Tuesday, October 4, 2016

Is Lyor Cohen's Move to YouTube Good or Bad for the Music Biz?

Written by Ed Christman — The jury's out.

The appointment of former Warner Music and Def Jam chief and 300 Entertainment co-founder Lyor Cohen to YouTube as its global head of music sent a ripple throughout the music industry on Wednesday, with many executives at first unsure what to make of it. But a major vote of confidence arrived soon enough, and, surprisingly, from one of the most vocal critics of YouTube: veteran manager (The Eagles, Bon Jovi) and executive Irving Azoff. Speaking with Billboard, Azoff commented, "Lyor has a long history as a defender of artist rights. … We are counting on you, Lyor, to lead YouTube to provide fair payments to artists and give them more creative control."

It's a hope shared by frustrated music business insiders struggling to collect every cent of revenue available for songwriters and artists. "Lyor basically invented the 360 deal," says one high-ranking source. "He is a true believer in real artist development, and he’s very vocal. Plus he has a dynamic [relationship] -- positive or negative -- with almost every industry player."

Others, however, are more circumspect. Music industry veterans know that Cohen is a proven hitmaker who inspires -- or, failing that, demands -- deep loyalty from his staff, but he is also considered controversial because of his temperament and his penchant for playing hardball. It’s a style that has left some hard feelings in certain quarters.

“He's burned all of his relationships in the business,” one executive says, “so I can't imagine it's going to help YouTube [to foster better industry relations]. There's no good will there.”

Then again, many of the qualities that people point to in Cohen -- a brusque manner, heavy-handedness, a sense of superiority bordering on arrogance -- are also lobbed at YouTube, particularly with regard to the company’s oft-maligned policies on the payment and policing of music content on its service.

“The majors have a little bit of love for YouTube but also a lot of hate,” says one industry executive. “They like it because they realize the promotional value, but when you go higher up [the labels’ corporate chain], everybody hates them because of the miserable payouts.” Sources say that YouTube’s payout on the label side ranges from $0.0010-$0.0015 per stream, the lowest in the U.S. industry. “Can Lyor fix that?” the insider asks.

Cohen himself seem to be pointing to more harmonious relations, saying in a statement to YouTube employees (which has been his only comment on the move to date) that the service can head "toward a more collaborative relationship between the music industry and the technologies that are shaping the future of the business. ... I'm confident that we can bridge the worlds of technology and music in ways that benefit everyone, instead of the zero-sum mentality that exists today.”

Mike Jbara, who worked for Cohen at Warner Music Group and now is CEO of music technology company MQA, says that his former boss's appointment “is a strong statement about trying to find a model for everybody, because you know that’s [Cohen’s] heart is in the development of artists. That’s who he is.”

And while Cohen’s leadership qualities can be divisive, many also cite his “warrior” spirit in focusing an organization. “Lyor has always been able to focus on priorities,” Jbara continues, “and where there is a lack of priorities and vision, he is good at focusing and defining them.”

Several publishers also are hopeful that Cohen will help lead YouTube into addressing the business model.

“There has been a large focus on the value gap issue with YouTube,” says NMPA president and CEO David Israelite in a statement. “For songwriters and music publishers, it is even more extreme as they receive even less than record labels and artist. I am hopeful that Lyor can help make progress to ensure songwriters and music publishers receive fair compensation for their significant contribution to the success of YouTube and Google. We look forward to working with him.”

However, other industry sources consider the idea that Cohen can improve YouTube payment structure to be wishful thinking.

“I don’t think that’s Lyor’s call,” one says. “I think there has to be an appetite at YouTube about changing their ways.”

Industry executives remember that it was Cohen himself who first led the fight against YouTube’s low payment back in 2009, when he pulled Warner Music Group’s music from the site, citing insufficient compensation. And at that time, says one industry executive, YouTube’s per-stream payouts were “substantially higher than where they are now.”

EMI Music Publishing Management CEO Dave Johnson thinks otherwise, and reads the appointment as a sign that YouTube may be ready to address the compensation issue.

“It’s an inspired move putting an executive like Lyor -- who is bright, competitive and enthusiastic -- at the crossroads between music and technology,” Johnson says. “The task is to foster communication at that intersection and I think Lyor would be very good at that.... It strikes me that this is a situation where one plus one equals three.”

However, another executive speculates that Cohen’s role is more likely to be in helping YouTube choose and help develop promising talent culled from the countless unsigned artists using the site. At a time when Apple Music, for one, is behaving more and more like a record label, that approach would seem to place YouTube in competition with the record companies.

And that’s assuming the relationship, which dates back at least to 2013, when Google became an investor in 300, remains harmonious. Cohen has never liked playing second fiddle, and the current structure sees him reporting to Robert Kyncl, YouTube’s chief business officer.

Indeed, in the late 1980s, Cohen played a significant role in the Def Jam split between Russell Simmons and Rick Rubin, which saw the latter -- unquestionably one of the most successful and influential producers of the past 30 years -- leaving to form his own label, Def American (which later dropped the “Def”). In the 1990s, when Cohen reported to Jim Caparro at the then-new created Island-Def Jam label group, it wasn’t long before Cohen usurped control and Caparro subsequently resigned, although they did work together a few years later at WMG.

And in when Len Blavatnik acquired Warner Music Group in 2011 and initially had both Cohen and former owner Edgar Bronfman on board, Cohen tried a power play on Bronfman -- the man who had brought Cohen to WMG and appointed him head of the music operation -- so that he would be the one reporting to Blavatnik as CEO, according to sources at the time

That didn’t work out well for either: Bronfman was kicked upstairs to the board eventually resigning in 2013, but Cohen -- who has been quoted denying that power play -- was passed over with the appointment of Steve Cooper as CEO and subsequently pushed out by both Cooper and Blavatnik, although this time it was Cohen who resigned in September 2012.

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