Welcome to The Manager’s Playbook, my personal newsletter where I share insights, tips, and strategies for artist managers on how to navigate through the music business.

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Ruiz’s Letter:

The Present Seeds The Future

What a week it was in LA during the Grammys last week.

I know this one is coming a few days after but let a man live. I’m just catching up to life now. I mean, besides the usual suspects winning awards and the snubs that always get everyone talking, we had some real wild cards thrown into the mix.

First off, let's talk TikTok versus Universal Music Group. This feud is something else. So, I’m flying from YYZ to LAX (the wifi was actually working on Air Canada this time smh) and my socials start lighting up on the smart phone. It was like watching two heavyweight UFC fighters go at it for a title fight but instead of battling it out with MMA technique both UMG & TikTok were throwing haymakers in the form of open letters.

Can’t lie, I find the literature and conversation surrounding this incredibly interesting, specifically the nuances. Regular readers of The Manager’s Playbook Newsletter know I enjoy diving into business specifics. It helps inform my strategic decisions which in turn I hope provides value for yours.

On that note, when you really dig into it, the recent UMG vs TikTok developments aren't at all surprising or unexpected. 

I’ll do my best to break down the situation based on what I’ve researched. Don’t hold me. I’m no expert. Just doing my best to provide some color for both you and I.

Speaking of drama, the rain was next level, especially on Grammy night. Imagine this: flood warnings flashing, streets turning into rivers, and us “The Industry”, navigating through the chaos with those “smiles” on our faces…

Because in LA, nothing—not even several Amber Alerts demanding to ‘STAY HOME UNLESS AN EMERGENCY”- is going to stop us ever INCREDIBLY IMPORTANT music folk…from attending ever INCREDIBLY IMPORTANT after parties.

I had some of my Toronto 8 Til Faint Artist Management (what up Erica & Martin) with me, banging around Los Angeles for non-stop “ever incredibly important after parties”, meetings, strategic planning sessions, events, more meetings, connecting with old friends, debriefs, even more meetings and squeezing in team workouts whenever we could catch a break.


It was a marathon filled with triple-triple coffees (that’s three sugars and three creams for us Canadian folk), WeHo Soho House link ups and less than proper sleep. The torrential downpours making every day feel like an eternity didn’t help either but the reality is, despite the chaos, we were riding the momentum with a ton of energy. 

The Grammys are always a spectacle. The week is full of events/ parties. However, over the years my perspective has shifted from looking forward to hitting up those late night events to getting up early in the am and getting after it in those breakfast meetings. Don’t get me wrong, networking at late-night events, debating with Carl Chery about the GOAT HipHop 3 album run can be incredibly entertaining. I live for those convos. However, this time around, it was more about morning coffees and impactful execution for me.

Speaking of impact, there’s a surprise in the works.

The Manager’s Playbook locked down an interview with a heavy hitter in the game.

Can't drop names just yet, but trust me, it's a titan of the business behind the scenes.

As I wrap this up, I gotta be clear. Even though Grammy week can be exhausting I wouldn’t have it any other way. I’m filled with gratitude. Being able to do what I love with a level of excitement that never seems to fade, even as the priorities shift from late nights to early morning, is a blessing. So here's to chasing dreams, making connections, and keeping that fire inextinguishable. 

Stay sharp. Stay humble TMP readers. Let’s get to it. Lots to to discuss.

STRATEGY

UMG vs TIKTOK:

Unless you’ve been living under a rock, by now you’re fully aware that Universal Music Group, the largest rights holder of music, has removed its entire catalogue of songs from TikTok. That means songs from UMG artists like Drake, Billie, Swift and roughly 3 million other records are no longer available on the platform. 

What you might not be aware of is the domino effect of this decision, which hits not only the entire music industry, but other sectors as well. 

So, the question is why is this happening?

TikTok is vital for artists offering rapid audience expansion and visibility. Through viral trends, artists engage millions globally, democratizing music discovery. Its influence extends to chart success and cultural relevance, transforming the music industry by providing unmatched exposure, sometimes in a matter of hours.

The next and better question is what is happening? Well, it depends on who you ask.

From UMG perspective:

1. TikTok's estimated payment to the entire music copyrights industry is a broad estimate of $400 million per year.

2. TikTok reportedly accounts for about 1% of UMG's total revenue, which translates to around $110 million per year.

3. The deal with TikTok is reportedly a “buyout” agreement (like meta) vs revenue share agreement (like Spotify) that is a fraction of what Meta and similar social media platforms pay. Reportedly 2-3x TikTok pays.

4. UMG feels the social media giant is operating more like a streaming platform, going as far as introducing its own DSP, TikTok Music.
   

In recent days, the likes of Primary Wave, Downtown, Hipgnosis, and the National Music Publishers Association have all publicly backed UMG.

From TikTok Perspective:

1. Universal Music Group's actions prioritize their own financial interests over those of their artists and songwriters.

2. Despite Universal's claims, they have opted to withdraw from a platform like TikTok, which provides valuable promotional opportunities to talent, both new & legacy acts, with its vast user base of 1.92 billion users.

3. TikTok emphasizes that it has successfully negotiated "artist-first" agreements with all other labels and publishers, highlighting Universal's self-serving stance.

4. TikTok believes UMG has tremendously over valued the app’s reliance on their artists catalogue.

5. Now, amid the dispute, TikTok has a chance to explore its AI catalogue. Ironically, Tencent Holdings, leading a consortium (Concerto Partners LLC) that owns a 19.92% stake in Universal Music Group, heavily invests in AI. Notably, one AI song on Tencent Music has over 100 million streams.

6. Revenue sharing isn't ideal for TikTok as it's not a consumption platform. Moreover, this hasn't been a successful profit model for other DSPs. Therefore, TikTok sees no need to disrupt a working model for revenue sharing.

From the Artist Perspective: 

1. It’s all about the money for big corporate giants and not much else. The sentiment is that the art comes last

2. UMG artist who heavily rely on the platform for marketing and are somewhat showing some signs of concern

3. Songs that are currently going mega viral for new artists are coming to a full stop, diminishing their chance of success.

4. Artists who were not reliant on the platform and have already built a base are relieved. They no longer have to deal with self-promotion 

5. My take, most UMG artists (and I would say marketing managers) aren’t too upset as they don’t have to constantly feed the beast with cookie cutter plans to “go viral”. Social Media fatigue is definitely a thing that has been felt by most, if not all artists. 

Tackling the UMG perspective:

TikTok estimated payment to the music industry is reported to be 400 million annually (according to Music & Copyright). Nothing to scoff at but when you pull back and see TikTok’s annual revenue on advertising is a reported 18 billion dollars you start to see the larger picture.

The undervaluation of music has long been a topic in music business discussions, yet its impact as a driver of cultural and economic development can’t be understated.

For example, in my city of Toronto, hometown hero & legend Drake, one of the top earning UMG recording artists, contributes approximately 400 million annually to the city's economy, marking 5% of its $8.8 Billion annual tourism revenue.

Sidenote* There really is a thing back home as Pre-Drake & Post-Drake.

To give further perspective, Apple, with a long history of trading on music's social capital, reported a mind blowing quarterly revenue of 119.6 billion dollars. That’s ONE HUNDRED AND NINETEEN BILLION DAMN DOLLARS. IN 90 DAMN DAYS!

Take Kate Bush's 1985 song "Running Up That Hill" for example. Initially propelled by a sync on Netflix's "Stranger Things" in the summer of 2022, it gained rocket ship momentum on TikTok billion plays where there is buy out deal but on Spotify it only had 400 million plays:

As for not being a consumption platform, take a look at a show for Steve Lacey back in Oct of 2022. The audience clearly only knows the song’s hook, which was the driving force for TikTok creates back then. 

It’s quite clear from UMG’s perspective, some things are not adding up. 

Here’s the other elephant in the room

Universal Music Publishing has also made a statement to take down their copyrights which includes approximately 4 million songs across all three major labels.

A real life example, Sza is under contract with Universal Music Publishing Group (UMPG) as a writer so even though she is signed to SONY as a Recording Artist her Grammy Award winning song ‘Snooze’, may be removed from platforms within weeks. This is because of a 30-day "tail" clause in UMPG's deal with TikTok, according to reports from MBW.

I will say this. It's tempting to label TikTok as the villain from a major label's viewpoint. However, there’s a lot of great TikTok employees who dedicate themselves to the value proposition for artists, creators, and regular users like us. TikTok also invests billions to enhance user experiences, accelerating the rise of artists and songs faster than traditional platforms or any label could ever do.

Also, suggesting TikTok underplays artists' value without addressing other broader platform AND label issues is misleading.

There’s also the part where major labels have to umm…get creative because... well, I’ll just let Gino The Ghost tell it:

ginotheghost

View more on Instagram

All in all, there’s a lot to consider with much of this. It could be resolved any day now. Or, it could be a stand off that remains for a long period of time. Keep in mind, this is not the first time this has happened. In 2008 Warner pulled all of their music videos off of Youtube. Nine months later, the major label returned except they had spent 2 million dollars in a mostly failed effort to scrub User Generated Content from the platform. 

Today, YouTube is considered a preferred partner of the majors. Most recently, Youtube surpassed the 100 million mark of paid subscribers to Youtube Music. They announced in September 2022 that it had paid music rightsholders over USD $6 billion in the 12 months. Maybe this is a positive sign of where things can go with TikTok/UMG. Or maybe, this is the beginning of a very different music business. 

If you made it this far, I respect the discipline in reading this. Shit takes effort and tbh some of this might be way way way off…

Truth is, NO ONE actually knows what’s going on besides those individuals at the negotiation table.

I’ll leave you with this thought though. Human ingenuity has historically found solutions to challenges. We’ll figure it out. However, the role of AI in shaping the industry's future adds another layer of complexity to an already intricate landscape.

PAY ATTENTION

“This is A Guy Who Doesn’t Fear Anyone”

Prior to the official fall-out with TikTok, The New Yorker recently did a piece on the man who is leading the charge for UMG/UMPG rights holders against the behemoth tech company. That man in question is Sir Lucian Grainge, arguably the most powerful man in music.

I spent a significant amount of time with Lucian between 2016-2017. Throughout our interactions, I gained valuable insights from him, not just about the music business, but also about the importance of embracing individuality and pushing boundaries. He embodied the idea that unconventional thinking and a willingness to challenge the status quo are essential ingredients for success in any endeavor.

During one of our conversations, I couldn't help but inquire, "Did you always know you were special?" His response was simple yet profound. He paused, before replying, "Different." In that moment, it became clear that Sir Lucian Grainge embraced his uniqueness with humility and self-awareness. It seemed, from my perspective, he didn't see himself as "special" in the conventional sense; instead, he recognized the power of being uniquely him.

Where Will the Next Big Wave of Growth in Music Come From?

The music industry is at a crossroads as streaming growth begins to slow down and the largest tech company for music discovery is at odds with the music industry (even if agreements with the two other majors are in place). In the last few editions we covered the layoffs that have been taking place at streaming companies, labels and other entities in the industry. So now the question is, where are the labels going to get their next big wave of momentum from?

Keep this in mind as 2024 plays out. It’s expected that labels are going to go all in on global music (ex. the Latin and Indian music markets). There will also be a big push to innovate artist-fan engagement. The most successful companies in the history of the world never waited for opportunities, they created them.

TikTok Video Length Limit Will Soon Increase to 30 Minutes

TikTok is reportedly testing a 30-minute upload limit, moving towards longer content. The news comes from a LinkedIn post by Matt Navarra, but TikTok hasn't confirmed officially.

We are seeing a series of calculated moves on TikTok’s part to depart from the short-form model and to align it more closely with YouTube.

The longer upload limit only opens up more possibilities for content. It could lead to more concert videos and in-depth content from artists. Either way, it’s an update that you will want to take full advantage of once it’s released.

INDUSTRY NEWS

Lucian Grainge Announces BIG Changes at UMG

UMG, led by Sir Lucian Grainge, is shaking things up in the music world. They've decided to revamp how they operate in the U.S., putting John Janick and Monte Lipman, big names in the music biz, in charge of supporting a wider range of UMG's labels.

Think of Janick and Lipman as the coaches for various UMG music teams. Janick will be supporting labels like Blue Note and Capitol, while Lipman focuses on Def Jam and Republic. This move is about giving these labels extra support to help them grow and thrive, while still letting them do their own thing creatively. It's a big moment for UMG, and they're gearing up for some major growth and innovation in the music industry.

Major Changes at Capitol Music

One thing to note about the music industry is that everything is connected. Music exec Michelle Jubelirer resigned from her position as CEO of Capitol Music Group. About a day later, Tom March was named as her successor:

This all comes after Lucian Grange discussed restructuring plans at UMG, and as layoffs persist across the industry, both topics that we touched on earlier in the newsletter. Capitol Music Group (CMG) is an American front line umbrella label distributed by Universal Music Group.

On that note, look at what was just announced..

New Mountain Capital-led group closes acquisition of BMI

New Mountain Capital has completed the acquisition of BMI, the US performing rights organization. Mike O’Neill will continue as BMI's President & CEO. The deal includes a $100 million allocation to BMI's affiliates. The acquisition marks a new chapter for BMI, focusing on growth and supporting music creators.

Who won Grammys for 2024? See the full winners list here

Here go the Grammys again.. sparking living room debates about who got robbed of their award. Check this out if you haven’t already. Any surprises?

ON REPEAT.. 🔥

RICK OWENS (feat. Ken Carson)
Managment/Label: Stay High / Epic Records Germany distributed by Sony Music Entertainment

STREAM:
Spotify | YouTube   | Apple Music

WHAT WE’RE WATCHING

The Business Behind The Grammys — Trapital

“This episode is about music's biggest night. But we’re not interested in who should win. This is about the business behind the show and everything surrounding it.

We break down how the show makes money for CBS and the Recording Academy despite the viewership decline, the massive For Your Consideration business, the campaigning required to win an award, why the Grammys where created and major controversies over the years.” - Trapital

STREAM THE PODCAST:
Spotify | YouTube   |  Apple Podcasts

NEED TO KNOW

COPYRIGHTS

Most Don’t Understand It.

Let me just start by explaining a simple, yet often confusing concept:

Each song is made up of two copyrights: Performing Arts Copyright(aka musical composition) and Sound Recording Arts Copyright (Master Recording).

When you own or license copyrights you now have the ability to exploit a ton of rights within them to how you see fit.

This is important to understand as UMG/UMPG make up a enormous share of ownership and/or control licenses to these copyrights in the form of songs themselves. And this is where the money from a song gets made! The rights within a copyright.

Here’s a very basic illustration I drew up to wrap your head around the concept of copyrights.

Think of the circle representing a song. Any song. One part of the song is the writing and the other part of the song is the recording.

If you split the song in half it represents two parts. The writing (aka PA Copyright) and the recording (aka SR Copyright). 

Also, yes…I do realize I write in all caps. Computers are my excuse for the lack of any good penmanship I never had and I’m sticking to it.

Bio

I’m Mauricio Ruiz, the Founder/CEO of 8 Til Faint, a talent management agency with over 5 billion audio streams worldwide. Our past and current clients include Grammy nominated, Juno Award winning multi-instrumentalist and singer/songwriter Jessie Reyez, Marley Bleu, and more. I am also the Co-Founder of Mad Ruk Entertainment, a content agency with over 3 billion long form video streams worldwide. Our client list includes The Weeknd, Eminem, and Celine Dion, along with renowned brands like Nike, Pernod Ricard, Canon, and the NBA.

Follow me on IG @mauroisruiz

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