
For me, because I love to study smart people, that list includes Lucian Grainge, Scott Borchetta, Daniel Glass, Max Hole and at least two dozen others I could name that I have been fortunate enough to work with or be around. Here’s what they did which I think made them smart. They understand the relevancy of Canada as an artist development-breaking market. Not as a market that is 3.5% of the world, and 10% of the U.S. but understand how critical it is for artists like James Bay and Sam Smith to start here. People that have recognized that are the people that I associate with. Yes, there’s a bias in what I am saying, but those people...
Lucian recognizes Canada more than any other leader that I have worked under over my 30 years plus in the industry.
Given your large circle of close friends, if you had a personal crisis who would you contact?
In Canada, it certainly would be Gary Slaight (Slaight Communications), (manager) Bruce Allen, and (producer) Bob Ezrin for certain. Internationally, it would be Jim Urie (former pres/CEO, Universal Music Group Distribution), a very dear friend of mine, as well as Daniel Glass (founder/CEO, Glassnote Entertainment Group), and Boyd Muir who works with Lucian (as executive VP/CFO, Universal Music Group). A real great guy. If I was having personal or business challenges that were complicated, that would be my list.
Larry LeBlanc is widely recognized as one of the leading music industry journalists in the world. Before joining CelebrityAccess in 2008 as senior editor, he was the Canadian bureau chief of Billboard from 1991-2007 and Canadian editor of Record World from 1970-89. He was also a co-founder of the late Canadian music trade, The Record.
To learn more about Larry LeBlanc and to see some nifty historical photos check out:
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