The Grammys fallout gets more shocking every day – but how relevant is the show to the modern record business?

The MBW Review offers our take on some of the music biz’s biggest recent goings-on. This time, in light of the almighty fallout between the Grammys’ parent org and its estranged CEO, Deborah Dugan, we look into the commercial impact of the ceremony. The MBW Review is supported by Instrumental.

Los Angeles is abuzz with the countdown to the Grammys this Sunday (January 26).

But dominant within these conversations is a slice of drama worthy of its own Hollywood production: an ousted female CEO locked in a vicious public battle with a male-dominated institution over her dismissal, her allegations of villainy… and, of course, the money she’ll receive for her exit.

That female CEO is Deborah Dugan, the former boss of Bono’s Red, who was named Chief Exec and President of the Recording Academy as recently as August last year.

Significantly, Dugan was the first woman to head the Academy in its history. She was hired following fierce criticism of the Grammy-running org over its diversity and inclusion practices – particularly pertaining to gender.

Since January 16, when Dugan was placed on administrative leave by the Academy’s bosses, all hell has broken loose:

  • The now-acting CEO of the Recording Academy, Harvey Mason Jr., sent an open letter to Academy members on January 20, detailing that an employee had alleged a “toxic and intolerable” and “abusive and bullying” working environment created by Dugan. That employee is now known to be the former assistant of ex-Recording Academy CEO Neil Portnow – the man who infamously suggested in 2018 that women who felt under-represented by the Grammys should “step up”;
  • Dugan’s dismissal just-so-happened to come three weeks after she sent a bombshell internal memo to HR, the shocking details of which emerged yesterday (January 21). In the memo, Dugan alleged that she had received unwanted sexual advances from top music industry lawyer, and Recording Academy General Counsel, Joel Katz. (Katz has “categorically and emphatically” denied this.) Dugan also outlined what she calls “egregious conflicts of interest, improper self-dealing by Board members and voting irregularities with respect to nominations for Grammy Awards, all made possible by the ‘boys’ club’ mentality and approach to governance at the Academy.”;
  • In a complaint filed with the Equal Employment Opportunity Commission yesterday (January 21), Dugan further alleged that the voting system of the Grammys is “ripe with corruption” and allows committee members to “push forward artists with whom they have relationships”. She also claimed that the Academy paid “plainly exorbitant” legal fees – in excess of $15m – to firms including Katz’s employer, Greenberg Trauig, over a five-year period;
  • The Recording Academy claims that Dugan previously offered to “withdraw her allegations” and resign from her role as CEO, on the proviso that she was paid “millions of dollars”. Billboard says Dugan asked for $22m; Variety’s sources reckon that number is “completely untrue”. Whoever’s right, it seems an eight-figure settlement payout could now be in the offing;

The Dugan drama has been a controversial and unsavoury curtain-raiser for the 62nd Annual Grammys, understandably attracting the ink of US entertainment staples from the Hollywood Reporter to the L.A Times, Page Six and Deadline.

As such, it has rather drowned out any other industry conversations related to the Grammys – including that regarding the relevance of the show, versus the annual expense ‘Grammy Week’ incurs for the record industry.

Four days out from the ceremony, that’s a conversation worth having.

The Recording Academy may claim that the Grammys is “music’s biggest night”, the show may still attract a TV audience of over 19 million – but, in reality, does it still have any material effect on the prosperity of the record business?

To answer that question, MBW has used BuzzAngle data to determine what happens to the US record industry in the week after the Grammys – the days following the three-hour televised ceremony, and its famed live performances.

Does it have any meaningful impact on the fortunes of the biggest records, and their labels, in the United States?

The jury’s out.

Each US release week begins on a Friday – and it’s this seven-day cycle (Fri-Thurs) which is naturally covered by BuzzAngle’s data. Last year, the Grammys took place on Sunday, February 10, meaning the event landed in the industry week commencing Friday, February 8.

What happened that week vs. the prior week?

For one thing, audio streaming volume in the United States actually fell.

The prior week (industry w/c Feb 1), BuzzAngle clocked 13.212bn on-demand audio streams in the States; in the week of the Grammys, this number dropped by 96 million streams to 13.116bn.

It’s worth noting that in that prior chart week (the Feb 1 one), there weren’t particularly any huge new releases; the highest new entry on the subsequent Billboard Hot 100 was at No.56 – One Call by Gunna – and on the Billboard 200 album list it was Vida by Luis Fonsi at No.18.

As you can see above, the 2019 Grammys fared better in terms of actual album sales (physical and digital) which climbed by 402,434 sales week-on-week in w/c February 8, according to BuzzAngle’s data – suggesting that the traditional Grammy ‘bump’ might have had some consequence in the world of traditional LP purchases. Track sales (i.e. downloads) also rose week-on-week, by 494,745.

BuzzAngle operates a conversion formula designed to bring all of this together under album-equivalent ‘project units’, which are roughly reflective of the revenue generated by an album purchase. In this case, 1,500 streams equals one ‘project’, as does 10 track downloads.

In the week of the Grammys 2019, thanks to that small jump in album sales and track downloads, these album ‘projects’ grew, week-on-week, by 387,820.

Going off the rough estimate that the industry’s trade/wholesale income from an album/’project’ is in the region of $7 to $8, this number suggests that record labels may have gained around $3m, in total, from any week-on-week Grammy sales ‘bump’ last year.

That’s equivalent to just 2% of the average US record industry weekly wholesale revenue from 2018. More to the point, it’s also a fifth of the size of that $15m the Recording Academy is said to have spent on those law firms.

In the pre-streaming era, this level of industry-wide gain was experienced by individual artists as a result of the Grammys.

Santana, for example, saw sales of his Supernatural rise by 364,000 in the U.S the week after it won Album Of The Year in March 2000; Adele‘s 21 saw weekly sales rocket by around 490,000 units when it won the same prize in 2012.

Those days appear to be over.

Worryingly for the Recording Academy – and the record labels who throw money at making the biggest splash in Grammy Week – a definite decline appears to have set in; one which suggests the historical commercial power of the ‘Grammy bump’ is weakening, as consumer behavior moves towards audio streaming.

In 2018, US industry album ‘project’ units – across streaming plus trad album and track sales – in the week of the Grammys grew by 111,326. In 2019 that bump was bigger, but again, well under half a million, at 387,820.

Yet as recently as 2017, Grammy week album ‘project’ sales rose by nearly 600,000 – driven by a 395,296 gain in traditional album sales.

When the tuxedos are back in their closets; when the after-party floors have been swept clean; when the mountain of dollars spent on the Grammys 2020 and its organizing body (and potentially shelled out to Deborah Dugan) have changed hands; when the trophies are fixed on the winners’ mantelpieces… perhaps it would be wise for the US music business to look at the stats, and ask itself something important.

Namely: If we stopped putting on (and obsessing over) the Grammys each year, would it actually make any material difference, at all, to the business that pays our salaries?

The MBW Review is supported by Instrumental, which powers online scouting for A&R and talent teams within the music industry. Their leading scouting platform applies AI processes to Spotify and social data to unearth the fastest growing artists and tracks each day. Get in touch with the Instrumental team to find out how they can help power your scouting efforts.Music Business Worldwide

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