Why make the leap?
It’s a question that springs up now and again in this business, whenever successful and/or renowned entrepreneurs jump into a job at a major music company.
Universal Music Group, of course, has a rich history in this field. (Witness, for example, the wildly successful history of UMG’s Interscope Records – run first by indie-entrepreneur-turned-major-label-guy Jimmy Iovine, and then by, well, indie-entrepreneur-turned-major-label-guy John Janick.)
Over the past year, this story arc has played out yet again at UMG, but with a twist.
In mid-2022, JT Myers and Nat Pastor were well established as the forward-thinking minds behind mtheory – a multi-pronged services and advisory engine for fellow indie music entrepreneurs. Their success to date had included work with artists such as Tove Lo and Tom Odell, as well as Major Lazer’s Lean On, the first fully independent track to reach No.1 on the US Top 40 radio chart.
Then Sir Lucian Grainge called. The Universal boss pitched to Myers and Pastor the concept of running a united UMG independent label/artist services division with global might – arguably the first truly worldwide swing Universal has taken to challenge Sony’s The Orchard.
“At first we were kind of confused by the whole conversation, to be honest,” laughs Myers. “But as we got more into it, Lucian explained that he saw the whole [record] business changing – and our ears really pricked up.”
Grainge’s pitch? It was time for UMG to embrace the burgeoning indie/entrepreneur sector like never before… globally. UMG’s indie services operation, including both Ingrooves and Virgin Music, was to be housed under a unified Virgin Music Group brand – with Myers and Pastor at the helm.
If that is, they were willing to make the leap.
“Lucian explained that much of Universal was built by combining smaller businesses with a culture of entrepreneurship,” adds Myers. “When we looked at [Grainge’s offer], with all of the capabilities it would enable us to inherit, it provided exactly what we needed to be an even better partner for independent labels and artists. We felt like we had to take this shot.”
Adds Pastor: “JT and I care deeply about the independent music space, because we’re from the independent music space. That’s what drives our mission at Virgin Music Group – that this is a moment unlike any other in which entrepreneurs and independent music businesses can find global success.”
Since being officially announced as co-CEOs of Virgin Music Group in September 2022 (via UMG’s acquisition of mtheory’s label division), Myers and Pastor have been busy.
Standout successes for Virgin Music Group in their first year in charge have included Nigerian artist Rema (signed to VMG via Mavin Records), whose Calm Down – boosted by a duet with Selena Gomez – recently became the first African artist-led track to surpass a billion streams on Spotify.
Elsewhere, Eslabon Armado’s Ella Baila Sola (performed with Peso Pluma and signed to VMG – formerly Ingrooves – via Regional Mexican specialist DEL Records) became the most streamed song of summer 2023 on Spotify around the world.
And while Virgin Music Group has now officially blended together the units formerly known as Ingrooves and Virgin Music, the legacies of these two companies live on – through successful partnerships (examples: David Kushner and NF [Real Music] on the Virgin Music side; Jung Kook [BigHit/Geffen] and The 1975 [Dirty Hit] via Ingrooves), and through technology. (Virgin Music Group today is the proud inheritor of three AI/digital marketing patents from the ex-Ingrooves team, including tech that can analyze music performance on TikTok to determine its likelihood of ‘crossing over’ to subscription streaming success).
Below, MBW asks Myers and Pastor about their first year running Virgin Music Group, which now operates in over 30 separate territories around the globe.
The duo also discuss their healthy rivalry with The Orchard, and why they implore the music industry to think twice before calling the company they lead a “distributor”…
‘Distribution’ used to mean moving boxes from warehouses to stores. Then it meant getting files onto DSPs. Now we use it to mean all sorts of things, covering all kinds of services and investment into artists. Is what you guys do ‘distribution’?
JT Myers: You’ve been eavesdropping on our team meetings! Nat and I are going to do our best to retire the word ‘distributor’ as a descriptor for [VMG].
Of course we do distribute music – and there are 100 other companies that also distribute music. But we don’t want to be defined by the most commodified thing we do.
“Getting music out is easy; the hard part is everything that happens after that… We don’t want to be defined by the most commodified thing we do.”
Getting music out is easy; the hard part is everything that happens after that. Marketing strategy, audience development, BI tools, and much more. Deliberately not thinking of ourselves as a ‘distributor’ has helped lead us to cool new things we’re going to add to our product offering.
In the age of artist deals like the one famously enjoyed by Taylor Swift – i.e. owning her own copyrights but being marketed and distributed by a major label – what is an ‘independent artist’ or an ‘independent label’?
Nat Pastor: We’re getting to the point where terms like that don’t have a lot of meaning anymore. We come from a time when being independent meant being part of a subculture, doing something unique. But sometimes in the past that meant also limiting your ambition.
JT and I always talk about watching that [paradigm starting to change] with artists like Major Lazer or Mumford & Sons – independent in the sense they weren’t signed to [a major in the US] but with huge ambitions and the commercial success to match. Today, that same story is now happening in hip-hop, Latin, Afrobeats, Regional Mexican… it goes on.
It’s so exciting to be an entrepreneur now, because there are so many ways to find success and build careers. With Taylor Swift, The Weeknd, and other [megastars who own their underlying copyrights but are signed to majors] it’s clear that these artists have the opportunity to do something bespoke in today’s business. Your corporate affiliation shouldn’t define who you are as an artist, and neither should your deal structure.
To me, what defines independence is a commitment to being an entrepreneur, and an openness to do things differently. That’s what we’ve dedicated our careers to so far, and that’s what we’re dedicating ourselves to at Virgin.
It’s been argued by some in recent years that ‘services deals’ might be an existential threat to major labels. It wasn’t that long ago that a senior figure working at one of the majors in the US – not at Sony, I should add – told me he believed Sony’s investment in The Orchard was “empowering the cannibal from within”. What’s your take on that kind of mindset and how it’s changed in the past few years?
Myers: It’s a lot more nuanced than that. When we were in mtheory, one of our mantras was ‘artists need better partners’.
Building a career as an artist is hard, there are a lot of things out of your control; you need a lot of fortune and people working really hard to help you get to that point. There was a time when if you wanted to be successful – in the mainstream definition of the word – a major label was your only path. That’s not true anymore, and that’s a great thing. But major labels still have a real value proposition, with a lot of resources and creative support they can bring to bear.
“Another way of describing ‘DIY’ is ‘you’re on your own’. It’s great that it exists as an option for artists today, but it’s not the only option.”
One of the bad terminologies that’s developed [in recent years] is that of the ‘DIY’ artist, because it oversimplifies what actually happens. You don’t just upload a song, go on your Instagram and suddenly you’re a global superstar. That glosses over a lot of the hard work that happens. Another way of describing ‘DIY’ is ‘you’re on your own’. It’s great that it exists as an option for artists today, but it’s not the only option.
Let me pick up on that: One of your rivals, Believe, has its own ‘DIY’ service, TuneCore. Warner Music’s ADA also has a ‘DIY’ – aka self-upload – service underneath it in Level Music. The Orchard has AWAL, which at its base tier is kind of a filtered version of ‘DIY’ (you ultimately have to be invited to upload via AWAL). Do you have any interest in adding a ‘DIY’ upload service to Virgin Music Group’s offerings?
Myers: We don’t have any intention of doing that, and it’s not because it’s not interesting as a business model. We just don’t see the need for it.
This idea that you can see ‘the matrix’ of proprietary data [within your own self-upload platform] so you can see when something’s popping before anybody else? There’s really widely accessible data that shows you the same thing in real time, with every piece of music in the world.
“All of those people at the base of that pyramid are human beings trying to make it in a really hard business. Something doesn’t feel right about that.”
The bigger issue for us is this: I’m sure you’ve seen some of these companies draw diagrams [about the evolution of DIY artist careers in their structures]. It’s always a pyramid, right? All the new artists go at the bottom, and then a [small percentage of them] are raised up or upstreamed or whatever to the next level. But, to us, all those people at the base of that pyramid are human beings trying to make it in a really hard business. Something doesn’t feel right about that.
Major labels used to get criticized for ‘throwing a bunch of s–t against the wall and seeing what sticks’ [as they would sign many artists and only a few would be successful].
Well the [pyramid system] casts the net even wider. It’s not why we got into the music business. We want to work with a curated group of partners and add value, rather than saying, ‘We’ll do nothing [for each DIY artist] and wait to see if anything happens.’
I guess this goes back to the ‘distributor’ thing: There are a lot of different deal types than any one artist or label might sign with a company like VMG, ranging from a smaller commitment on your side to a much larger investment, and the margins on each side will be reflective of that.
Pastor: There is no ‘one size fits all’ deal anymore. Each label and artist we work with [at VMG] has different needs.
Our challenge is to organize the offerings we provide to partners so they’re not overwhelming – so they can understand what [each option] does for them and how we charge for it. This isn’t about the biggest advance, or the lowest fee, or the shortest term. That’s a race to the bottom. It’s about finding creative and fair deals that are a ‘win-win’ for everybody.
“We believe you get what you pay for. For years [at mtheory] we were underwhelmed by the level of service from some of those we now call our competitors.”
We believe you get what you pay for. For years [at mtheory] we were underwhelmed by the level of service from some of those we now call our competitors.
Our job [at VMG] is to provide our clients with outstanding service and repeated results, which makes them feel like we’re the best partner they could ask for. We want to show our receipts.
Myers: For artists that don’t want to be their own record label [i.e. DIY], there are still a lot of [non-major-label] choices that are great for them. What bothers us is artists who’ve been given the wrong impression of what they’re signing up for, when a company is telling them ‘we can do all that for you’ and doesn’t deliver.
We saw that at mtheory; a lot of artists went into situations [with ‘services’ companies] where they thought they were going to get marketing, distribution, capital etc. and what they really got was a check… and that was the last time they heard from the company they signed to.
“it sucks when an artist is told they’re getting one thing [i.e. certain ‘services’ commitments] then finds out they’re not… and that there’s 5,000 other artists who’ve been sold the same story in that system.”
Some management teams and artist teams are totally capable of working in the ’you’re on your own’ construct. It’s great that can happen. But it also sucks when an artist is told they’re getting one thing [i.e. certain ‘services’ commitments] then finds out they’re not… and that there’s 5,000 other artists who’ve been sold the same story in that system.
That’s what’s caused most of the criticism we’ve heard of the ‘artist services’ model from the artist and manager community. At Virgin, we want to have a more honest conversation about what it means to go the independent route.
The Orchard has seen unrivaled success in the Latin Music world in recent years, which has paid off with successes like Bad Bunny, Peso Pluma etc. It’s fair to say the investment from Sony in Latin territories for The Orchard was heavy and early, and that head start has partly led to what we see today. But how do you intend to compete with it as VMG in the years ahead?
Pastor: What you said is exactly right: The Orchard was there 10 years ago, before everybody else. It still shows, and they’ve built that into a great business. But of course we plan to compete.
Myers: We already have a great team in Latin America, and it’s a big area of focus for us. You can see that with our work with DEL Records and our new relationship with [Mexico’s] Grupo Firme and Music VIP.
Kudos to The Orchard for seeing something before anybody else did and, yes, we’ve got catching up to do. But there’s plenty of room to grow in Latin America and we’ve made great progress. We like our prospects there.
Which other markets around the world are you particularly excited about from a VMG growth perspective?
Pastor: There are so many markets in the world that haven’t traditionally been territories that the majors have focused on for monetization reasons, amongst other reasons, that today have really robust, active, and healthy independent music communities. Virgin can really be successful in globalizing a lot of that music.
We’ve already had so much success in K-pop either directly as Virgin or with our partners at Interscope and Imperial – with examples like NCT 127, Stray Kids, TXT, Seventeen, Jimin, New Jeans, Jung Kook, (G)I-DLE, and, of course, BTS. These are huge drivers of our business and will continue to be; Korea is producing music that is very global and that fans are excited to consume around the world.
“There are so many markets in the world that haven’t traditionally been territories that the majors have focused on for monetization reasons, amongst other reasons, that today have really robust, active, and healthy independent music communities.”
We’re now also seeing that happening with artists from West Africa and Nigeria; it’s hard not to be excited about the Afrobeats movement and what global stories like Rema and Mavin Records portend for the future. Then whether it’s parts of South Asia or elsewhere, we see many other big opportunities in front of us.
Myers: The most exciting thing is nobody really knows [where in the world the next hit artist is coming from]. But there are multiple examples of countries where you have strong local creative communities, huge populations, giant diaspora populations, and streaming breaking down global barriers. Latin was arguably the first example of that but it feels like there are 30 or more places globally that are on deck for similar things to happen. It’s so exciting.Music Business Worldwide