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HITS Daily Double

I.B. BAD: BRITANNIA RULES

The world’s biggest music groups are both being run by Brits, now that Rob Stringer has joined Sir Lucian Grainge in royal purple. Warner Music U.K.’s Max Lousada has become one of the hottest execs in the business, and Sony’s Jason Iley is assertively building a new competitive team, while UMG’s David Joseph continues to lead the Premiere League standings on the way to another championship season.

Nonetheless, it’s been a relatively soft year for big worldwide acts signed out of the U.K., with the notable exception of Adele, and not many new acts that have captured the top of the U.K. sales charts either. Meanwhile, not one U.K.-signed act of recent vintage is in the U.S. Top 50 album sellers YTD; Adele (#1), David Bowie (#13 and 46)
Radiohead
(#17) and Coldplay (#25) are the only U.K. artists on the leaderboard, with The 1975 (#51) the highest-ranked newer act. This paucity of British breakthroughs during 2016 stands in contrast to the last several years, during which the U.K. has been a prolific source of breakout acts, including One Direction, Sam Smith, Ed Sheeran, Hozier, Calvin Harris and Ellie Goulding, along with U.K.-inked Aussies 5 Seconds of Summer.

Why, then, do British execs still make considerably less than their American counterparts, considering that the business has become so global in scale—especially now, as the streaming sector explodes while their acts throw off such big sales numbers? The reason for this salary gap is rooted in the fact that for years the profits of the U.K. labels paled in comparison to those of the U.S. companies; it’s also one of the reasons that most British execs want to relocate to the U.S.

Look for more changes in the executive ranks on the heels of Ferdy Unger-Hamilton’s relocation from Polydor to Columbia, as some key deals expire and certain individuals go on gardening leave. But the futures of certain top execs appear to be set in stone: Word is that Island’s charismatic Darcus Beese and Virgin EMI’s Ted (The Hammer) Cockle have had their new deals in place now for some time. Sonny Takhar is planning to spend most of his time in L.A. as he starts his new venture, which will have a distribution deal with Sony. The newco is being financed by private investors rather than private equity, and is said to have Simon Cowell’s full support. On this side of the pond, the deals of a number of top U.S.-based execs are expiring within the next 18 months, but most are expected to stay in place, with the forecast for continued growth from streaming playing a role in those negotiations.

LET THE GOOD TIMES ROLL: The Big Three’s collective bet on streaming as the driver of a return to prosperity has started to pay off in earnest this year. Thanks primarily to streaming revenue, Sony Music and WMG are showing 14% profit margins in their most recent quarterly earnings reports, while UMG’s profit margin for the first three quarters is 9.7%, with sizable upticks each quarter. In all, streaming generated $1.1 billion for Uni during the nine-month period, a 64% year-over-year jump, setting up what will be the company’s best year since Grainge took the reins in 2010. Meanwhile, under the leadership of Doug Morris, Sony’s streaming business is in line to hit or surpass $1b by the end of the year. Because of this explosive growth, the majors are becoming extremely aggressive in terms of A&R; they’re throwing down again because they can finally see a light at the end of the tunnel. Will private equity jump in next? The values of startups and assets acquired in the last 10 years will certainly appreciate in reaction to the exponential growth of a once-moribund, now revitalized music business.

MARS LANDING: Bruno Mars24K Magic, released 11/18, is projected to debut with 175-185k in sales. That’s a respectable number, but the pop superstar is coming off 2012’s Unorthodox Jukebox, which had a 192k first-week on the way to 4m+ RTD—and his brand has grown dramatically in the last four years. Bruno’s TV appearances, which have included 60 Minutes, “Carpool Karaoke” and the AMAs, have boosted the new album’s number, despite the fact that the AMAs don’t typically move the needle, but not by enough to threaten what will be this week's runaway chart-topper. Metallica’s self-released Hardwired… to Self-Destruct, the band’s first LP since 2008’s 2m-selling Death Magnetic, is expected to finish in the 300k range. Miranda Lambert’s The Weight of These Wings (RCA Nashville) will bow with 130-150k, nipping at Bruno's heels. If his brand is bigger than ever, why isn’t his sales-
and-streaming forecast commensurate with this growth? Could it have to do with Bruno’s decision in May to end his longtime association with manager Brandon Creed, who’d guided the artist to superstardom? Bruno no longer has to pay a commission, but at what cost in big-picture terms? This appears to be yet another example of manager-less artists doing less well in the absence of professional artist management.

NAMES IN THE RUMOR MILL: Mike Scott, Mike McCormack, Miles Leonard, Nick Raphael and Dave Dollimore.