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I.B. BAD: SEA CHANGE

Is what happened last week between Frank Ocean, UMG and Apple game-changing? It certainly was for Universal, in that it triggered Lucian Grainge’s mandating an end to all exclusives—notably including a deal that had been in place between Apple, Lady Gaga and Interscope. How will this chain of events impact the relationship between Universal and Apple, which in effect provided Ocean with a backup plan in his ejection from the major-label system? How will the artist’s newfound autonomy play out in terms of his career moving forward? How will the missing parts of a complete worldwide strategic rollout fall into place to help build a bigger global brand for the artist? Will the tens of millions of Spotify users around the world eventually get access to the music? Who will be responsible for trying to get radio airplay, which continues to be the single most effective means of breaking records and triggering artists’ careers? The above elements will be crucial in building the all-important monetization of the brand for the artist. Are Ocean and his team looking to make a deal with another distributor or major to pick up the missing pieces of a worldwide plan?

How much was Apple willing to pay Ocean as an advance for the exclusive, and how much are these big exclusives worth to Apple in general terms? That’s determined by how many new people they can get to sign up for Apple Music at $10 a month on the heels of the exclusives. Remember, Apple is one of the richest companies in the world and has billions in cash to invest. The company also has the game’s best analytics in place to help determine how important an artist brand is at any given moment in time. 

How did Ocean break free from UMG? One plausible theory is that Universal, having grown weary of the artist’s constant demands, wanted him gone and chose to let him buy out of his deal. Agreeing to the arrangement, Ocean, manager Mark Gillespie of Three-Six Zero Group and attorney Laurie Soriano then secured a $5 million advance from Live Nation as part of the guarantee for the artist’s upcoming tour and used that check as payment for his release following the delivery of the last remaining album on his deal, the visual album Endless. According to Ocean insiders, Universal agreed to the deal unaware of the fact that Ocean had another completed album ready to self-release one day later, minimizing the value of the final album under the deal with Universal. Most recording contracts contain a clause preventing the artist from releasing a second album on top of the first, causing legal minds to ask whether Ocean is in breach.

This unprecedented situation and its continuing repercussions leads to the inevitable macro question: Will the relationship between the rights holders and Apple deteriorate because of the Ocean episode?

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