RAINMAKERS’ BACKSTORIES:
LARRY MESTEL
It’s fitting that Larry Mestel began his career under the tutelage of a legend—Island Records founder Chris Blackwell—because he’s made his mark inventively overseeing the catalogs of numerous legends. The deal that put Mestel’s 2006 startup Primary Wave Music on the map was shelling out a reported $50 million to Courtney Love for the catalog of her late husband, Nirvana’s Kurt Cobain.
In the decade and a half since, Primary Wave has amassed a jaw-dropping 20,000-song treasure trove encompassing the copyrights to works by Bob Marley, Smokey Robinson, Hall & Oates, Stevie Nicks, Prince, Burt Bacharach, Ray Charles, Sly & the Family Stone, James Brown, Bing Crosby, America, Paul Rodgers, Luther Vandross, Count Basie, The Four Seasons, Whitney Houston, Leon Russell, Free, Toots & the Maytals, Aerosmith, Def Leppard, War, Robbie Robertson, Boston, Alice Cooper, Paul Anka, Steve Cropper, Glenn Gould, Devo and Donny Hathaway, among other towering figures.
As I.B. Bad recently noted, 15 years ago, when nobody else was considering the asset value of song catalogs, Mestel came along with an audacious business plan focused specifically on just that. The mainstream biz initially viewed Primary Wave as an outlier, but Mestel silenced the doubters with his innovative approach to exploiting the works of the writers and artists his company represented. For example, he was an early exponent of brand expansion for creators, developing everything from e-greeting cards for Smokey Robinson to an animated series about John Oates’ mustache.
These days, Mestel—in tandem with longtime associates Justin Shukat and Adam Lowenberg and the rest of the PW team—is really rolling. Along with serial disruptor Merck Mercuriadis, he’s setting the pace for the music-asset explosion, demonstrating the ever-escalating value associated with song catalogs. With projects like the high-profile Whitney Houston biopic, he’s confirming the company’s expansive reach.
Mestel has amassed an enormous war chest and now reliably numbers among the biggest bidders as the plums of modern songwriting hit the auction block; the company is said to have north of $1.5 billion in cash and assets under management and has spent more than $1 billion on its acquisitions to date. Not even a global pandemic could slow him down, as we found when we tracked down Mestel in his remote office.
The New Jersey native realized he wanted to get into the music business in 1988, four years after graduating from UMass Amherst, when he was introduced to Chris Blackwell and then-PolyGram chief Alain Levy. The following year, he was offered a job as a senior executive at Island Records.
“Mel Klein, who was working with Chris, was leaving, so he recruited me to take his place,” Mestel recalls. “He introduced me to Chris, and it was a very short interview. When I left, I said, ‘Mel, I don’t think that went very well. It was only like five minutes.’ And he goes, ‘What are you talking about? That’s five minutes longer than he normally spends with people.’
“I didn’t hear anything for three months. And one day Mel called me up and said, ‘You’re starting next week.’ And I said, ‘What do you mean, I’m starting next week? So what am I making?’ He goes, ‘What do you care? Show up on Monday and be ready to work.’ That’s how I started at Island Records. I was working for a consulting firm out of Massachusetts. I was helping PolyGram buy Island. That’s how I met Alain and Chris, who figured I knew enough about Island from the sale process. I thought I knew a lot about the music business, but I knew absolutely nothing, which I realized the first day I showed up at Island.
“Even today, almost 30 years after I started at Island, everything that I know and do today is the result of working with Chris Blackwell for 11 years. I’ve worked with a bunch of other people since Chris, but absolutely everything—deal-making, marketing, artists, relationships, etc. —I learned from being mentored by Chris Blackwell. No one else even comes close. I learned very early from Chris the perspective of the artist always being the most important, first and foremost.
“After 11 years of working with Chris, I thought it was time to spread out a little bit. And Arista was much more in the pop-culture record business, whereas Island was the quintessential independent. Even though it was acquired by PolyGram, it was still run independently by Chris. And it was world music and rock. So I saw Arista as an opportunity to expand in the pop-culture music business.
“What happened was that Bertelsmann announced that LA would be coming in to take over for Clive, and Strauss Zelnick called me up, said, “Hey, I want you to meet L.A. Reid. He needs a partner, and I’d like you to partner up with him.” Arista was much more of an urban and urban-pop label, and it was an area of the business that I hadn’t had a lot of exposure to, so from that perspective, it was a great learning experience. We’d turned it into one of the largest labels in the world by the time I left in 2004. But then the Sony merger was announced, and Alain asked me to come to work with him at Virgin, so it was the right timing and it made sense. And I had always loved Levy; I thought he was an exceptionally brilliant record executive. I had always enjoyed working with him at PolyGram. So I went to Virgin Records in 2004.
“[Levy] was the architect of PolyGram Records, which he turned into the biggest music company in the world, and that was the precursor to Universal.”
Mestel became EVP/GM of Virgin, which at the time was “the doormat of the business,” he acknowledges, “and there was not a lot going on. Most artists that were signed there had moved on to other labels. I was there for two years until Jason Flom took over for Matt Serletic, and it was the perfect time for me to try something else. I’d always had a little publishing and marketing company on the side, and I decided that if I was ever going to be a full-time entrepreneur, that that was the time to do it. Alain was great to me; he let me out of my deal, and I started Primary Wave in 2006, and I got very lucky—I raised a lot of money in a very short period of time to start it. We bought the Nirvana catalog, the MGM/United Artists catalog and a bunch of other incredible artists to start off, and we built a brand and a legacy for legends and icons.”
That area of the business was far less understood a decade and a half ago than it is now. In fact, Mestel is viewed as the architect of this sector. How, we wondered, did he convince people to invest in something that was at the time considered wildly speculative?
“It really wasn’t easy, but I got lucky,” Mestel responds with characteristic humility. “I met the right people, fate put me together with a company called Plainfield Asset Management, who were really great partners to start the
company with. I mean, that’s a whole conversation about how I got through to them. Really, it was very fortuitous, meeting the right partners at the right time. We had a 50/50 relationship. They put up the capital, we split the equity and they were great partners until the financial crisis, when they went out of business, and I bought their 50% of the company back. They were gentlemen and amazing partners, and they helped me start the business financially. There’s really no other way to say it other than sometimes it’s better to be lucky than good.”
