I.B. BAD:
THE HEAT IS ON

THE NEW DEAL: The influx of cash from streaming is a game-changer for the new school of deal-making, as the pursuit of record deals for hot artists is changing dramatically. Labels are more willing to take risks in regard to those terms, and artists have more freedom because they can start the process without necessarily having a label as a partner in the traditional sense. Streaming and social networking have democratized development in favor of artists who can create a buzz without major-label involvement. But one thing hasn’t changed: An act’s chances of scoring a mainstream worldwide hit are dramatically increased if it’s signed to a major label. Otherwise the act could strike out commercially, as happened with Frank Ocean—although it appeared that Ocean didn’t care, unlike most artists.

Because of the revitalization of the business, the majors are now able to make calculated investments and throw down major cash for artists who have been able to show the proper analytics, as the 360 deal becomes a thing of the past for those artists who can show that they can seriously move the needle. Meanwhile, major artists who come up for renegotiation have huge bargaining chips in that they require less bandwidth from the majors. It isn’t unusual now to see hit writer producers and artists getting their own labels or imprints as part of this relatively new phenomenon. Artists’ increased power and leverage is offset to the rights holders by the huge money being generated from streaming and the associated advances (like the $1.5 billion Spotify reportedly paid UMG), as massive repeated listening by the actives, catalog sales, low artist royalties and low overhead create a perfect storm for investment in the right brand.

HEAT CHECK: Craig Kallman’s Atlantic, Monte Lipman’s Republic and John Janick’s Interscope are three of the hottest labels in the business, and each has achieved its heat employing a distinct approach to A&R. Atlantic is arguably the most research-driven major; that strategy has been in place throughout Kallman’s tenure, and it’s clearly paying big dividends this year. The company is very active in deal-making, throwing down real cash as a way of taking acts off the table.

By contrast, Republic, previously known for a research orientation, is now in the classic A&R game and holding its own, with the Lipmans, Wendy G. (who A&Rs The Weeknd and Ariana Grande), Charlie Walk (who signed Julia Michaels, DNCE and Hailee Steinfeld), up-and-coming hotshot Tyler Arnold (who snagged Post Malone and Metro Boomin) and Rob Stevenson with Ben Adelson (James Bay) all heavily involved in signing acts.

Interscope’s approach is a blend of research and hands-on A&R, a longtime specialty of Janick and President of A&R Aaron Bay-Schuck. And while Janick’s power alley has been rock acts that cross to pop dating back to his years at Fueled by Ramen, his deep dive into hip-hop at Interscope has been similarly on the money. Recent signings Blackbear (Alamo) and Daya are also rumored to have been in the multimillion-dollar range.

MIDYEAR MARKETSHARE TAKEAWAYS: At the halfway point of 2017, some industry pundits are already declaring Atlantic as marketshare champs in both the SPS and streaming competitions. And although their YTD figures—10.4% SPS and a stunning 12% in streams—is nearly two percentage points ahead of #2 SPS Columbia (9.5%) and three percentage points over #2 in steaming Republic (9%)—aren’t insurmountable, this is clearly Atlantic’s race to lose.

Columbia—still being overseen by Sony Music CEO Rob Stringer until he solves the puzzle—is the wild card in this competition following a recent reorganization that, when completed, will fold RED into The Orchard. RED accounts for 3.2% of Columbia’s SPS share at midyear; if The Orchard’s 2.4% were added in as well, Columbia’s share would rise to 11.9%, vaulting Big Red to first place. That would be a radical shift in the overall. It’s unclear at this point how Sony will handle this issue.

One of the most intriguing battles is inside UMG, pitting surging Interscope against perennial power Republic. At the six-month mark, for the first time since the sales-to-streaming transition gained critical mass, Interscope holds a slight lead over Republic in SPS, 7.8 to 7.7, making Janick’s company #3 in the overall standings, while Lipman’s label group holds close to a percentage point lead over Interscope in the streaming stats, 9 to 8.1. Interscope is #4 in streaming share, while Columbia (8.7%) is #3. The various subplots, against the backdrop of the streaming revolution, are making 2017 a year to remember.

EPIC’S KNOCKOUT PUNCH: Epic’s marketshare—3.6% in SPS and 4.2% in streams—is several weight classes below that of Atlantic, Columbia, Republic and Interscope. But the label is punching way over its weight at radio, with no fewer than five upwardly bulleting singles on the Mediabase Top 40 chart. The firepower is being generated by the exploding DJ Khaled, with a pair of big tracks, while French Montana is breaking big and Camila Cabello and the returning Fifth Harmony are gathering steam. All four have singles in the Top 30 of the Mediabase Pop chart.

Epic’s promotion team, led by EVP Promo Todd Glassman—who exited the label last week—EVP Benny Pough and SVP Promo Sujit Kundu, has attacked radio with aggressive power combinations. Glassman’s deal was up, and they couldn’t come to terms on a new contract, according to insiders. He’s already fielding multiple offers from some savvy players.

Epic has sustained its momentum throughout the year, and now, under the new leadership of Sylvia Rhone, the label is on fire, with all this heat coming on the heels of the exit of L.A. Reid, who was responsible for bringing all the current high scorers to the company.

CHAMPIONSHIP BELT: Khaled’s new album spent much of the week ending 6/30 deadlocked with Interscope alternative-crossover specialists Imagine Dragons for #1 SPS before the Epic hitmaker finally punched it into the end zone with just over 150k—just 2k north of the Dragons’ total. Khaled’s weaponry in the nip-and-tuck battle included not only his current smash featuring Justin Bieber and new single with Rihanna and Bryson Tiller but also his overarching status as the king of social media and quintessential streaming demon.

In the battle for #1, how big a factor will singles sales be? Janick, understanding how 69-cent singles at iTunes can impact marketshare today, dropped the Imagine Dragons’ “Believer” and expected follow-up single “Thunder” to 69 cents during release week, while Khaled’s singles stayed at $1.29. The move appears to be working: At press time, “Believer” was #2 at iTunes, while “Thunder” was #21 and climbing. Khaled’s singles, meanwhile, were #3 and #6. It bears noting that 69-cent singles count as much as $1.29 full-price tracks on the charts. Interscope is one of the kings of the 69-cent gambit, along with Atlantic, Republic and Capitol.

TALKIN’ ’BOUT BOYS: Atlantic has reportedly closed a multimillion-dollar deal for Why Don’t We, a five-member boy band put together by Randy Phillips. The group’s analytics on the socials and Spotify were so strong that a bidding war ensued, which ultimately saw Kallman throw down the elephant-bucks guarantee. That sets up an old-school boy-band battle with PrettyMuch, a new group SYCO/Columbia imprint. Sonny Takhar, who assembled the group, has some extremely useful experience in this sector: The former SYCO prexy, who will launch his own Columbia imprint later this year, played a huge role in the creation, creative development and marketing of One Direction. There’s a huge early buzz on the first single, and they’ve got some big TV looks coming up later this summer.

HIGH TIMES IN NASH VEGAS: Those skeptics who badmouth country for coming late to the streaming party will likely be stunned to learn that country streams YTD are 11.2b—up a stunning 67% over the same period a year ago. That increase has outpaced the industry as a whole; streams on Spotify and Apple Music are up 60% y-o-y. On the subject of scale, Music Row is still buzzing about the megabucks Sony laid out for Tim McGraw and Faith Hill, and UMG’s deal for Carrie Underwood, both said to be north of $8m, as well as the massive marketing commitment UMG made to Shania Twain. The two companies are banking on the ability of Hill, whose last release was in 2005, and Twain, who hasn’t put out an album since 2002, to re-engage the country audience in a climate that has changed dramatically since the early years of the century.

NAMES IN THE RUMOR MILL: Donald Glover, Joel Klaiman, Joie Manda, Joey Arbagey, Mike Caren, Charles Goldstuck and Dan McCarroll.