Troll
02-12-2006, 4:20pm
Universal's Lewis doesn't fear for future of country
It's been a rocky year for Universal Nashville.
Label artist Lee Ann Womack picked up three Country Music Association Awards in New York in November, including single of the year, but album sales haven't quite lived up to the critical acclaim.
Meanwhile, the trio Sugarland — nominated for a Grammy as best new group (though it didn't win) — announced the departure of band member Kristen Hall the month before last week's awards show. And in September, mega-star Toby Keith bolted from Universal-owned Dreamworks to form his own label, causing that division to shut down shortly thereafter.
At the center of it all has been Universal Nashville co-chairman Luke Lewis — a sometimes controversial figure who isn't afraid to speak his mind. Or take bold action.
After getting bored with the direction of country music in 2001, for instance, he opened Lost Highway Records, a rootsy label within Universal that has produced everything from the soundtrack to O' Brother Where Art Thou? to Johnny Cash's late-in-life recordings with rock producer Rick Rubin.
All together, Universal is the second-largest label group on Music Row with a little more than 32% of the country market share — behind only SonyBMG.
Tennessean music industry reporter Ryan Underwood sat down with Lewis days before the 37th Annual Country Radio Seminar industry gathering, which starts here Tuesday, to discuss the direction country music is going in 2006, the problems record labels have with country radio, and what life has been like without Toby Keith.
The past two years seem to have been pretty good for country music. Sales were up in 2004 and down only slightly in 2005. What kind of shape do you see the industry in these days?
Nashville, in general, had a big year. But it wasn't explosive; it doesn't feel like the early 1990s. That was a really good run between about 1989 and 1995. I think all of us would like to see that again because it's fun. Being part of a growth industry is always fun. So the overall picture of country for the coming year, I don't think a lot of us are expecting to beat last year. I think if we meet last year, we'll be doing well. Flat might be the new up.
Is the industry poised to see that 1990s level of growth again?
I'm not sure market conditions are going to allow it. There are so many things that have changed the industry besides the digital revolution. The programming philosophies of radio have changed really drastically and slowed things down on our end. And I don't see that changing. But every time you turn around and find something that makes you want to jump out the window, there's something positive on the other side. So you might have an erosion of listeners at radio, but you've got 9 million-plus people signing up for satellite radio.
Speaking of the digital revolution, the year-end report from Nielsen SoundScan showed a huge percentage increase in digital music sales. Have those been enough to fill the gap from a dropoff in sales of physical CDs?
My sense is that it's not catching up enough. Hopefully it will. I wish I had a crystal ball. It's made all of us kind of jumpy in the industry. Nobody can quite get a grip on it. There are still a billion peer-to-peer songs being traded every month or something like that. At Universal I think we had somewhere in the neighborhood of 5% to 6% of our sales here last year in digital.
You mentioned that radio is slowing things down on your end. Can you elaborate?
Country music is still primarily a radio-driven genre. Thankfully a lot of us have found ways to sell records without radio. But you still can't do the tonnage. As long as their programming philosophies stay the same — and I don't see any reason why they'd change — they've slowed down.
What do you mean?
I think they rotate music slower in country than in any other format. It used to be adult contemporary that was slow.
What's caused that?
Looking at it from the outside, it seems like they're over-consulted, over-researched. They're not entrepreneurial. They have a pretty low tolerance for risk. I enjoy being at this end of the business because if you don't take risks, you're out. But in radio, it looks like you can survive without taking risks. You can research everything to death and only play the hits and probably keep most of your listeners.
But that makes sense because their business is to sell ads.
Yeah. They're constantly telling us that they're in a different business than us. We don't need to be reminded.
Most radio programmers believe that if you stay very consistent in your sound, then your audience is going to stick with you and somebody sitting in an office won't turn it off. But that doesn't speak to the music consumers. It's a passive business model.
What are some of the other dynamics affecting the music industry these days? What's happening with your margins, for instance?
Margins are getting thinner, but I think that's something every industry has suffered from. Our company — about a year-and-a-half ago — decided to lower our wholesale cost so retailers could price our product (CDs) at $9.99. Now everybody seems to think that is the magic price.
It was a very risky move to make. But since we've done it — we were doing really well before that — we seem to be doing even better.
Some of the results of tough business conditions cause you to do things you probably didn't want to buck up and do before. But now they're getting done. It's like anything else: There's good coming out of the bad.
Three years ago, The Wall Street Journal estimated that Universal Nashville had revenues of $370 million per year. Is that about where you are today?
I'm not sure that was right. I wish it was. I don't know whether I want to go into revenue numbers. But there wasn't anybody in town doing those kinds of numbers. No one ever has.
Back in 2002, you said publicly that you were bored with country music. Do you still feel that way?
I got in the headlines one day for saying I didn't listen to country radio. I said it in Austin, Texas. But I'd be a moron if I didn't listen to country radio. At the time, I wasn't listening to it for pleasure, and I should have qualified what I said. I'm kind of notorious for making stupid comments, or not finishing a thought or whatever the hell it is.
But the business is getting better. The music has gotten better. I think they go hand in hand. In 2002, we were all in the doldrums. Everybody was copying each other and doing the same stuff. I don't want to be part of that.
Are there some things that you think caused it to get better?
Brian Philips (executive vice president and general manager) at CMT has really made a difference. He's made as big a difference as anybody in this town.
Why do you say that?
Because he's helping us not be a victim of radio's shortcomings. He's doubled the number of households they're in from around 40 million to about 80 million in the last several years.
He's also targeting a younger demographic. The average age of listeners at country radio is somewhere around 40 years old. And his is probably much closer to 30. And younger people usually buy more music … let's face it.
What do you make of the Muzik Mafia phenomenon? Has that somehow altered country's identity?
No. It doesn't appear to be having any lasting impact. To me, I just don't see it.
Hey listen, they're all really great entertainers, good songwriters. John Rich is a genius. Gretchen Wilson is a great artist. End of story.
What I will say is that it's good for the community. Music Row had gotten kind of boring. There weren't a lot of hell-raisers running around. And I think those boys, Big & Rich, were partyin', and it's reflected in the music. They've rattled the cage.
You've had some tough competition on Music Row in the last couple of years, haven't you?
Yeah, and that's really healthy. You would think the two big gorillas in the pile would be SonyBMG and us.
But the guy who is really making a difference, the guy I consider a fierce competitor is Mike Dungan at Capitol. He's having a big impact. He's taking his artists to the next level. Not to discount anybody else, but if I'm looking over my shoulder right now, it's at Mike Dungan.
Not Joe (Galante at RCA Label Group), not (John) Grady (at SonyBMG), not Bill (Bennett at Warner Bros.). They're all good. And Lyric Street, too, by the way. Randy (Goodman) is really good.
Is there any bad blood out there among the label heads?
I think it's pretty chivalrous, if I can use that word. You don't see many of us taking shots at each other. It's a pretty dang amazing dynamic. The only time it really gets ugly is when everybody's fighting for their artists to be on the awards shows or something like that. But that's normal stuff. And it heats up pretty good sometimes. Knowing each other so well — that kind of makes it a sport.
Universal has also had some tough times recently. Kristen Hall left Sugarland, and last fall Toby Keith split to form his own label. How is all of that affecting business?
On the Sugarland thing, for a minute it was like "uh-oh." Is that going to hurt the group? Is that going to hurt our efforts? Kristen wrote a bunch of those songs, co-wrote a bunch of them. If she doesn't do that anymore, we'll miss her. So I'm hopeful she'll keep doing that. Other than that, thankfully, the lead singer is a really dynamic front person for that group. If she was walking, it'd be like "oops." I don't mean to diminish Kristen, but I don't see her leaving really impacting the group.
How about Toby?
Hey, Toby's starting a record label, and he's released one single so far. Jury's out.
What impact has his move had on you?
Well, we don't have to talk to each other anymore! Really, that's about it. He's still affiliated with Universal Music Group. So from a corporate perspective, thankfully, they're still partners.
Hey, the guy is capable of having huge records and making money for everybody. That's a good thing. I've got a spotty history with him. I don't care to revisit it. I really don't.
Now, moving right along ... •
http://www.tennessean.com/apps/pbcs.dll/article?AID=/20060212/BUSINESS05/602120355/1048/BUSINESS
It's been a rocky year for Universal Nashville.
Label artist Lee Ann Womack picked up three Country Music Association Awards in New York in November, including single of the year, but album sales haven't quite lived up to the critical acclaim.
Meanwhile, the trio Sugarland — nominated for a Grammy as best new group (though it didn't win) — announced the departure of band member Kristen Hall the month before last week's awards show. And in September, mega-star Toby Keith bolted from Universal-owned Dreamworks to form his own label, causing that division to shut down shortly thereafter.
At the center of it all has been Universal Nashville co-chairman Luke Lewis — a sometimes controversial figure who isn't afraid to speak his mind. Or take bold action.
After getting bored with the direction of country music in 2001, for instance, he opened Lost Highway Records, a rootsy label within Universal that has produced everything from the soundtrack to O' Brother Where Art Thou? to Johnny Cash's late-in-life recordings with rock producer Rick Rubin.
All together, Universal is the second-largest label group on Music Row with a little more than 32% of the country market share — behind only SonyBMG.
Tennessean music industry reporter Ryan Underwood sat down with Lewis days before the 37th Annual Country Radio Seminar industry gathering, which starts here Tuesday, to discuss the direction country music is going in 2006, the problems record labels have with country radio, and what life has been like without Toby Keith.
The past two years seem to have been pretty good for country music. Sales were up in 2004 and down only slightly in 2005. What kind of shape do you see the industry in these days?
Nashville, in general, had a big year. But it wasn't explosive; it doesn't feel like the early 1990s. That was a really good run between about 1989 and 1995. I think all of us would like to see that again because it's fun. Being part of a growth industry is always fun. So the overall picture of country for the coming year, I don't think a lot of us are expecting to beat last year. I think if we meet last year, we'll be doing well. Flat might be the new up.
Is the industry poised to see that 1990s level of growth again?
I'm not sure market conditions are going to allow it. There are so many things that have changed the industry besides the digital revolution. The programming philosophies of radio have changed really drastically and slowed things down on our end. And I don't see that changing. But every time you turn around and find something that makes you want to jump out the window, there's something positive on the other side. So you might have an erosion of listeners at radio, but you've got 9 million-plus people signing up for satellite radio.
Speaking of the digital revolution, the year-end report from Nielsen SoundScan showed a huge percentage increase in digital music sales. Have those been enough to fill the gap from a dropoff in sales of physical CDs?
My sense is that it's not catching up enough. Hopefully it will. I wish I had a crystal ball. It's made all of us kind of jumpy in the industry. Nobody can quite get a grip on it. There are still a billion peer-to-peer songs being traded every month or something like that. At Universal I think we had somewhere in the neighborhood of 5% to 6% of our sales here last year in digital.
You mentioned that radio is slowing things down on your end. Can you elaborate?
Country music is still primarily a radio-driven genre. Thankfully a lot of us have found ways to sell records without radio. But you still can't do the tonnage. As long as their programming philosophies stay the same — and I don't see any reason why they'd change — they've slowed down.
What do you mean?
I think they rotate music slower in country than in any other format. It used to be adult contemporary that was slow.
What's caused that?
Looking at it from the outside, it seems like they're over-consulted, over-researched. They're not entrepreneurial. They have a pretty low tolerance for risk. I enjoy being at this end of the business because if you don't take risks, you're out. But in radio, it looks like you can survive without taking risks. You can research everything to death and only play the hits and probably keep most of your listeners.
But that makes sense because their business is to sell ads.
Yeah. They're constantly telling us that they're in a different business than us. We don't need to be reminded.
Most radio programmers believe that if you stay very consistent in your sound, then your audience is going to stick with you and somebody sitting in an office won't turn it off. But that doesn't speak to the music consumers. It's a passive business model.
What are some of the other dynamics affecting the music industry these days? What's happening with your margins, for instance?
Margins are getting thinner, but I think that's something every industry has suffered from. Our company — about a year-and-a-half ago — decided to lower our wholesale cost so retailers could price our product (CDs) at $9.99. Now everybody seems to think that is the magic price.
It was a very risky move to make. But since we've done it — we were doing really well before that — we seem to be doing even better.
Some of the results of tough business conditions cause you to do things you probably didn't want to buck up and do before. But now they're getting done. It's like anything else: There's good coming out of the bad.
Three years ago, The Wall Street Journal estimated that Universal Nashville had revenues of $370 million per year. Is that about where you are today?
I'm not sure that was right. I wish it was. I don't know whether I want to go into revenue numbers. But there wasn't anybody in town doing those kinds of numbers. No one ever has.
Back in 2002, you said publicly that you were bored with country music. Do you still feel that way?
I got in the headlines one day for saying I didn't listen to country radio. I said it in Austin, Texas. But I'd be a moron if I didn't listen to country radio. At the time, I wasn't listening to it for pleasure, and I should have qualified what I said. I'm kind of notorious for making stupid comments, or not finishing a thought or whatever the hell it is.
But the business is getting better. The music has gotten better. I think they go hand in hand. In 2002, we were all in the doldrums. Everybody was copying each other and doing the same stuff. I don't want to be part of that.
Are there some things that you think caused it to get better?
Brian Philips (executive vice president and general manager) at CMT has really made a difference. He's made as big a difference as anybody in this town.
Why do you say that?
Because he's helping us not be a victim of radio's shortcomings. He's doubled the number of households they're in from around 40 million to about 80 million in the last several years.
He's also targeting a younger demographic. The average age of listeners at country radio is somewhere around 40 years old. And his is probably much closer to 30. And younger people usually buy more music … let's face it.
What do you make of the Muzik Mafia phenomenon? Has that somehow altered country's identity?
No. It doesn't appear to be having any lasting impact. To me, I just don't see it.
Hey listen, they're all really great entertainers, good songwriters. John Rich is a genius. Gretchen Wilson is a great artist. End of story.
What I will say is that it's good for the community. Music Row had gotten kind of boring. There weren't a lot of hell-raisers running around. And I think those boys, Big & Rich, were partyin', and it's reflected in the music. They've rattled the cage.
You've had some tough competition on Music Row in the last couple of years, haven't you?
Yeah, and that's really healthy. You would think the two big gorillas in the pile would be SonyBMG and us.
But the guy who is really making a difference, the guy I consider a fierce competitor is Mike Dungan at Capitol. He's having a big impact. He's taking his artists to the next level. Not to discount anybody else, but if I'm looking over my shoulder right now, it's at Mike Dungan.
Not Joe (Galante at RCA Label Group), not (John) Grady (at SonyBMG), not Bill (Bennett at Warner Bros.). They're all good. And Lyric Street, too, by the way. Randy (Goodman) is really good.
Is there any bad blood out there among the label heads?
I think it's pretty chivalrous, if I can use that word. You don't see many of us taking shots at each other. It's a pretty dang amazing dynamic. The only time it really gets ugly is when everybody's fighting for their artists to be on the awards shows or something like that. But that's normal stuff. And it heats up pretty good sometimes. Knowing each other so well — that kind of makes it a sport.
Universal has also had some tough times recently. Kristen Hall left Sugarland, and last fall Toby Keith split to form his own label. How is all of that affecting business?
On the Sugarland thing, for a minute it was like "uh-oh." Is that going to hurt the group? Is that going to hurt our efforts? Kristen wrote a bunch of those songs, co-wrote a bunch of them. If she doesn't do that anymore, we'll miss her. So I'm hopeful she'll keep doing that. Other than that, thankfully, the lead singer is a really dynamic front person for that group. If she was walking, it'd be like "oops." I don't mean to diminish Kristen, but I don't see her leaving really impacting the group.
How about Toby?
Hey, Toby's starting a record label, and he's released one single so far. Jury's out.
What impact has his move had on you?
Well, we don't have to talk to each other anymore! Really, that's about it. He's still affiliated with Universal Music Group. So from a corporate perspective, thankfully, they're still partners.
Hey, the guy is capable of having huge records and making money for everybody. That's a good thing. I've got a spotty history with him. I don't care to revisit it. I really don't.
Now, moving right along ... •
http://www.tennessean.com/apps/pbcs.dll/article?AID=/20060212/BUSINESS05/602120355/1048/BUSINESS