This industry is not accustomed to major music company bosses like Steve Cooper.
The Warner Music Group CEO is undoubtedly one of the most influential figures in today’s global entertainment business.
But he’s also a private, methodical type of guy – one who didn’t earn his stripes in the tempestuous cauldron of A&R, but rather in the rigorous world of high finance.
After Access Industries swooped for WMG in summer 2011, Len Blavatnik handpicked Cooper to run the company.
It’s now been five years since the ex-MGM exec accepted that offer – and, Cooper tells MBW, he still has “much more I want to get done”.
When Cooper and Access arrived at Warner, some who had just witnessed Terra Firma’s mangling of EMI feared the worst.
Another private equity giant, with another money-minded strategist, was being thrust upon the creative world. What could possibly go wrong?
Well, not a lot, actually.
In contrast to penny-pinching, Cooper’s Warner Music Group has spent increasingly huge amounts on A&R – including, last year, the major’s biggest Q4 commitment since 2008.
Cooper has also overseen a glut of confident acquisitions, not least Warner’s £487m ($760m) buyout of Parlophone Label Group in 2013 – securing glittering catalogues from David Bowie, Kate Bush, Pink Floyd and Coldplay for a price most now consider a bargain.
Meanwhile, as Cooper has guided WMG into a digital-first operation, Warner’s global recordings market share has mushroomed to over 17% and Warner/Chappell has become the No.2 pop publisher in the US.
Earlier today, WMG announced its biggest Q3 revenues since Access’s 2011 buyout.
MBW’s latest estimates suggest it’s now generating $2.5m a day from streaming alone.
Cooper doesn’t give many interviews, so we wanted to make this one count.
We asked him all about the hot-button industry issues – from YouTube to Spotify’s pricing and Sony’s takeover of Sony/ATV.
But we also wanted to know about his personal motivations – especially since, back in 2011, many assumed he had been drafted in by Len Blavatnik as a short-term solution.
So: is Steve Cooper more of a music man or a businessman?
And, with Warner flying, does it even matter?
You recently positioned warner as the ‘independent major’. How can a company with a $3bn annual turnover – owned by the global giant that is Access – maintain an independent approach?
It’s in our DNA.
First, if you look at how the company evolved, you can draw a line straight through from Ahmet Ertegun, Jac Holzman, on to Seymour Stein and right up to the present day with Craig [Kallman – pictured] or Cameron [Strang].
These guys all founded their own indie companies, and they became part of the fabric of WMG. Warner is the only place you have that kind of family lineage, that DNA.
“We’re big enough to break huge worldwide superstars, but not so big that emerging artists get lost.”
Second, we’re ultimately owned by one person, which cuts out corporate bureaucracy.
Finally, it’s about the promises we can make to artists, which no one else can make – and fulfilling them.
We’re big enough to break huge worldwide superstars, but not so big that emerging artists get lost in the system.
That also makes us a good home for creative entrepreneurship – what Max Lousada’s doing in the UK with The Firepit is a great example of that in action.
Let’s talk about that one-person ownership. What’s Len Blavatnik like as a boss?
He’s very down to earth, speaks his mind and makes his positions very clear. He’s involved but not intrusive.
What I mean by that is he’s engaged with our strategy, goals and direction, but lets the management team run the business.
“Having [Len Blavatnik] on our side is a great feeling.”
Having him on your side is a great feeling. He has this incredible instinct for long-term opportunity and a willingness to take educated risks.
Len really believes in the music business and loves artists and, in some ways, he’s just getting started.
When you took the helm at Warner, many assumed you would be there as a ‘fixer’ and depart fairly soon. But you’ve been there for half a decade, and are presiding over a bit of a golden period. What’s your plan for the coming years – are you sticking at WMG?
Yes, I know when I arrived there were people in the industry who expected me to leave after a year or so.
It’s been five years now, so I’m keeping people guessing.
“Streaming is now our biggest revenue source. So the question is… what’s next?”
Honestly, the team here knows where I stand, how much fun I’m having, how much more I want to get done.
I spend much of my day talking about what the company needs to look like in 2018 and beyond.
Streaming is now our biggest source of revenue. So the question is, what’s next?
What have been the ingredients for Warner over-indexing on market share in the past two years in particular?
More hits. Some things never change.
It’s hits that make all the difference. And at the same time, we specialize in real artistry.
Just for starters look at Twenty One Pilots, Bruno, Ed, Andra Day, Lukas Graham, Dua Lipa; they are all bona fide talents.
The same goes for Jon [Platt] at Warner/Chappell, where there’s a focus on unique songwriters and true talent like Beyoncé or Justin Tranter and Julia Michaels.
We’re punching above our weight, without relying on pop fads.
“We’re punching above our weight, without relying on pop fads.”
It’s crucial that we’ve stayed nimble.
Take Atlantic as an example. The first label to cross the 50% digital divide, and they’ve been religious about keeping that momentum.
That meant Julie [Greenwald] was ahead of the curve when it came to re-directing her team towards streaming. Our leadership around the world did the same.
But we’re far from complacent. We know that transformation never ends.
Finally, Stu [Bergen] has helped ensure we draw on the collective power of our global company and that we’re open to great music coming from anywhere.
Just this quarter, our biggest seller was a French star called Renaud, a former PLG artist. He had the largest debut week in France in 14 years.
Now the dust has settled, do you think you got a good deal for Parlophone Label Group?
Yes and it was a real and crucial turning point.
When Access bought WMG, it was after a decade of darkness for the industry.
But Len was clear that he saw the music business turning a corner.
“Buying PLG was us flicking the switch from survival model to success mode.”
Buying PLG was us flicking the switch from survival mode to success mode. It brought us some great artists, a deeper catalog and some strong people.
And it took us to the next level in terms of non-Anglo repertoire.
Do you have, and can you have, any ambitions to become the No.2 major music company?
Sure, but our focus is on being the best, not the biggest.
Market share is just one metric that we look at. Important, but it’s not the whole picture.
To what extent can the music rights business recover in future; how big, for example, do you think the recorded music market will be in 5 years or 10 years’ time?
That’s the 100 billion dollar question.
I’ve worked in a bunch of different sectors and been in some really hairy situations. So, even on tough days, I keep in mind how much we have going for us.
People all over the world have a deep emotional connection to what we help create. But as we all know that doesn’t automatically translate into more revenue.
“Music is absolutely ubiquitous, but only about 1% of the global population are paying subscribers.”
Music is absolutely ubiquitous, but only about 1% of the global population are paying subscribers. I believe it’s early days with respect to streaming.
We’re closer to the start of the curve than the end.
But will that growth be in line with the true value of music? We still need to fight every day for our artists and songwriters to be fairly compensated.
TALKING OF WHICH… Are YouTube’s safe harbor protections going to be hobbled in the US and/or EU, or has this been a lot of fuss about nothing?
It’s certainly not nothing. The world’s largest on-demand streaming service woefully undervalues music.
There’s no question we have our best shot in the EU.
“We have our best shot [at hurting YouTUbe’s safe harbor protections] in the EU.”
Many of the US policy-makers understand the issue, but they seem reluctant to take on the tech giants.
The outcry has been unanimous and very loud. I would hope that the artists will be heard and that we’ll see a fairer legal framework.
Warner has been aggressive internationally, with Access-led acquisitions in China, Russia, Poland, South Africa and more. To what extent are these emerging market purchases paying off, and will we see more in the near future?
You saw in our latest results that they are paying off.
We’re the market leader in both China and Russia now.
“We know exactly where we are targeting next.”
But to me that’s just a by-product of us getting into pole position for the future there.
And, yes, we know exactly where we are targeting next.
Warner was named in the press as lobbying against Sony’s acquisition of the Jackson Estate’s stake in Sony/ATV. Were you surprised by the EC’s decision, and what are your fears for how the deal might affect the music marketplace?
Well, we responded to the EC’s questionnaire, and we respect their decision.
I will point out that this hopefully means the majors are on the same page and that the balance across recorded music and publishing is similar at all three.
“[The sony/ATV deal] hopefully means that the majors are on the same page.”
That should help the decision-making when we work together to shape public policy to grow revenues for everyone.
You don’t have anything without a great song and a star to perform it. Together, they drive the whole show, as you know.
Where does Warner currently stand on Spotify freemium; how much should it be allowed to give away for ‘nothing’?
I’ve said on our earnings calls in the past that the main reason we’re comfortable with freemium is that it’s a conversion tool.
Free or ad-supported won’t sustain the business alone.
I do think we need to learn from the movie business and window in a better, standardized way.
“$9.99 a month or ad-supported… it’s got to be more nuanced than that.”
All the exclusives feel erratic at the moment. That’s confusing to fans, and that’s not good for the industry.
Right now, it’s really 9.99 a month or ad-supported.
It’s got to be more nuanced than that with prices that cater to all levels of appetite and budget.
Warner still has a big chunk of debt but its finances haven’t looked better in a long while – you were recently upgraded by Moody’s. Is WMG fiscally secure?
Without a doubt. Yes.
More hits, the growth of streaming, and careful financial management have all helped us generate stronger cash flow.
We’ve tried to maintain a balance so that we can invest in the future and still grow the bottom line.
Are you more of a businessman or a music man?
I get a version of this question a lot. I spoke to a group of interns just this week and it came up. So, here goes.
I have huge respect for people that have dedicated their entire careers to the music business, but that’s not what I’ve done.
I have three rules that have served me well, in business and in life.
First, have fun, because this isn’t a dress rehearsal.
“Rule one: Have fun, because this isn’t a dress rehearsal. Rule two: No assholes. that’s in direct correlation to RULE one.”
Second, no assholes. That’s in direct correlation to point one.
Third, treat people fairly and expect to be treated fairly in return.
So, I’ve applied those here. Right from the start, I knew better than to get involved in the creative decisions.
We have a lot of really talented people, and I never second guess them. I just want to create an environment where they can do their best work.Music Business Worldwide