According to Digital Music News, the recently established chairman and CEO of Universal Music Group Lucian Grainge has been put in the hot seat due to his recent downsizing of the company through ineffective business practices. If the atmosphere around the organization does not change in the coming months, it’s very likely he’ll be fired and replaced only six months after his start.
Universal’s parent company Vivendi SA has voiced their condemnation through Vincent Bollore, saying they want to “fix the free problem” that streaming services seem to be dedicating themselves to more and more frequently. An anonymous source told Digital, “this is all coming from Vivendi. They don’t really understand how free [content] works [in music].”
About six months ago, Rob Wells – former CEO – introduced the ‘freemium’ way of conduct by creating close ties with Spotify and encouraging ad-supported tiers of service for users. This move was a difficult one to pull off, however, as sites like YouTube failed to bring in enough paying subscribers in the past. At the time, these decisions were seen as detrimental to the company’s prosperity, allowing Grainge to easily sacrifice Wells by getting him fired. His ideas were mirrored by Doug Morris, CEO of Sony Music, who had this to say: “Basically, I equate ‘free’ with the decline of the music business. Why should anyone pay for anything if they can get it for free? In general, free is death.”
Now, with the position all his own, Grainge hoped to change the tide and bring back paid services. He sought the help of past UMG executive Jimmy Iovine to help restore balance to the force and reintroduce paid services with limited free access back into the market. Their efforts, however, did not go as planned.
Grainge, Iovine, and the Universal execs began to close the deal on a 3-month trial period with Apple Music, that would eventually (and forcibly) lead to a required paid membership. They attempted to pressure Spotify to do the same, but the streaming service was not keen to abandon their ad-supported practices that got them to where they are. With Spotify holding tight to their free and ad-supported methods, Universal is left with a significantly lighter wallet. The kicker? Apple Music is in talks about switching to a similar model for its users, to compete with Spotify and other services if nothing else.
Now, it seems that the absence of the ideas which got Wells fired, and which Grainge spoke out against as his main stance for “fixing” the problem, is exactly what’s alienating UMG from the rest of the gang. Services from Youtube, Spotify, and Soundcloud – while they are dealing with respective monetization backlash from their users – have all opted for a primarily ad-supported business model as their means of income.
Meanwhile, Universal has been reported to have been conducting studies to project their revenue were they to eliminate the use free or pirated material entirely. Set up by Vivendi itself, the projections point to a whopping 17x increase in revenue over the next three years. UMG’s PR department has denied any such activity going on, saying if we want to know the truth we should be contacting Vivendi directly.
Now, as Universal’s resources dwindle by the day, it seems that Lucian Grainge will face the chopping block if his approach doesn’t drastically change (and soon).