Is AI An Existential Threat To The Music Business Or The Thing That Will Save It?

Sir Lucian Grainge, the chairman and C.E.O. of Universal Music Group, the largest music company in the world, is curious, empathetic, and, if not exactly humble, a master of the humblebrag. His superpower is his humanity. A sixty-three-year-old Englishman, who was knighted in 2016 for his contributions to the music industry and has topped Billboard’s Power 100 list of music-industry players several times in the past decade, Grainge is compact and a bit chubby, with alert eyes behind owlish glasses. He isn’t trying to be noticed. He presides over a public company worth more than fifty billion dollars, but he could be a small-business owner who sells music in a London shop, as did his father, Cecil. On earnings calls, Grainge can sound more like a London taxi dispatcher than a chief executive. But woe to those who mistake his European civility for a lack of competitive fire. “He is so deceptive with that little kind face and those little glasses,” Doug Morris, the previous chairman of UMG, told the Financial Times in 2003, when he was still Grainge’s boss. “Behind them, he is actually a killer shark.” In 2011, Grainge devoured Morris’s job.

As UMG’s leader, he has solidified the dominance of Universal, the largest of the Big Three label groups, helping it to overtake Warner Music and Sony. More than half of Spotify’s twenty most streamed artists of all time are signed to UMG. But Grainge is also the consummate music man, with forty-five years of experience on both the publishing and the label sides of the business. He oversees a long list of formerly independent labels, including Interscope, Republic, Capitol, Motown, and Island. “Lucian’s like the league commissioner,” Monte Lipman, who founded Republic with his brother Avery, told me. Don Was, the head of Blue Note, UMG’s storied jazz label, said, “He’s the smartest motherfucker in the music business, period. He can operate in the artistic world, and he can operate in the financial world, which are two very different beasts.”

Grainge lives and works in Los Angeles, but West Coast fitness culture has yet to make a convert of him. He neither skis nor golfs, although he sometimes drives the cart for other golfers, doing business between holes. He doesn’t drink or smoke, and, as for drugs, “I panic when I have to take an aspirin,” he has said. He is a family man whose first wife, Samantha Berg, suffered complications while giving birth to their son, Elliot, in 1993, and spent the remaining years of her life in a coma—a profound loss that has colored his world view as much as any professional experience. In March, 2020, Grainge was among the first wave of people in L.A. to contract COVID, and he nearly died, spending eighteen days on a ventilator. After recovering, he told me in his office last November, he had survivor’s guilt. “Why me?” he kept asking himself.

Grainge’s son, Elliot, now thirty and a record man himself (his label, 10K Projects, signed the Gen Z sensation Ice Spice), told me, “We’re not from Hollywood.” He added, of his father, “He doesn’t put on a show, a façade, like so many people out here do—there’s a total difference of personality. He’s from an insular Jewish community in North London. He has a village mentality.”

Still, music has made Grainge a very rich villager. One British music executive told me, “Winning means more to him than to almost anyone else I have met in the music business”; money is just a way of keeping score. Although Grainge’s annual salary—five million dollars—is relatively modest for his position, he received a hundred-and-fifty-million-dollar bonus for successfully taking UMG public, in 2021. Some shareholders objected to the size of this “transition” compensation, deeming it “excessive.” In the U.K., Grainge’s pay package was even discussed in Parliament, in the context of a proposed bill that was promoting equity in the music business. A Conservative M.P., Esther McVey, said, “It’s shocking that record-label owners are earning more out of artists’ works than the artists themselves.”

Grainge lives in a mansion in Pacific Palisades with his second wife, Caroline, whom he married in 2002, and with whom he has raised a daughter, Alice, and a stepdaughter, Betsy. When he got a star on the Hollywood Walk of Fame, in 2020, Lionel Richie—a longtime Universal artist, and the father of Elliot’s wife, Sofia—honored him at the ceremony. (“That’s a real copyright!” Grainge exclaimed to me approvingly about Richie’s evergreen tune “Hello.” “A wedding and bar-mitzvah song!”) He is highly regarded both by UMG’s artists and by the company’s investors, an extraordinarily difficult twofer to pull off.

His old friend Bono, whose band, U2, is on Island, told me, “Lucian doesn’t do varnish. If you’re looking for varnish from Lucian, you’d better be drinking it. He is exactly as he appears.” He added, “People like us are practiced in the art of dizziness, and the music business can be a dizzy world. But for those of us who like to know where the doors, walls, and windows are, facts are friendly, and they’re more friendly if they don’t come with the kind of back-slapping, white-crowned varnish”—the kind with which music executives often treat artists. Bono did an impression of Grainge for me. “Can’t do it, mate!’’ he barked. “No! Will not. Not gonna happen!” He added that, as a musician, “I feel very comfortable when I know who I’m in the room with, when I don’t have to negotiate with a Janus-faced man.”

Which is not to say that Grainge is always easy to understand. He favors off-the-wall analogies, often involving cars, which he collects. When Grainge first met the English singer-songwriter Jamie Cullum, he declared, “Jamie! You’re like a Formula 1 sausage roll,” an exchange that has been captured for posterity in a cartoon Cullum drew that hangs on a wall outside Grainge’s office. “He talks in riddles, which I find endearing,” Jody Gerson, who runs UMG’s global publishing company, told me. “Weird historical British references, Yiddish things, and every now and then he’ll say, ‘Do you know what I mean?’ And I’m, like, Do I admit that I don’t? He once said to me, ‘Jody, I think like a jazz musician. I don’t always know exactly how I’m getting there, but I know where I’m going to end up.’ Lucian knows what he’s doing at all times, and that’s his process.”

Among investors, Grainge is seen as an executive whose strategic use of technology has reshaped the industry’s business model. At an investor presentation in 2021, Bill Ackman, whose hedge fund, Pershing Square Capital Management, owns ten per cent of UMG, compared Grainge’s impact on the music business to that of Netflix’s Reed Hastings on the TV and film industry; he has also likened Grainge to Walt Disney and Steve Jobs. Irving Azoff, of Full Stop Management, told me that Grainge, who attracted Ackman’s fund and the Chinese tech conglomerate Tencent, which owns twenty per cent of UMG, had created a global investor base to match the company’s roster of global superstars. That, in turn, had enhanced the value of the music industry as a whole, “which had always been traditionally undervalued,” Azoff said.

In the course of Grainge’s forty-five years in the business, everything about the way people create, sell, and consume music has changed. Distribution, once a mainstay—you needed labels to physically get records into stores—has become as easy as hitting an Upload button. Promotion of new music, which labels once controlled by way of radio d.j.s, now occurs on streaming platforms, where algorithms determine playlists. Product lives in the cloud, and revenues, formerly derived from sales of albums and singles, have given way to regular royalty payouts from streaming services. Music executives, who used to come up in the record business, like Grainge and Rob Stringer, the head of Sony Music, are now as likely to be lawyers, private-equity managers, turnaround specialists, or tech leaders—such as Robert Kyncl, the recently appointed C.E.O. of Warner Music Group, who was previously an executive at YouTube.

And yet, unlike print media, television, and film—other creative industries that have struggled to adapt to similar digital transformations—the music industry, after a severe contraction in the first decade of the century, now appears to be more profitable than ever. Streaming revenues alone reportedly surpassed seventeen billion dollars in 2022. It was arguably Grainge who, more than any other executive, defied the grim prognostications of the industry’s imminent demise in the early two-thousands. How did he manage it? After all, even though UMG controls the content, Google, Apple, Microsoft, Meta, et al. own the technology.

“Let it out. Let it all out.”

Cartoon by Benjamin Schwartz

“It’s called a ‘wriggle,’ ” Grainge, in his large sixth-floor corner office, told me on a gray November day. He sat at an oblong table with his back to the window, which faces east toward downtown Santa Monica. A guitar signed by Amy Winehouse was nearby. He held out his hand and wriggled it, his fingers moving like fish nosing through coral. “You’re going to have to figure out if you’re going to go above, beneath, around the side, or through.”

In March, 2023, Neal Mohan, who had just become the C.E.O. of YouTube, received a message from Grainge that said, “Hey Neal, congratulations, when can we meet?” Mohan told me, “It was typical Lucian in that it was warm and friendly, but it was clear that he had real urgency in his request to talk.” The subject was A.I.

A. & R. scouts are said to have ears, and Grainge sports an impressive pair of aural appendages that move up and down the sides of his head when he’s talking. But Grainge uses his nose. “I’ve always been able to smell intuitively what the next scene is,” he said. “Whether it’s punk or New Romantics, I’ve always enjoyed it, picked up on it, and this is my view of technology.” Generative A.I., which can produce novel images, text, and music, smelled to him like the next big scene. “That’s all I am—a talent scout.”

The industry is facing yet another revolution, but what sort isn’t yet clear. Is A.I. a format change in the way music is consumed, like the transition from records and cassettes to CDs, or is it a threat to the business model, as were free downloading and file-sharing? Is generative A.I. a new kind of digital workstation for making music, or is it the new radio—a platform for promoting acts and engaging with fans? Is a new era of musical invention at hand, or will A.I. cripple human creativity?

In April of 2023, an anonymous producer called ghostwriter used A.I. voice replications of Drake and the Weeknd to create a deepfake duet called “Heart on My Sleeve.” The “Fake Drake” song quickly went viral, sending waves of fear through the industry; Universal’s stock fell by roughly twenty per cent between February and mid-May, over concerns about generative A.I. eroding the value of its copyrights. (The stock has since recovered, and is near an all-time high.) Grainge invited me to imagine an illegitimate version of a Kanye West song featuring Taylor Swift’s voice: “Get your head around that. And then it’s ingested into one of the platforms and someone starts monetizing it.” He added, “I haven’t spent forty-five years in the industry just to have it be a free-for-all where anything goes. Not going to happen while I’m still here!” At the same time, he didn’t want to miss out, in case A.I.-generated material became a new source of revenue for artists—and their labels.

Before Mohan’s appointment, YouTube, which is owned by Google, had developed several key music-related products: paid-subscription services and Content ID, an automated way to detect copyrighted music on the platform. These products dramatically altered YouTube’s relationship with the music industry, turning the lawless wasteland of the early twenty-first century into the industry’s Elysian Fields. Between July, 2021, and June, 2022, YouTube paid more than six billion dollars to rights holders globally.

Last spring, Grainge flew to San Bruno, south of San Francisco, where YouTube is based. This was around the time that people in nearly every content industry were awakening to the fact that Google, Microsoft, Meta, and OpenAI were scraping material of all kinds from the Internet to use in training their A.I. models. As lawyers in all those content businesses mulled suing for copyright infringement, Grainge’s instinct was to play with the technology. It was the same approach he had taken to music streaming. “He experiments early,” Daniel Ek, a founder of Spotify, told me. “So then the cost isn’t as huge later, because you’re not betting the farm on everything you’re trying to do.”

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