‘We have shown that great records from anywhere in the world can become hits’

Whatever hopes, hits and surprises November and December might have up its sleeve for the music business, the global song of the year is surely already decided.

As we stand today, Despacito has over 4.6bn streams on YouTube alone across its two versions – the original by Luis Fonsi feat. Daddy Yankee (4.1bn plays), and the remix featuring Justin Bieber (560m).

It is the most-viewed YouTube video of all time.

Over on Spotify, the two iterations of the track have racked up more than 1.6bn streams, with the Bieber version out in front on 900m+ plays.

Stats such as these are having a noteworthy effect on Universal Music Group‘s financial performance, and its market share standing in various territories around the world.

Despacito’s wild success is also having a predictable knock-on impact on blockbuster A&R: Latin stars such as J Balvin, Nicky Jam and Baluma are being earmarked as record company priorities, while pop acts like  Little Mix have proudly begun adopting Reggaeton sounds into their latest tracks.

Universal’s other big Latin hit this year, J Balvin’s and Willy William’s ‘Mi Gente’ (and its remix featuring Beyonce), now has more than 1bn YouTube plays and 500m Spotify streams.

Luis Fonsi was brought into UMG’s global machine by Universal Music Latin Entertainment, which has been run by Spanish native Jesús López for the past 16 years.

López (pictured with Fonsi, main) previously worked at BMG for 11 years in the 1980s and 1990s, where amongst many Latin hits he became involved with the ‘Macarena Mix’. There, he saw for the first time what can happen when a non-English language track becomes a worldwide phenomenon – Macarena was the most popular track in the US Billboard charts in 1996.

The exec then opened the operations of MCA Latin America , which in 1997 officially became Universal Music Latin America, with a regional office in Miami and fellow operations in Argentina, Chile, Brazil, Colombia and Mexico.

Within five years, López was named Chairman / CEO of Universal Music Latin America & Iberian Peninsula, headquartered in Miami.

Despite the recent flurry of success, it hasn’t all been riches and rainbows for López at UMG: arguably no other area of the global business was as damaged by piracy as Latin music, with both Iberia and South America becoming global hotbeds of illegal activities for years.

“We’ve been investing in Latin music for decades. The success, the views, the streams, the physical sales… it’s of no real surprise.”

Sir Lucian Grainge

Responding to these challenging conditions, López smartly broadened Universal’s Latin activities into artist management, publishing, ‘360’ partnerships and, eventually, into live music promotion: the company launched its first ever ‘L Festival’ in 2015 and has now held three editions in California featuring the cream of Latin entertainment.

López has shown an aggressive side in the market, too: in 2008 Universal acquired Univision, which immediately resulted in the company becoming the US market leader in Latin music and rebranding as UMLE.

As Sir Lucian Grainge put it earlier this year: “We’ve been investing in Latin music for decades. I’ve worked with and managed teams who’ve created a flourishing [Latin music] marketplace for many years.

“The success, the delivery, the views, the streams, the physical sales – everything we’re doing – is of no real surprise.”

Today, Universal Music Latin Entertainment includes Universal Music Latino, Machete Music, the newly acquired Fonovisa and Disa, Universal Music Mexico & Central America, Latin Publishing in the U.S. and Mexico, and GTS Global Talent Services, a management service division.

MBW caught up with López to ask him all about the runaway success of Despacito, the cutural relevance of Latin music at the close of 2017 – and where UMLE can go from here…

You’ve pretty much seen everything in Latin music during your career. What have you learned from the current commercial high point?

This year, I have learned that streaming has helped democratize the consumption of music within the Latin world.

Today, the consumer decides directly what he wants and likes and now we can see it in real time. Before streaming it was more difficult to understand people’s preferences and unique tastes.

Streaming platforms have also helped bring greater exposure to Latin music worldwide and to reach fans far beyond the traditional markets for our artists.

Social Media has been another key factor, helping to fuel the great success of both “Despacito” and Mi Gente.

This Summer we saw more than 1 million people globally on Instagram posting something related to #Despacito or #Despacitomix, and the innovative use of a global Snapchat filter for “Mi Gente” also helped new fans from all over the world discover the track.

What about the post-Napster dark years? How badly hit was Latin music and its key markets, and what are your memories of being a ‘record label boss’ during this time?

That was an extremely difficult moment for our industry, especially because back then the Latin American music markets were already dominated by physical piracy. The digital anarchy that followed really began to have a dramatic impact on business and it felt like a perfect storm.

“When others thought it was time to reduce the investment in Latin music, Universal maintained its presence in all countries.”

At the time, when others thought it was time to reduce the investment in Latin music, Universal maintained its presence in all countries, invested in new artists and purchased two very successful independent companies – Vale Music in Spain and the Univision Music Group – which had a large presence in Mexico and the US Latin market. This was bolstered again with the later addition of the EMI Latin catalog.

This growth and our undiluted belief in Latin Music not only helped us weather the storm, but also strengthen it for the future, and now we are feeling the benefits of this long-term investment into Latin by Sir Lucian and Universal Music Group.

During this period, you moved the business into other areas such as live events and artist management. How has this worked out and how do you overcome the conflict of being both an artist’s manager and their record label?

In that post-Napster Latin world, we knew that we needed to find new ways to generate income and to find ways to help develop our artist’s careers and be more efficient in our investments.

It seemed more than natural that we should become a full-service entertainment company with our heart set on music but with our head set on management, our arms in festivals and our legs in developing new business opportunities, especially in brand partnerships, merchandising and live promotions.

We launched GTS (Global Talent Services) in 2012, a division committed to grow and develop the artist services related business across Latin America & Iberia and invited other managers to become our partners as co-managers, to sign artists directly and to join our network. Some of the artist we now manage and co-manage include David Bisbal, J Balvin, Luis Fonsi, Manuel Carrasco, Nacho, Sebastián Yatra, Bustamante and Pablo Lopez.

“It seemed more than natural that we should become a full-service entertainment company with our heart set on music but with our head set on management, our arms in festivals and our legs in developing new business opportunities, especially in brand partnerships, merchandising and live promotions.”

Over the past few years, we have also invested heavily in developing Bravado outside of the traditional business of selling t-shirts at concerts, and today we have a huge brand and merchandise business within the regions. We have built a hugely successful commercial licensing partnership with Inditex – the global fashion company that owns Zara, Pull & Bear, Massimo Dutti and Bershka amongst others.

This relationship is managed by our company in Spain and has delivered some fantastic fashion orientated collaborations across their brands.

Inditex has a global reach, with a presence in 94 markets, across five continents, which opens up fantastic opportunities for UMG artists. One example of this relationship came in December 2016, when The Rolling Stones released their “Blue & Lonesome” album. For the first time ever, day and date with album launch, Zara stores all over the world carried exclusive Blue & Lonesome themed tees and jackets, and each item carried a swing tag from which you could stream tracks or download the album.

It has also been key to the wide development of this business model, working together with Universal Music Publishing and having a very high percentage of artists who are also authors signed with UMPG Including J Balvin, Alejandro Sanz, Chano, David Bisbal, Manuel Carrasco, Sebastián Yatra and many others. This close collaboration helps to maximize our ability to create opportunities for these artists in all areas of their careers.

Sir Lucian Grainge recently said UMG ‘never stopped investing’ in Latin music and that he for one wasn’t surprised about Despacito’s huge success. Does that accurately describe your experience of working for UMG?

Sir Lucian thinks globally and artistically, as well as in all other areas of business, but he also allows total freedom for local execution to his senior management team. From this trust, comes the great success of international executives like David (Joseph), Frank (Briegmann), Naoshi (Fujikara), George (Ash) and many more.

Personally, he has supported me and my team through difficult times and has encouraged us to continue investing both in new talent and in the development of new businesses models.

“I would summarize in three words what Lucian conveys to me: Vision, Support and Freedom, for which I am deeply grateful.”

I would summarize in three words what Lucian conveys to me: Vision, Support and Freedom, for which I am deeply grateful.

The shift in international structure a couple of years ago, has also meant that our records have been able to find greater support around the world, with our partner labels like Republic in the US, Polydor in the UK, Central Europe, Australia and many other UMG territories around the world showing incredible belief and commitment to make “Despacito” and “Mi Gente” hits in their markets, despite the obvious language challenges.

How did you come to sign Despacito and did you suspect how globally huge it would become?

We have been working with Luis Fonsi since 1998 and are proud to have been a part of his entire career journey.

At the end of 2015, during the process of selecting songs for his new album, he came to my office and played me several songs. When I listened to the demo of “Despacito”, I told him that the album could wait, and that he needed to concentrate with the producers in working and developing the track.

After six months of working on the song, we did a feature that didn’t work, so we kept looking and in November 2016 the song was finally finished with addition of the Daddy Yankee collaboration.

The video was completed in late December, and on January 13, 2017 we released “Despacito” as the first Latin song of the year. The rest as they say, is history…

What were the key plays you made as a record label to boost its global standing?

From the very beginning we were convinced that the video was going to be a fantastic marketing tool for the song and focused our initial marketing push around that. We also concentrated our focus into the massive reach of the streaming platforms within Latin markets and Social Media.

Within 15 days, the reaction of the people was already crazy and through data arriving from around the world, we began to see the song beginning to react in countries that normally don’t care for Spanish language music.

From there we started with our traditional radio, marketing and global outreach working with our partners around the world to drive mainstream playlist, radio additions and support.

Has it broken barriers in terms of an attitude to what Spanish-language music can achieve worldwide, both in the music industry and outside?

Yes, with “Despacito”, all global records have been broken, both in the numbers we reached and the unprecedented speed in which we have achieved them – and not just for a Spanish-language track, but for a song from any genre.

Barriers will continue to exist, but of course they are lower now than ever before and we have shown that great records can become hits from anywhere in the world, with the right support and infrastructure behind them.

Language will remain determinant and the hegemony of English as the world language of music will not disappear; no other language can be a threat. But in 2017, good music has proven its ability to resonate with fans anywhere on the planet.

“for the first time in history, two of the most successful songs of the year globally will have both been mostly sung in Spanish.”

A good example of this is the Despacito remix; we released our remix in March featuring Justin Bieber. It was at that time that we started climbing and reaching number 1 in the charts of Anglo speaking countries, which combined with the success of the original and video helped spark a global phenomenon throughout the Summer.

“Mi Gente” is another example of the speed that Latin music can now reach #1 globally on streaming services. Last week, just three months after the release of the original, we released a new remix featuring Beyoncé. The initial reaction has been phenomenal, and my hope is that it will continue to grow into the “song of the holidays.” Now for the first time in history, two of the most successful songs of the year globally will have both been mostly sung in Spanish.

Do you think Latin music – and, specifically Reggaetón – is on the precipice of becoming the ‘language’ of mainstream music once again? How can you ensure this new wave of Latin pop isn’t restricted to a ‘one-off’ global smash like it was with Macarena all those years ago?

Speaking from experience, I was Head of BMG for US Latin and Mexico, 21 years ago when we made the “Macarena” a global hit, and I can assure you that what has been achieved with “Despacito” is unprecedented, and not comparable to that or any other Latin hit song to date.

Over the last 15 years, we at Universal Music Latin Entertainment have had success with many enormous hits that have surpassed the Latin world, including “La Camisa Negra” (Juanes), “La Gasolina” (Daddy Yankee), “Danza Kuduro” (Don Omar), “Bailando” (Enrique Iglesias), but none has reached the level of “Despacito”.

“The main difference has been made by streaming and social media, which was not a factor then, and relied on more traditional routes to market.”

The main difference has been made by streaming and social media, which was not a factor then, and relied on more traditional routes to market.

Now “Mi Gente” is demonstrating that “Despacito” was not a solitary hit and that there will be more global Latin hits in the wake of their success.

 I guess you have typically focused on three markets: the Latin contingent in the US, Central/South America and Iberia. How is streaming affecting these markets from your perspective – all of which have been heavily hit by piracy in the past. Are they, in your mind, recovering?

Clearly the Latin world is recovering, and now we must encourage Latin consumers to adopt more the subscription model and less the ad-supported model.

From our insight, we know that Latinos spend more time watching videos than consumers in other parts of the world, so the future relationship between YouTube and the music industry will be key to our growth.

YouTube has been the driving force behind Despacito’s huge popularity. How important a tool do you consider it… and have you and the artists been paid fairly for the video’s popularity?

I think the concept of the Value Gap is something already discussed by many people at all levels of the industry and I could add little more.

What I do know is that we as an industry and our artists and composers do not receive a fair and sufficient economic compensation compared with the benefits generated in the use by third parties of our product and creativity.

You headed up the team which launched L Festival in 2015, a flagship move into live events for UMG. How’s it gone so far and do you have any international expansion plans for the brand?

We are already preparing the third edition of L Festival for the autumn of 2018 in California.

This concept for the festival is based on sharing the diversity of music, culture, gastronomy etc. that we have as Latinos. From Argentines, to Spaniards to Mexican, we have a common language, but different cultural roots, so I think it’s important to spread this diversity for new generations of Latinos in the US and equally for their friends and neighbours interested in our culture.

We have also completed three editions of the Universal Music Festival, at the Teatro Real in Madrid, Spain. This is a different kind of festival; here the purpose is to bring popular music to a historical theater that is traditionally dedicated to Opera.

Over the past three years, we have been very successful with attracting audiences and sponsors and we are very happy to see artists such as Elton John, Rod Stewart and Tom Jones sharing the line-up with flamenco, world music and Latin pop artists such as David Bisbal, Luis Fonsi and Manuel Carrasco through 10 days of concerts each Summer during the month of July. The next edition will be in 2018.

We are also creating partnerships to bring international festivals to Latin America especially in the world of EDM, including the Social Festival in Mexico and Colombia, which took place earlier this year.

Which one thing would you change about the modern music industry and why?

I don’t think I’d like to change anything. I like the fact that the industry keeps evolving and I like to be an active part of that evolution. That is what I’ve been doing for 30 years and I hope I’ll be able to continue doing that.

Every day I am more fascinated with the new relationships that technology allows us to have, with our creative people to discover new talent and with the consumers to better understand what they want and how they want it.Music Business Worldwide

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