This week In the Hot Seat with Larry LeBlanc: Larry Mestel, CEO and Founder, Primary Wave Music.
Primary Wave Music, the American independent music publishing, talent management, production, branding, and entertainment company, is successfully capturing lightning in a bottle with a staggering string of prominent catalog transactions.
Headquartered in New York, with offices in Los Angeles, London, and Austin, Primary Wave Music was founded in 2006 by veteran label executive Larry Mestel with a purchase of a stake in Kurt Cobain’s music catalog.
Over 12 years, Primary Wave Music—consisting of Primary Wave Music Publishing, and Primary Wave Entertainment—has grown into a musical powerhouse handling talent management; digital, advertising, and branding strategies; intellectual property creation; and film and TV production.
Primary Wave’s extensive catalog includes over 16,000 copyrights of such revered music figures as Bob Marley, Smokey Robinson, Alice Cooper, Steven Tyler and Tom Hamilton (Aerosmith), Def Leppard, Hall & Oates, Chicago, Maurice White, Graham Parker, David Rose, Daniel Johnston, Steven Curtis Chapman, Lamont Dozier, Steve Cropper, Sly Dunbar and Robbie Shakespeare, CeeLo Green, Holly Knight, Larry Smith, Kenny Loggins, and Count Basie.
Primary Wave also has a majority interest in Chris Blackwell’s Blue Mountain Music, and in British songwriter/producer Pete Waterman’s catalog; an equity stake in Rough Trade Publishing; and the rights to the music of the late Canadian pianist Glenn Gould, including his publishing and master royalties, as well as his name and likeness rights.
Among Primary Wave’s management clients are: Brandy, CeeLo Green, Melissa Etheridge, Fantasia, Cypress Hill, Eric Benét, Yanni, Plain White T’s, plus music writers/producers Jon Levine, DANJA, Mag and Mitch Allan
Before launching Primary Wave Music, Mestel was the chief operating officer and GM of Virgin Records; and previously executive VP and GM of Arista Records.
In 1997, Mestel had co-founded Palm Entertainment with Chris Blackwell, the founder of Island Records. Mestel was responsible for Palm’s day-to-day operations, which included the Palm Pictures label, Rykodisc and Ryko Distribution and Ryko Music Publishing.
Prior to that, Mestel was chief operating officer for Island Entertainment Group, which included Island Records, Island Music Publishing, and Island Pictures.
How much staff does Primary Wave Music carry?
We have about 70 people now.
You have offices in New York, L.A., London, and Austin. Why Austin?
There are a lot of brand opportunities down in Austin. There’s a lot going on in Austin. And we are likely going to have a Nashville office.
Primary Wave Music Publishing has a catalog of about 15,000 copyrights?
It’s maybe 16,000 or a little more now. We are intrinsically different than the (music publishing) majors. Here’s the thing, while we believe that we are really good marketers the major music publishers have very good people. They have a good chunk of money. The big difference, Larry, is that when we are competing for an artist-songwriter, if you think about it, they each have millions of songs. We have 16,000 songs. Who can best focus on marketing? Who can best focus on creative? Who can best focus on really delivering? Not someone with two million copyrights. It’s not possible.
Of late, Primary Wave has been aggressive in picking up the publishing catalogs of Sly Dunbar and Robbie Shakespeare, Kenny Loggins, Tom Hamilton of Aerosmith, Count Basie…
Alice Cooper, and Bob Marley.
Well, you also can’t go to many strip clubs without hearing David’s Rose’s classic instrumental, “The Stripper,” which reached #1 on Billboard’s Top 100 chart in 1962. You have that now too.
(Laughing) Ah, that’s funny, yes.
Many of Prime Wave’s catalog acquisitions have been generated in the past 18 months. Any concerns about being too far ahead of yourself? Maybe moving so fast that your teams can’t manage and control at the pace you are taking on? A worry? Or have you made adjustments to support the acquired growth?
We have brought on additional staff. As we grow we bring on additional staff, but you have to look at it this way: With the number of songs that we have, we have a lot of core capacity to go before we have an issue of having too much on our hands. We have a lot of excess capacity.
What type of research does the company do prior to deciding to try to purchase a percentage of a music catalog? Obviously, you look at existing and potential revenue streams, and the equity position.
Yes, you have to research. You have to see what has been done. More importantly than knowing what has been done, you have to look and see what you think you can do. That’s a real key. Then you have to look at the mix of the income streams. If it’s too heavily mechanical or too heavily synced, it may not be the right deal or the right opportunity.
Other than future income potential what are your criteria for seeking to purchase a portion of a catalog? What was the attraction in acquiring these assets?
It’s really very simple. I sit down with my team and we say, “First of all, is it iconic? Is it legendary? Or are they (the songs) hits?” We are in the icon business, the legend business, and the hits business. And, if they don’t fall into those categories, there better be a spectacular reason to want to do a deal.
Many of the catalogs Primary Wave has picked up have arguably not been well-serviced over the years. Ironically, this is the same sector of the music industry that was being ignored when you were working at major record labels. Labels didn’t want to know about and didn’t care about the heritage acts on their roster. They were then, and still are, more focused on emerging artists, and what can chart.
Can I tell you something? Already we are only like 5 minutes into the conversation and you have gotten it 100% whereas a lot of journalists are so attuned to the hits business that they don’t understand what you just said. The reality is that what we are looking for are three things. It’s legendary. It’s iconic etc. But we also have to be able to move the needle. When we make an acquisition like this, we look at the revenue stream and we say, “Can we make an impact positively to increase the earnings?” And then the third thing is that we have to love the music.
Primary Wave doesn’t seem to have any staff with any love for country music. You don’t have much in the way of country catalogs.
Well, how much country music do we have?
Not much.
That is going to change pretty soon because we are looking at a couple of deals in the space, and we are looking at an office in Nashville.
So many prestigious music publishing catalogs have been folded into the overall catalogs of music publishing giants which often either buy or administer catalogs and do little more than just send along a check to the co-publishers or songwriters involved.
Yes because a lot of publishers are lazy. They have historically ridden on the coattails of record companies. We feel very strongly about the word “partnership” with artists, with heirs, with estates, and with the management of the artists. We really feel that it is our responsibility to move the needle, and this is really how we have built the company. The digital team is really one creative aspect that we have that others don’t, but it is also marketing and it is also branding. So we have a deep marketing team, and we have a deep branding team as well.
Interestingly, on Oct. 26th Sony Corp’s $2.3 billion deal for EMI Music Publishing cleared the European Commission. The closing means that Sony is acquiring the final 60% of EMI, and it becomes a wholly-owned subsidiary of Sony. You and Sony are in different types of businesses.
We are. Two completely different types of businesses. Completely different businesses. Sony guys are great guys, but it’s two different types of businesses.
In most cases, with the catalogs you have bought, it has included name and likeness rights. But it also includes no reversion of rights?
Well, with most of what we have bought that is correct, but almost all songs at some time revert back. Not outside America, but inside America. But a lot of what we have bought also goes to copyright term also.
(In the United States, songs written pre-1978 revert back to songwriters after 56 years have expired, while songs written after 1978 can revert after 35 years of when first published.)
Primary Wave Music is also involved with management.
Correct. Publishing is a much bigger business, but yes we are doing management as well.
Why be in artist management which isn’t as clean cut as music publishing? You want to be in a position to offer a songwriter-artist all possible career outlets?
Correct.
You seek 100% of management if it’s involved, and you want the majority portion of publishing negotiated to be free and clear. So the strategy, in essence, is to be partners in a 360-styled deal?
Correct. A big part of our business, and the biggest part of our business is the acquisition of catalogs and doing new co-publishing deals with talent.
Still, each of your deals seems very individual.
Yes, each other is very very individual on to itself. Absolutely.
As well, Primary Wave recently started a digital-only label.
We didn’t start a label. What we did was because of the infrastructure that we have we felt that it was appropriate to provide services for those artists that needed it for us to be able to put out records if they wanted to and to support them on pretty much on what is their label. So we started the CURE8 label, and the (compilation) series is disCOVERED.
Since launching Primary Wave in 2006, you have greatly broadened the concept of music publishing. Traditionally, music publishers collect royalties, seek label partners, and try to have a great operational backroom. Primary Wave is similar to a marketing entity, and being more like a record label.
Exactly. Not a record company but…
I said like a record company. Your first hire was a senior marketing person who had worked with you at Arista Records. This was followed by bringing aboard the former head of marketing at Arista and Virgin Records. You have since recruited label and advertising agency executives, and video, games, and brand personnel. You have a 12-person digital team. You built a company servicing quintessential talent, but in the music publishing sphere.
In fact, I will tell you that the reason is very simple because, frankly, when I started Primary Wave, I was a record guy. I ran labels. While I always had a little publishing company on the side, I never really knew the publishing business all that well in 2006 when I started. So I ran it like a record it company.
Over the years heading Primary Wave, you learned to navigate complex copyright and royalty issues. Still, with your background, a Bachelor of Business Administration degree from the University of Massachusetts, followed by working in New York as an accountant at Arthur Young & Co., you knew to follow the money. Therein lies one of the great music publishing challenges: Figuring out how to unlock the hidden income of songs.
(Laughing) You know, Larry, I don’t tell anybody that used to work at Arthur Young because I will feel very boring.
Seriously, you had enough training to keep an eye on where the money was coming from in the music industry.
Oh, absolutely. Of course.
Let’s not kid ourselves, during the period you worked at the labels, the affiliated music publishing folks—two or three of them, if that–were down the hall in another office. The labels were then making so much money that they didn’t pay much attention to their publishing affiliates.
That’s right. You are absolutely right. Nobody really paid attention to the publishing guys other than the publishing guys, and the publishing guys were always the ones making the steady money; a little more every year; and the record guys were the ones up and down, and up and down. So that’s eventually why I said, “Forget this ridiculous record business with CDs plummeting, I’m going into the publishing business.”
Primary Wave’s big break came when a mutual acquaintance introduced you to Courtney Love, and you made a deal to acquire 50% of Kurt Cobain’s catalog
Correct.
For a reported price tag of $50 million.
It was a lot of money. You are way ahead of me.
The use of Kurt Cobain’s lyrics, graphic designs, and signature on a limited edition Converse running shoe in 2008 was a brilliant and provocative use of copyright. During his lifetime, Kurt Cobain had been a fan of Converse, and he was wearing purple Converse All-Star sneakers when he committed suicide in 1994 in a greenhouse room above the detached garage to his home in the upscale Lake Washington neighborhood of Seattle.
Well, exactly and that was an enormous thing that we did with Converse. It went over well with the fans. Courtney loved it. It was the first time that anybody has put lyrics and little doodles onto the side of sneakers like that.
Did Primary Wave make the pitch to Converse?
Yes, we approached Converse. We came up with the idea. We wanted to turn what would have been a merch deal into a music deal. How do you do that? You put lyrics on the side of sneakers. That’s how you make a music deal.
With only owning a portion of the music publishing, you had to do something involving the music rather than a merch deal, which you weren’t involved in.
That’s right.
Then with the music publishing rights, you would receive a percentage of every shoe sale.
That is exactly right.
Tell me about the 500 numbered heart-shaped CD boxes sent to tastemakers to reintroduce Nirvana’s catalog.
I will tell you a funny story about that. When we buy these iconic catalogs, we like to come up with ways to get the music in front of people who are going to use it. Kurt was the first really big iconic catalog that we bought when we started the company. That really launched Primary Wave. He was the cornerstone of the business because it was the first acquisition that we made. It was still physical CDs in the marketplace at the time. Streaming wasn’t prevalent at all. It was downloads that were coming on. So we made this beautiful art piece. It was a wood heart-shaped box with flannel interior with CDs of the entire catalog. When you opened up the top of this beautiful wooden heart-shaped box. It played the (Rockabye Baby) Lullaby version of “Heart-Shaped Box.”
So it was spectacular.
What we did is that we numbered them, #1 to #500, and we sent out 500. We sent it to everyone that was in charge of music in some way. Either music supervisors, editors, producers, advertising agencies, gaming companies. You name it. If they were using music, we sent it to them. The funny thing is that my creative team would take meetings and the CD heart-shaped boxes were on the desk of these executives. We numbered them because we wanted to keep track of who had what box. So if anyone decided to sell it on eBay we would know who it was.
And I bet at least one showed up on eBay.
It did. We had, in fact, two people that tried to sell. They didn’t realize that it was numbered. We knew exactly who was selling them on eBay. With the heart-shaped box we sent it out, we got great feedback and it really helped increase the synchronization use of the catalog in a very good way.
A few years later, after securing an interest in Steven Tyler’s song catalog, Primary Wave sent out a thousand “Dream On” boxes in which the music played after the top was opened.
For “Dream On,” we did the same thing, yes. Ben Silverman told me a funny story when he was head of NBC (co-chairman of NBC Entertainment and Universal Media Studios). He said he kept the “Dream On” box on his desk, and when somebody came in to do a pitch, and if he didn’t like the pitch he’d just open the top of the box, and it would just play (the chorus) “Dream On, Dream On.” That’s very funny.
In 2010, the Primary Wave team pitched GTECH, the world’s largest lottery-systems provider, on using “Dream On” as part of a scratch-off lottery game in Massachusetts. GTECH, however, was so impressed by the concept that they opted to roll out the “Dream On” lottery campaign in 11 states. Part of the Aerosmith-related campaign allowed fans to scratch off prizes such as free concert tickets, backstage passes, and even a private performance by the band.
But the original pitch was only for Massachusetts?
Yes, to be honest. My team and I piled into a car and we drove up to GTECH in (Providence) Rhode Island, and we pitched them on a Massachusetts’ state lottery. It was “Look, what would be a better name for a scratch-off lottery game than ‘Dream On,’ right? It only makes sense.” Well, they loved it (the concept) so much they said, “You guys aren’t thinking big enough.” We’re thinking to ourselves, “What do you mean that we aren’t thinking big enough? It would be great to have a Massachusetts’ lottery. The band is from Massachusetts.” They said that they wanted to roll it out to all of their lotteries. The great thing about it was we were able to help tie in Aersomith’s tour (The Cocked, Locked, Ready to Rock Tour) that was coming out with the launch of a lottery and leverage the marketing of lottery with the tour. So we got billboards and bus stop benches and light boxes and everything. The band loved it. They made a ton of money.
Better still for your music publishing interest is that this limited run lottery campaign had TV commercials utilizing “Dream On” in their messaging.
Thank you. We got adjacent use for “Dream On.” Exactly. And we got a royalty on every ticket sold. A publishing royalty. So it was a good thing. That’s the stuff that gets us excited. That is the stuff that gets my team excited. To be able to take these great songs and put marketing campaigns that the artists like together.
Well, all of this gives you an argument to carry forth to further copyright owners other than raising the financial stakes in a bidding war with other publishers. Like showing copyright owners Kurt Cobain’s Converse sneaker, the pair of box sets, and even the Steven Tyler scarf and harmonica promotion.
Did the Primary Wave team have the concept of collaborating with American Greetings and Hallmark Mark when it made the Father-Daughter Day pitch to Smokey Robinson?
In fact, we did. That was in our initial book. Smokey looked at my marketing team, and he chuckled. He said, “You guys are full of it. There’s no way that you are going to get something like this.” That was like the badge of honor to our marketing team. They went out and nailed it.
Had there previously been a Father-Daughter Day?
No. We created it for Smokey Robinson. Smokey is very proud of that. “My Girl” is part of the whole campaign. Not only that, but more importantly, he can go golfing with his buddies and say that he’s got a holiday. How many people can say that they have a holiday?
(Father-Daughter Day, inaugurated in 2017, is a holiday recognized annually on the second Sunday of October in the United States, honoring the relationship between a father and a daughter. It is not federally recognized.)
In acquiring the rights to the writer’s share of Smokey’s song catalog as well as the rights for his name and likeness for a reported $22 million, you would have said, “Who holds your publishing now? What have they done for you?”
That is exactly right.
Sony/ATV still owns the publisher’s share of most of Smokey’s Motown songs, but the publishing ownership of some early songs have reverted to him. As well, there are songs in the Bertam Music catalog, which was established in the 70s to administer some of Smokey’s post-Jobete Music songs
Yes, Sony still has an interest in the copyrights, and they still administer what we bought because we feel that we didn’t want to break the copyrights up, and it’s much more efficient to let Sony continue to administer, but we are pitching like crazy, and they are the beneficiary as Smokey and ourselves are of our marketing work.
It’s been a year since Primary Wave acquired Glenn Gould’s catalog, and his name and likeness. Was any music publishing involved?
The deal we made was for all rights. It’s not just publishing. There is publishing. It is also the masters’ royalty stream, name, and likeness, the brand, life rights, everything. Glenn fits exactly who we want to be in business with. He’s iconic, obviously legendary, and we think that an enormous amount can be achieved with his brand because we think that over the years that it has been under introduced to the world.
With a few exceptions, Sony Classical and CBC Archives sat on his legacy.
They did.
(Glenn Gould, whose statue sits outside the CBC’s Toronto headquarters, is one of the most acclaimed classical musicians of the 20th-century; his life and recordings are chronicled in more than 50 books, a dozen films, three plays, and endless musical tributes.
GlennGould.com. now overseen by Primary Wave’s Robert Dippold, partner & president, Digital Strategy, includes recordings, radio broadcasts, television programs, original articles as well as news about upcoming new projects.
Few classical recordings have aroused as much fascination as Gould’s 1981 recording of Bach’s “Goldberg” Variations which Gould recorded digitally and in stereo in the Columbia 30th Street Studio in New York City. He somewhat abandoned the showmanship of his classic 1955 recorded version– first major-label recording–and replaced it with a more introspective interpretation. In 1982, Gould suffered a severe stroke two days after his 50th birthday, and never regained consciousness, leaving the two Bach recordings as bookends to his career.
The score Gould used while making the 1981 recording of Bach’s “Goldberg” Variations” has resurfaced and will be offered at auction on Dec. 5 at Bonhams in New York.)
Primary Wave is working on bringing Glenn Gould back to the concert stage. The company has partnered with the hologram production company, Eyellusion. You really are seeking to return Glenn Gould to concert halls around the globe?
We are, and Faye Perkins (an advisor to the Estate of Glenn Gould) and Stephen Posen (the sole executor of the Estate of Glenn Gould) will be involved to make sure that the creative is in tune, and in line with what they think that Glenn would have wanted, and liked.
The irony is that Gould disliked the concert stage, and he retired from live performances in 1964 at age 32, stunning the world by walking away from the stage to concentrate on studio recordings. He made no secret of his disdain for giving public performances
You’re right, and guess what? He doesn’t have to be (onstage). The other thing is that he loved technology, and the technology that puts this together is amazing. But, more importantly, think about it; how do you keep a legacy alive? The way that you keep a legacy alive is that people have to see and experience and be re-introduced (to the artist and to the music). What better way than to have Glenn Gould in front of a large orchestra playing where people can’t tell the difference whether it is Glenn Gould or the hologram? Let them be blown away, and let them go home, and say, “My gawd, I loved this.” And let them talk to their kids about it (the performance), and let them talk about Glenn Gould.
(Gould famously declared, “The concert is dead.” He further said that live concerts made him feel demeaned, like a vaudevillian. “I detest audiences,” he explained in this 1966 clip from CBC-TV, “Not in their individual components but en masse… I think they are a force of evil.” The future, Gould declared, was in the recording studio, where he was free to splice and edit imperfections in his playing.)
Will you be able to expand the EP series past the recent release of “Beginnings…Vol. 1” that included tracks that Gould recorded as a young man that had never previously been available digitally.
I hope so. I don’t know if you know this, but Faye is still very much involved with us. She is literally the product manager that we are employing for Glenn Gould as part of our Primary Wave family. I take a lot of direction from Faye because she is so enormously passionate about Glenn Gould. In order to do a good job, and in order to creatively do a good job, and do a good job in marketing, you have to be as passionate as Faye. Every time that she talks about Glenn Gould, I am fascinated. I really am. I just love her enthusiasm.
I was impressed by a Hall & Oates’ story dealing with their 1974 hit ”She’s Gone” not being used in a Swiffer Wetjet mop commercial despite Primary Wave have unfettered rights to use their songs in any matter. Yet, after pushback from Darryl Hall, you decided not to use the song in the Swiffer commercial. And Primary Wave had the absolute right to do so.
We did. One hundred percent, but we listened to Darryl. He said that he wrote it for his girlfriend, and he didn’t want it in a Swiffer Wetjet mop commercial even though the Swiffer commercials had won awards.
Swiffer commercials are memorable, and they have won numerous Clio advertising awards.
They are amazing commercials, but Darryl didn’t want it, and it is important to us to have a long-term relationship with the artist.
Primary Wave’s 2006 deal with Julien Lennon related to the songwriting income generated by compositions his father, John Lennon, wrote or co-wrote as opposed to the publishing rights which are mostly owned by Sony/ATV Music Publishing.
That’s correct. That was an economic interest in every Beatle song that John Lennon had ever written. When we did that deal back in 2006, we saw an amazing opportunity. Look, if you are a publisher, you want to have an income stream off the Beatles. We are all Beatle fans, and we all love the music. We knew at the time that the Beatles had not yet been digitally distributed. We also knew that the income from the (Cirque du Soleil theatrical production) “Love” show in Las Vegas hadn’t started to flow through, and we knew that there were significant marketing opportunities that were going to happen with the Beatles. We couldn’t have anything to do with the marketing of the Beatles, but this was something where we thought, “This is a great financial opportunity.” That was a very unusual deal for us. That’s not like the normal deal we do when we acquire catalogs.
Most of your deals are with songwriters that are artists.
In most cases, though we do in certain cases like with Holly Knight for instance.
An artist who has been more successful as a songwriter.
Yes. Correct.
Meanwhile, you failed to land the catalog of Jerry Leiber and Mike Stoller in 2007. Just weeks after Marty Bandier took over as chairman and chief executive at Sony/ATV came the announcement of its purchase of their catalog, home to such hits as “Hound Dog,” “Jailhouse Rock,” “Stand By Me,” and “Love Potion #9.” The deal was for around $50 million. You were apparently outbid.
At the end, it came down to…
The kids.
The kids. We loved Jerry Leiber and Mike Stoller. I must have had five meetings with them. They were torn. I believe that at the end of the day…Mike Stoller told me this that with everything being equal he would have rather come with us but Sony ended offering something that was in the stratosphere.
Sony/ATV trumped your bid with 23X of the valuation, you walked away at 21X or 22X.
I can’t confirm or deny that but they offered something that was, as you rightly pointed out, was very high. Ultimately, it came down to the kids because they are the heirs. But I will tell you this. Mike Stoller could not have been more of a gentleman. In fact, Mike came to a bunch of our Grammy parties in the years following. He brought us certain songwriting deals. He’s just an amazing human Mike Stoller.
Copyright holders sell their music catalogs or seek administration deals for so many different reasons. Many families or heirs are at a loss what to do if the artist or songwriter gets older or passes away. Even many songwriters don’t understand that as small business owners they have to know how to maximize their catalogs. Many figure it’s more practical to make an administration deal. As they grow older, they may start looking into estate planning, and capital gains issues.
With an aging demographic of music makers are there more deals out there today than a decade ago?
I think that there are, yeah, because I think that the artists that we were dealing with when I started the company back in 2006 are now in their mid-70s. As an artist gets older they realize that they have to have an estate plan. If they don’t want an estate plan, and they want the cash, they can’t take the cash with them. The amount of money in the business now is pretty significant. So given the tax benefits, it makes a lot of sense to consider selling, especially if they want somebody like us; who an artist can hopefully trust with their brand, and their babies.
At the same time, there are publishers like Sony/ATV, BMG Rights Management, and Kobalt Music with big pockets for acquisitions. Significant competition for Primary Wave?
Not really. Here’s the difference. You take a couple of deals. You take Smokey Robinson, for example. That wasn’t a competitive deal. We dealt one-on-one with Smokey. If you look at Bob Marley. I dealt one-on-one with Chris Blackwell.
(Fifty-Six Hope Road Music, the entity run by the widow and 9 children of late reggae superstar Bob Marley who died in 1981, handles most aspects of his estate. Chris Blackwell’s Blue Mountain Music has had a co-publishing stake in Marley’s music, including such classic songs as “One Love,” and “Three Little Birds.” In January (2018) Blackwell signed a $50 million deal with Primary Wave Music Publishing that resulted in the creation of a new venture, Blue Mountain/Primary Wave Music, of which Primary is believed to own around 80%—although, in the case of Marley’s songs, his estate retains a majority interest.)
C’mon you had an inside track with Chris Blackwell because you had worked with him for over 11 years.
True. But with Def Leppard, it was one-on-one with (the late) Howard Kaufman (of H.K. Management) With Holly Knight, it was one-on-one with Holly and Tina Fasbender, her business manager. Most of the deals…we don’t like to get involved in auctions. In fact, I can’t remember such a deal, and we have done 20 deals in the past 18 or 19 months. We don’t get involved in auctions.
Still, it must have been a big moment in your life to negotiate the deal in which Primary Wave acquired an 80% share in Blue Mountain Music for $50 million?
A lot of money. People charge a lot of money.
While U2 is published by Blue Mountain that catalog was exempt from the deal?
Yes.
Much of the credit for the passing of the Sen. Orrin G. Hatch Music Modernization Act this year goes to National Music Publishers’ president/CEO David Israelite.
(Laughing) I recently saw David at the BMI Country Music Awards. I was there because one of our artists who we love, Steve Cropper, got the BMI Icon Award. I saw David, there and the head of BMI (BMI President and CEO Mike O’Neill) rightly in his monologue thanked David on behalf of the industry. David is one of the smartest guys in the music business that I have met. He has done an amazing job corralling the herd.
In 2016, you were a signee on an industry letter submitted to the U.S. Copyright Office to reform the Digital Millennium Copyright Act (DMCA). The Sen. Orrin G. Hatch Music Modernization Act is the result of a series of industry compromises. Do you think the bill went far enough for music publishers?
Well, here’s the thing. The bill was a very good compromise because without compromise nothing would have gotten done. Does one wish that publishers could have gotten more? Absolutely. And do I think that publishers and writers, more importantly, songwriters, will continue to get recognized in the future? Absolutely. I think that they will continue to get more recognition in terms of legislation but you have to compromise to move forward and David and the team that worked on it did a really good job to bring that all together.
While the bill contemplates establishing a mechanical licensing collective to distribute unmatched royalties on a market share basis to music publishers and to those songwriters that do not have an exclusion clause in their contracts–what the music publishing industry calls Black Box payments—it still isn’t clear how those monies will be divided. Publishers would like 51% of the representation and leave the writers with 49%. So a problem, if there’s not equal representation.
Well, that’s going to be a big thing. That’s going to be a very big thing shortly.
There will be a tug and a pull back and forth.
I’m sure.
As a music publisher, you are pleased about 44% rise in streaming mechanical rates in the U.S.?
Yep.
Has collecting publishing revenues from across Europe become any easier? Unfortunately, copyright laws there can differ between countries, and there are different accounting systems, and challenges of inter-agency communication, and content matching.
Well, it depends on what territory you are talking about. That’s really what it comes down to.
(This month Kobalt Music, Wixen Music UK, and Inside Baseball Music Publishing teamed up to launch the UK-based Independent Alliance For Artists Rights (IAFAR). The stated aim of IAFAR is “educating and protecting those in the neighboring and related rights sectors.”)
A blanket collective seems to be needed there.
I think that if technology continues to get better and if technology continues to hold in the marketplace, I think it’s going to. I think a real opportunity for music publishers and the labels are the emerging markets. Obviously, Russia, India and China, those are the big opportunities for the future.
Africa as well
Absolutely. I completely agree.
While Primary Wave may not take part in auctions, it does have $300-$400 million in the pipeline to finance acquisitions from BlackRock alternative investors. Primary Wave put its acquisitions on hold after its original investor Greenwich-based hedge fund Plainfield Asset Management imploded in 2010. A considerable blow to you at the time? While it slowed down your pace of acquisitions were better able to stabilize the portfolio of the holdings you had then purchased?
Well, exactly. I think that it was both positive and negative. The negative was this: That when the financial crisis hit in 2008/2009 Plainfield, unfortunately, went under. Plainfield, unfortunately again, was our equity financing. So we had built this fantastic company with fantastic cash flow.
When you talk about being lucky in raising $60 million in a week to start Primary Wave did that come from Plainfield?
Yes. So good news, bad news, right? The bad news was that financial crisis hit and Plainfield goes out of business. We lose our equity financing. But the good news is that as entrepreneurs we were able to buy back a big part of what Plainfield owned in our company at very, very favorable prices. I have to say the Plainfield guys were absolutely fantastic partners. They were honest with us. They were amazing to deal with. They were great partners. It was a shame that they went out of business because we were really rolling at the time. But, as entrepreneurs, we got very creative about really building up our digital team, really building up our brand team, and even building up a bigger marketing team because we wanted to begin other services like management so that we could attract more talent to the company when we didn’t have the ability necessarily to go out and buy large catalogs. But, at the same time, we did build up our creative staff so we could sign new and developing songwriters, and new developing singer/songwriters.
So that’s why I say good news/bad news. The bad news is that we lost a lot of our equity financing, but the good news is that we had a great company with great cash flow and we could expand and be more entrepreneurial.
[In May 2012, Plainfield substantially completed the liquidation of the funds which it managed, and deregistered.]
At the same time, you were still figuring out what parts did or didn’t fit. For example in the past year, less than four years following back-to-back acquisitions of Mark Burg’s Evolution Management, and David Guillod’s Intellectual Artists Management, the two both departed. Has Primary Wave scaled back on Hollywood representation?
No. We are focusing on where our strength is and that’s in music.
You had been seeking to be involved with film and TV development and production.
Absolutely, and we are still in the film and TV business. Cathy Schulman (through Welle Entertainment, a co-venture with Primary Wave Entertainment) is doing that. The reality is that we are in the business, but I want to do it through Cathy. She is a professional. She is spectacular. She is an Oscar-winning producer (for the 2004 American drama film “Crash”) and she’s had enormous successes over the years. So we are going to do it with her, and we are going to focus a lot less on the acting talent side. It’s not a business that I know, and I want to focus mainly on the music business. The business that I do know.
You want to lose money go into the film business.
You are right. Oh no. I think that you are absolutely right.
Where are you from originally?
I was born in Brooklyn near Sheepshead Bay. Grew up Marlboro, New Jersey. Went to school in Massachusetts, and then came back to New York.
You graduated from the University of Massachusetts.
Yes. I had a four year BBA (Bachelor of Business Administration).
The only job you could get was at the leading international accounting firm Arthur Young & Co. (which merged with Ernst & Whinney in 1989 to form Ernst & Young rebranded in 2013 as EY)? You said you don’t talk about it, but you worked there for three years.
I never talk about it.
Well, your accounting position there led to you being hired at Island Records. PolyGram was buying Island Records, and you were brought in as a consultant.
That’s right I was consulting for PolyGram on the acquisition and I met Chris Blackwell and Mel Klein (a top financial officer at Island for nearly a decade, and a key engineer of Island’s sale to PolyGram), and Tom Hayes (Island’s vice-chairman) and they took a chance, and brought on somebody who knew nothing about the music business. I thought I knew everything about the music business, but I realized in about 24 hours that I knew nothing about the music business.
(In 1989, Chris Blackwell sold Island Records and Island Music to the PolyGram UK Group for $300 million)—he explained in 2009: “It had gotten too big and too corporate for me and I couldn’t really handle it.” Following the sale, Island was no longer an independent company, but Blackwell was given a position on PolyGram’s board, and stayed on as CEO of PolyGram’s new Island Entertainment division for a decade. Blackwell severed his association with the company in 1997.)
Before joining Island, what did you get, four or five minutes with Chris Blackwell who is renowned for his brisk meetings?
I think that, maybe, it was three minutes. But I have to say that from those three minutes on he was one of my heroes. I learned in those 11 years working with Chris and Tom Hayes. I learned everything either positively or negatively I know about the business is from those guys. Chris was just the unusual combination of insane business acumen and just spectacular creative acumen.
You worked alongside Chris for 11 years in all.
Something had to rub off, right?
Chris was renowned for his smart deals for his artists and for his label’s distribution deals with Philips/Fontana, A&M, United Artists, and Capitol Records.
Yes, he was a sharp businessman.
Though Island Records never made an exorbitant amount of money label executives elsewhere were deeply envious of its roster. While Island licensed out artists like the Spencer Davis Group, Traffic, Joe Cocker, Roxy Music, King Crimson, and Cat Stevens in the U.S. while Bob Marley & the Wailers remained the cornerstone of its catalog along with U2, Melissa Etheridge, Toots And The Maytals, Burning Spear, Third World, Aswad, Steel Pulse, Grace Jones, Black Uhuru and Chaka Demus and Pliers.
Yeah, you are absolutely right. He started many of the great record companies that followed with joint ventures.
Under Chris, you went on to have a substantial career in running diverse businesses because you headed Palm Entertainment that included Island Records, Palm Pictures, Island Outpost–a chain of boutique hotels in Miami, and the Caribbean, including the Goldeneye estate, once the Jamaican home of James Bond creator Ian Fleming—and Palm Pictures, which encompassed a film division, music labels Palm and Quango, the Japanese anime producer Manga Entertainment, and the digital media companies, Sputnik7 and RES.
You oversaw quite a few companies for Chris.
It was the record company, the hotels, whatever he was involved with.
What did you learn overseeing all these companies?
I learned how to be more of an entrepreneur. PolyGram was really my first big record company job. Island Records was part of PolyGram so it was a major. I thought that the guy that ran PolyGram (worldwide) at the time, Alain Levy, was one of the smartest guys in the music business. Alain Levy had the foresight to buy Island, A&M and Motown, all within a 12 to 18 month period. He really formed what is today Universal Music Group. PolyGram was the basis, and it was Alain Levy’s vision that really started it. All those guys from the ‘70s, ‘80s and early ‘90s that was the heyday of the record business at that time. They were all exceptional record men.
You left Island in July 2000 to go to Arista Records as executive VP/GM to oversee business affairs, international finance, production, special markets, administration sales (noncreative), and the West Coast operation
What was your experience working with L.A. Reid there?
L.A. Reid was one of the very, very rare music executives that could find talent. He could package that talent with the right producer, and the right songwriters and really come up with fantastic records. He was absolutely exceptional at doing that.
He had big boots to fill in replacing Clive Davis, who had run Arista for 25 years. L.A. had co-founded Atlanta-based LaFace Records with fellow producer Kenneth “Babyface” Edmonds. The label, a joint venture with Arista, launched the careers of TLC, OutKast, Toni Braxton, and Usher. In 2000, BMG purchased LaFace, and made L.A. CEO and president of Arista. Clive was forced out due to BMG’s mandatory retirement policy.
Right. We came into an impossible situation and L.A. Reid was coming into to fill probably the biggest shoes at the time in the music business. Not an easy thing to do.
He certainly didn’t have Clive’s blessing either.
No. We had a very rocky start post taking over but the company was really humming. It was one of the biggest labels in the world when we left.
Starting with Avril Lavigne.
Yes, that was really his first big signing.
After four years at Arista, your took on what would be your last label position as chief operating officer and general manager at Virgin Records, which was in shambles by the time you arrived.
Here is what happened. I was under contract from Arista and BMG. Alain Levy tried to bring me into EMI about six months before to be the president in North America, but the head of BMG at the time (chairman/president and CEO) Rolf Schmidt-Holtz would not let me go. Rolf Schmidt-Holtz is a great man. He is a nice man. He is a fantastic guy, and I had a contract. He wanted me to honor it, and that was fair.
They wouldn’t let me go.
Then I think about 8 months later the merger was announced between BMG and Sony and then I think it was January of 2004 it became clear that BMG and Sony were going to merge and Clive Davis was going to come back to run Arista, and L.A. Reid left Arista in January 2004. So Alain Levy came back to me and said, “Hey, do you want to go and run Virgin with Matt Serletic. I chose to do that because I didn’t want to stay for the merger. And here’s the interesting part, Larry. That was in January or so of 2004. I had agreed my deal. I’m coming to Virgin. The Super Bowl happens (Super Bowl XXXVIII broadcast live on February 1, 2004, from Houston, Texas) and Janet Jackson (due to a nipple slip) become a disaster. Virgin starts to fall apart. I show up in April 2004, and the label was reeling because of the whole Janet Jackson incident, and the Rolling Stones’ leaving and other things.
MTV stopped playing Virgin artists over the Janet Jackson incident.
Exactly. Oh no exactly. That whole time is a little bit cloudy for me.
Final question, and on a lighter note, tell me how good is a Fatburger custom burger?
I will tell you that Fatburger was so good that in the late ‘90s when I left Los Angles to fly back to New York, I would always stop at Fatburger, and it was never a good idea to have a Fatburger before getting on a transcontinental flight believe me.
(In 1990, a group of investors led by Island Trading Co. purchased the Fatboy chain which had started out as a mom and pop shop in Los Angeles).
Larry LeBlanc is widely recognized as one of the leading music industry journalists in the world. Before joining CelebrityAccess in 2008 as senior editor, he was the Canadian bureau chief of Billboard from 1991-2007 and Canadian editor of Record World from 1970-80. He was also a co-founder of the late Canadian music trade, The Record.
He has been quoted on music industry issues in hundreds of publications including Time, Forbes, and the London Times. He is co-author of the book “Music From Far And Wide,” and a Lifetime Member of the Songwriters Hall of Fame.
He is the recipient of the 2013 Walt Grealis Special Achievement Award, recognizing individuals who have made an impact on the Canadian music industry.
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