NEAR TRUTHS: BEEF AND BOUNTY

BEFORE THE BAR(S): With Kendrick Lamar’s new set, GNX (pgLang/Interscope), dominating DSPs and hurtling toward a #1 chart bow, biz chatter is going bananas over Drake’s bizarre legal action against UMG. The petition filed by his legal team, which names the label group and Spotify as defendants, alleges RICO violations as part of a scheme to “illegally” boost Kendrick’s Drake-dissing “Not Like Us.” UMG’s response called the notion that it would intentionally undermine one of its acts “offensive and untrue” and deemed the legal arguments in the complaint “contrived and absurd.”

Whatever twists this saga ultimately takes, it’s a possibly unprecedented example of rap beef turning into a legal battle involving giant corporations. But it’s certainly not a great look for Drake, particularly in the context of hip-hop’s chest-beating machismo, to be running to the courts for relief after getting a lyrical pasting. (Kendrick could even submit his own brief, if it please the court, in the form of a coruscating new track.)

If his legal gambit is, as some insiders are alleging, a cobbling-together of conspiracy theories with little evidentiary basis, what is Drake’s next move? Why have Theo Sedlmayr and the rest of his legal team led him down this expensive, perilous path? How will this affect his brand? Will it do irreparable damage to the relationship between the artist and Universal? Once an artist is this unhappy, can the rift ever be repaired?

EMERALD CITIES: In any case, Kendrick’s new release certainly numbers among Q4’s home runs, and the smart money says Wicked is likely to be on that list as well. The Republic soundtrack to the giant flick is said to be seriously outperforming expectations and—with multiplex action through the roof—will likely settle into robust weekly sales for months on end.

You can add Columbia’s Tyler, the Creator to the season’s bona fide smashes. Warner’s Linkin Park and Alamo’s Rod Wave look strong, while Interscope’s breaking Grace Abrams and GloRilla are leveling up. It should be a festive holiday season for Island’s Gigi Perez and Atlantic’s ROSÉ (the latter just inked a pub deal with Warner Chappell and has an album due on 12/6) as well. The Christmas lights are already twinkling at the DSPs, and stockings are hung for Taylor Swift’s pending Anthology drop. Word is that Beyoncé is starting to promote her upcoming tour, which should be enormous, beginning with a halftime performance during the NFL’s Ravens-Texans Christmas game airing on Netflix. Talk about a kickoff. Will it have a halo effect on the Grammys? All in all, despite the turmoil and uncertainty in the world, we’re looking at a merry yuletide and a holly, jolly biz.

HANDS ON THE TILLER: There’s been much chatter of late about succession, which feels wildly premature—nobody in a top job is going anywhere—but gives industry gadflies something to buzz about at cocktail gatherings. It’s interesting to note that the publicly traded corporations, especially European-owned ones, have historically chosen execs from outside the music world for management. Look at the histories of EMI, BMG and WMG over the last 20 years, and you’ll see a long list of C-suite occupants (Guy Hands, Eric Nicoli, Strauss Zelnick, Eloni Leoni-Sceti, Thomas Middelhoff, Rolf Schmidt-Holtz, Edgar Bronfman, etc.) who didn’t come from music. Yet the most successful companies have always been run by music people.

In 2008 BMG sold its 50% stake back to Sony, and in 2012 UMG gobbled up EMI. In both cases, real music people were then running the companies doing the acquisition. WMG’s value had been decimated by Wall Street geniuses, who sold the company to Len Blavatnik for $3.3b in 2011—by the time of this writing, its valuation had quintupled (market cap $16.5b).

REDISTRIBUTION OF WEALTH: Considerable discussion nowadays centers on how the business is moving more and more toward a distribution model. The labels continue to cut deals for distro rights, and the Big Three keep building out their distribution systems in hopes of capturing all that sweet indie-label business. When Sony acquired The Orchard in 2015, the domino effect was felt across the industry, and the last five years have seen UMG and WMG make their own moves to take back a piece of that business. Messrs. Pastor and Myers at Virgin have been effective at fortifying their unit and look to be real contenders. Warner, meanwhile, is said to be looking for an acquisition and—after a look at Believe that didn’t come to fruition—is thought to have been kicking the tires of both STEM and Downtown. Will they pull the trigger, or do they have another move planned?

The traditional deal model saw 20% go to the artist and 80% to the rightsholder. Now, much to the regret of the latter, the equation has been completely inverted: The distro model apportions 80% to the creative entity and 20% to the distributor. That 20% is diminished dramatically when big acts renegotiate their deals with the majors. According to the lawyers doing those deals, superstar artists are looking to keep their distro partners under 10% but are willing to let labels recoup out-of-pocket costs in marketing.

That’s a radical change in who gets the goodies. If you doubt it, take a peek at The Orchard’s market share, which hovers in the neighborhood of 8%.