Universal Music Group Jose Arroyo Business Management 2021 1 Background UMG is the one of the largest music companies in the world. The company oversees various business ventures pertaining to recorded music, music publishing, live events, and merchandising. UMG owns a dynamic musical catalogue that attracts fans and supporters from all walks of life. The company’s profound music library, innovative approach to music distribution, ability to promote artists, and operational adaptability is the reason why they captured 28.9% of the total recorded music market share in 2016, equalling $5.27B in total revenue, according to statista.com. 2 Leadership Sir Lucian Grainge is the CEO and Chairman of Universal Music Group. Grainge has over 30 years of experience in the music industry and has worked with many artists in that three decade time span. He began working at UMG in 1993 as GM of A&R and Business Affairs. Through his innovative approach to music distribution, accompanied with his knowledge of the industry, he continued to climb the organizational ladder, and eventually was named CEO and Chairman in 2010. He has been recognized as one of the most influential executives in the music industry on many occasions, and continues to lead UMG into a future of prosperity through innovative asset acquisitions and joint ventures with various entertainment companies. 3 Company Structure UMG’s organizational structure begins with Sir Lucian Grainge. Although he is the CEO and Chairman of UMG, the company’s global reach does not allow him to directly supervise all business operations. This is how he has chosen to divide responsibilities and business focuses: • Michelle Anthony - VP of UMG - Oversees U.S. Commercial Services (sales, live events, label merchandising, college marketing, and fan engagement. • Frank Briegmann - President & CEO of Central Europe & Deutsche Grammaphon - Responsible for UMG operations in most of the Eastern region of the world. • Jody Gerson - Chairman and CEO of Universal Music Publishing Group - Heads all publishing activities. • Jeffrey Harleston - General Counsel and Executive VP of Business & Legal Affairs - Oversees all business transactions, contract, corporate policies, and litigation. • David Joseph - Chairman and CEO of Universal Music UK and Ireland - Exectutes operations in UK and Ireland, including various record labels, such as Capital, Decca, Island, and Virgin EMI. • Andrew Kronfeld - Executive VP of Marketing - Works directly with labels regarding A&R activities, ensuring artists receive the greatest marketing strategies and creative development • Boyd Muir - CFO and Executive VP of UMG - Manages financial operations, which include asset management, information technology, accounting, and human resources. • Michael Nash - Executive VP of Digital Strategy - Heads all digital business development activities across the globe. • Gautam Srivastava - Executive VP of Human Resources - Supervises all human resource activities on a global scale, including compensation, benefits, recruitment, people development, pensions, and leadership planning. • Will Tanous - Executive VP of Communications for UMG - Responsibilities include shaping and communication UMG’s business strategy, managing internal and external communications, and public policy/government relations correspondence. 4 Organizational Chart 5 Core Values Artistry Innovation Entrepreneurship UMG’s three core values are Artistry, Innovation, and Entrepreneurship. In their mission statement, UMG states they are committed to being a leader in the music industry’s technological transformation. This engagement enables their innovators and empowers their artists to explore new opportunities that emerge. 6 Social Responsibility UMG has partnerships with various organizations that enables them to use the power of music as a catalyst for positive change in the community. They promote and support various music programs and foundations, such as: Little Kids Rock - an organization that provides instruments and music training to underprivileged schoolchildren at no cost. Musicians on Call - a foundation that brings live and recorded music to the bedsides of hospital patients. Musicares - a foundation that provides assistance for people in the music industry during times of need. Sinfini for Schools - an organization that allows music teachers in the UK to download teaching resources on classical music for 11-14 years old students. XLP - A foundation that provides assistance to inner city youths struggling with various social and economic issues. Pencils of promise - a community based organization that creates schools and programs across the globe. 7 Goals and Objectives Some of UMG’s goals include: • Continue to find new revenue and marketing opportunities for all artists on their roster • Make music streaming revenue a sustainable source of income • Acquire assets that extend the company’s reach and attract music listeners of all demographics • Operate current assets through innovative marketing strategies that allows for greater revenue • Identify and develop recording artists and songwriters in the music industry • Collaborate with technology companies in order to drive the music industry forward • Cover all aspects of media and entertainment, not just music • Utilize data in order to find untapped markets in the music industry • Take advantage of new opportunities emerging through the advancement of technology 8 Products and Services UMG provides a wide array of products and services related to music and media. Obvious products and services include physical/digital albums and merchandise. However, the company also has the ability to operate in many other fields of the music industry through the assets they posses. Publishing rights and licensing agreements allow UMG to explore emerging markets in the industry, such as music streaming platforms, in order to capture further revenue. Notable products recently made possible by UMG include albums from Drake, and The Weekend, “More Life” and “Starboy,” respectively. Upcoming products worth mentioning include the 50th anniversary edition of The Beatles, “Sgt. Pepper’s Lonely Hearts Club Band” album, which UMG is expected to promote heavily through new physical packaging and on various online music streaming platforms. 9 Recent Deals and Acquisitions Although record sales are important to the company, new revenue being made possible by music streaming platforms has allowed UMG, as well as the music industry as a whole, to see substantial market growth. Last month, UMG executed a licensing agreement with Spotify, the leading music streaming platform. This agreement will allow Spotify access to UMG’s enormous musical catalogue at a discount royalty payment rate. In return, Spotify will restrict UMG’s new albums to Spotify’s paid subscribers for the first two weeks of the album release. The deal was made in order to incentivize upgrading from a free Spotify account to a paid subscriptions, which will in turn equal greater revenue for UMG and the recording industry as a whole. UMG is the first of the Big Three music companies to strike a deal with Spotify, illustrating a desire to collaborate with technological advancements and cater to changing music consumption preferences. UMG also acquired the licensing, publishing, and merchandising rights to the late great Prince, an iconic figure in the music industry. In February, UMG and Prince’s Estate made an agreement that allows UMG to operate and distribute Prince’s musical library, consisting of 25 albums and various unreleased material. UMG’s commitment to making music streaming a sustainable source of income is illustrated by this deal. Having the ability to manage this valuable asset and collaborate with Prince’s Estate on distributing his unreleased musical works puts the company in a profitable position. It also allows UMG to expand their reach to new music lovers, discover unexplored opportunities through song placement, and renovate aged recordings by combining them with modern talent. 10 Culture at UMG According to 24 reviews of UMG’s company culture, ranging from intern positions to executive roles within the company, UMG has a dynamic culture influenced by artistry, innovation, and communication. All 24 reviews on Indeed had a positive review, with 100% of them being graded as a four to five star experiences. Current and former employees praised the company for their friendly, yet focused atmosphere. Many reviews stated that management was very helpful and available for direction and guidance as needed. Collaboration and teamwork was also highly praised. Reviews reflect the notion that employees at UMG enjoy working in the music industry, and that the company is effectively acquiring talent that fits into the company culture. 11 Management According to Reviews on indeed.com, management at UMG is supportive, yet allows employees to work independently with little supervision. The notion that there is not a high degree of micro-supervision illustrates the idea that UMG’s management team places trust and confidence in the ability of their employees. It also shows belief in their recruitment process and hiring capabilities. Although there were a few negative reviews conveying the notion that some of UMG’s upper management is too demanding of their employees, 80% (24 out of 30) of the people who provided their perspective gave management a four to five star rating. There were also no complaints about job roles and responsibilities, meaning duties were described clearly and effectively