{"id":219393,"date":"2024-12-17T10:27:43","date_gmt":"2024-12-17T10:27:43","guid":{"rendered":"https:\/\/www.musicbusinessworldwide.com\/?p=219393"},"modified":"2024-12-19T11:44:11","modified_gmt":"2024-12-19T11:44:11","slug":"new-york-state-of-things-and-dinner-with-robert-kyncl","status":"publish","type":"post","link":"https:\/\/www.musicbusinessworldwide.com\/new-york-state-of-things-and-dinner-with-robert-kyncl\/","title":{"rendered":"On… the New York State of things \u2013 and dinner with Robert Kyncl."},"content":{"rendered":"

MBW Reacts is a series of analytical commentaries from Music Business Worldwide<\/a> written in response to major recent entertainment events or news stories. Only MBW+ subscribers<\/span><\/a> have unlimited access to these articles.<\/em> The below article originally appeared within Tim Ingham’s latest MBW+ Review email,<\/strong>\u00a0issued exclusively to MBW+ subscribers.<\/em><\/p>\n

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Last week, to round out the year, I plumped for a Holiday-flavored, 48-hour trip to New York City<\/strong>.<\/p>\n

I saw a bunch of cool and thought-provoking people. I put the world to rights with Brad Navin<\/strong>, turned up Hey Now!<\/em> with Stu Bergen<\/strong>, and\u00a0<\/strong>fanboy’d over Bo Burnham with Tyler Arnold <\/strong>and Avery Lipman. <\/strong><\/p>\n

I debated (the death of) mono-culture with Justin Kalifowitz,<\/strong>\u00a0shared a hug with\u00a0Carianne Marshall<\/strong>… and talked Adele and Amy with Kirk Sommer.<\/strong><\/p>\n

But perhaps the most intriguing moment came when Mark Beaven <\/strong>recommended me shrimp pasta… via the phone of Warner Music Group boss,\u00a0Robert Kyncl<\/strong>.<\/p>\n

<\/div>
<\/div>
<\/div> <\/div> <\/span><\/p>\n

I join Kyncl<\/strong> for dinner at one of his favorite haunts \u2013 Central Park institution,\u00a0Marea <\/strong>\u2013 where he occasionally dines with Beaven<\/strong>, one of the most influential songwriter managers in the game.<\/p>\n

The duo’s friendship is keenly apparent (“I buy the food, he brings the wine,” grins Kyncl). Yet it’s interesting that the Warner exec\u00a0<\/strong>\u2013 one of those, big, bad major label bosses, after all \u2013 regularly seeks the counsel of a professional champion of songwriters<\/strong>.<\/p>\n

This isn’t all that’s unusual about Kyncl’s <\/strong>view of the world.<\/p>\n

When I inform one of Kyncl’s contemporaries that I’m sitting down with him, they cheekily reply: “Good luck getting a word in edgeways!!”<\/strong><\/p>\n

I come prepared.<\/p>\n

I ask\u00a0Kyncl<\/strong>\u00a0\u2013 who spent his first 21 years in then-Communist-controlled Czechoslovakia<\/strong> and still remembers the Russian anthem \u2013 whether, in the modern era of rampant misinformation, he remains a free speech absolutist.\u00a0(On balance, it’s a no; Kyncl learned the downside during his years at YouTube<\/strong>\u00a0of giving “guys in Arby’s” the same level of algorithmic reach as credible creators.)<\/p>\n

I also ask Kyncl\u00a0<\/strong>where his desire to ‘win’ in business originated. Once again, he points to his upbringing.<\/p>\n

In fourth grade, he participated in a highly competitive cross-country ski team, funded by the national government. He then moved on to a middle school that only accepted athletes as students, before joining a boarding school<\/strong>\u00a0at which he was expected to train two to three times<\/strong> each day<\/strong>. “It was ultra-competitive,” he says \u2013 a “hardcore” environment where winning was “everything”.<\/p>\n

“the topic we debate most over our near-three hours together is obvious: What will a major music company look like in the future… and will artists still care?”<\/strong><\/p><\/blockquote>\n

Obviously, I ask him about books, films, and music. He’s no great fan of fiction, but speaks in glowing terms about Red Notice<\/strong><\/em><\/a>, a thrill-ride expos\u00e9 of real high-finance corruption from Bill Browder<\/strong>.<\/p>\n

And I ask him who he contacted for advice when Len Blavatnik<\/strong> offered him the Warner Music Group<\/strong> job in 2022. Names included media mogul\u00a0Jeffrey Katzenberg<\/strong>, Snap Inc. Chairman Michael Lynton<\/strong>,\u00a0former HBO boss Richard Plepler, <\/strong>and ultimately\u00a0<\/strong>his longtime YouTube <\/strong>colleague, the late Susan Wojcicki.<\/strong><\/p>\n

Yet the topic we debate most over our near-three hours together is a more obvious one: What will a major music company look like in the future… and will artists still care?<\/strong><\/p>\n

<\/div> <\/div> <\/span><\/p>\n

Kyncl’s<\/strong> history in media \u2013 seven years at Neflix<\/strong> (2003-2010) and 12 years at YouTube<\/strong> (2010-2022) \u2013 has suffused within him the belief that digital platforms<\/strong> are the Godzillas<\/strong> of the entertainment business.<\/p>\n

Yet he also believes that, without large-scale aggregators of quality content (i.e. ‘majors’) negotiating with FAANG and Spotify<\/strong>, the value of copyright risks erosion. As he puts it: “For those artists going it alone, it’s you vs. a $100 billion<\/strong> platform<\/strong>\u00a0or even a trillion-dollar platform<\/strong>; you don’t stand a chance.”<\/p>\n

There’s probably a reason Kyncl<\/strong> subconsciously picks this\u00a0$100 billion<\/strong> figure; it’s the market cap that Spotify<\/strong> reaches<\/a> shortly before we sit down to dinner. It’s also roughly the same assumed value of all three major music companies combined.<\/strong><\/p>\n

Kyncl<\/strong> doesn’t take issue with\u00a0Spotify’s<\/strong>\u00a0boundless market cap growth. He’s much more focused on Warner <\/strong>extracting fair value from the platform… and ensuring that\u00a0Daniel Ek’s<\/strong> company is constantly being challenged by a strong No.2 (currently: YouTube Music<\/strong>).<\/p>\n

Kyncl <\/strong>reasons that realtors can be confident of getting a good price for a property so long as they have at least two people keen to buy it. (In this analogy,\u00a0Warner Music Group’s<\/strong>\u00a0catalog is the house,\u00a0the streaming services are the buyer, and Kyncl’s licensing team<\/strong>\u00a0is the realtor.)<\/p>\n

<\/div> <\/div> <\/span><\/p>\n

Kyncl<\/strong>\u00a0has overseen some dramatic change at Warner Music Group <\/strong>since becoming CEO in January 2023.<\/p>\n

This year, WMG’s efficiency drive has led to 750 redundancies<\/strong>. About half of those lay-offs came in WMG’s now-jettisoned ‘owned and operated media’ divisions, yet WMG veterans central to music rights (including\u00a0Max Lousada<\/strong> and Julie Greenwald<\/strong>) have also exited.<\/p>\n

Today, Warner’s global headcount stands at around 5,500<\/strong> people vs. approximately 10,000<\/strong> at Universal. I suggest to Kyncl<\/strong> that, in future, artists may simply be drawn to the ‘major’ with the most global offices and the most employees (‘boots on the ground’). He disagrees.<\/strong><\/p>\n

Instead, he argues that sheer volume of headcount <\/strong>doesn\u2019t equate to a company’s global impact \u2013 or its speed to market. \u201cVelocity\u201d<\/strong> is a word he uses a lot.<\/p>\n

“Kyncl<\/strong>\u00a0insists that Warner<\/strong> is generally less interested than its competitors in signing low-margin <\/strong>deals with superstars.”<\/p><\/blockquote>\n

The majority of the funds Kyncl<\/strong> has freed up with those redundancies, he\u2019s reinvesting. Back in January, one of his key promises for 2024 was to expand Warner\u2019s A&R pipeline<\/strong>; last month, there was a blink-and-you’d-miss-it-stat on WMG’s earnings call: \u201cA&R investment is up approximately 11% [YoY, across Warner’s latest FY]”.<\/strong><\/p>\n

Kyncl <\/strong>further\u00a0insists that Warner<\/strong> is generally less interested than its competitors in signing low-margin <\/strong>deals with superstars.<\/p>\n

He says that WMG<\/strong>\u00a0now strategically avoids “empty calories”<\/strong> deals, i.e. agreements that see a company book large revenues but a meager morsel of profit. “We’re more disciplined than that; we’re focused on value and reinvestment,” he says.<\/p>\n

Kyncl <\/strong>claims that Warner’s global distribution agreement with BMG <\/strong>was one such low-margin\/”empty calories”<\/strong> deal for WMG, and that he didn’t shed tears when both sides agreed<\/a> to end it. I infer from our chat that similar margin concerns have informed\u00a0WMG <\/strong>ultimately not<\/em> acquiring for-sale services businesses such as Believe<\/strong> and Downtown Music<\/strong>.<\/p>\n

\n

Kyncl<\/strong> then turns the tables with his own zinger: “Can you name one major analog media company that has ever completed a truly successful digital transformation?”<\/strong><\/p>\n

I falter. He says: “Warner Music Group<\/strong> could be the first.”<\/p>\n

Kyncl’s<\/strong> rationale: in the analog era, the record business was simple<\/strong> \u2013 \u201dbasically radio and physical retail\u201d. Music companies, on the other hand, were structurally complex<\/strong>, selling LPs and CDs on a country-by-country basis.<\/p>\n

Today, according to Kyncl<\/strong>, that situation has reversed. The record business is complex and fractured<\/strong> but Warner is striving for\u00a0structural simplicity<\/strong> \u2013 a “business without borders”<\/strong>. He believes this will enable its artists and employees to \u201cmove at velocity\u201d<\/strong>. (There\u2019s that word again.)<\/p>\n

In a year where Warner had big hits with new artists like Benson Boone<\/strong> and established stars like Charli xcx<\/strong>, Kyncl believes WMG’s flatter structure<\/a> enables\u00a0artists to go global, faster.<\/p>\n

He reveals that Warner <\/strong>recently \u201cfully globalized\u201d its catalog division under Kevin Gore<\/strong>. The twist: Kyncl doesn\u2019t define catalog as music that\u2019s 10 years or older<\/strong>, but simply \u201cartists who no longer make new music\u201d.<\/p>\n

Thus, everything from Aretha Franklin<\/strong> to Fleetwood Mac<\/strong> lives with Gore\u2019s catalog team, but active artists like Linkin Park<\/strong> have their entire body of work promoted by the same ‘frontline’ record company that’s handling their new album.<\/p>\n

\n

According to Kyncl, Warner Music Group<\/strong> is now around halfway through<\/strong> its digital transformation, across data, systems, and organizational structure.<\/p>\n

Other companies \u2013 mainly outside music \u2013 he argues, “misunderstand” how a truly digital-first media firm operates. (Someone who does<\/em> understand, in Kyncl’s mind, is Elliot Grainge<\/strong>, the new head of Atlantic Music Group. Drinks had flowed by this point, but I remember Kyncl saying that he and Grainge “think about the world in a similar way” and share a thirst for “disruption”.)<\/p>\n

Shortly before we leave, Kyncl <\/strong>delivers a memorable soundbite on the value of music; one that may be designed to remind his listener that, beyond his belief in the power of tech, he also appreciates the magic of ‘content’.<\/p>\n

“Art decorates walls,”<\/strong> he says. “Music decorates time.”<\/strong><\/p>\n

\n

Twenty-four hours later,<\/strong> I kind of get what he means.<\/p>\n

He’s decorating time<\/strong> all over the shop.<\/p>\n

Just as I hear a whisper that intrigued A&Rs from Republic Corps\u00a0<\/strong>are watching on, Stephen’s manager, Alicia Jones<\/strong>, texts to make sure I got in okay. I reply, affirmatively, that I’m “losing my f**ing mind”<\/strong>.<\/p>\n

Hopefully I’ll find it again by the close of the Holiday break. No promises.<\/strong><\/p>\n

Wishing you and yours a wonderful one. See you on the other side.<\/p>\n","protected":false},"excerpt":{"rendered":"

MBW founder Tim Ingham on 48 hours in New York City, and three hours with Warner’s boss<\/p>\n","protected":false},"author":3,"featured_media":219396,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[9],"tags":[1820],"class_list":["post-219393","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-mbw-review"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts\/219393","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/comments?post=219393"}],"version-history":[{"count":0,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts\/219393\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/media\/219396"}],"wp:attachment":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/media?parent=219393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/categories?post=219393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/tags?post=219393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}

I’m at Gramercy Theater<\/strong>, watching a jaw-dropping show from alt-country marvel, Stephen Wilson Jr<\/a>.<\/strong> It’s the fourth time I’ve seen the Big Loud <\/strong>artist this year \u2013 and the best.<\/p>\n