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from good to great

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Hey! This weekend I spent some time testing out ChatGPT and was impressed. I bet that in 2023 we’ll have at least a few viral hit TikTok songs that give songwriting credits to AI tools. There are plenty of copyright and legal concerns for the music industry to sort out with AI, but I’m eager to see what happens next.

Today’s memo is about Motown Records. I’ve been wanting to write about Motown for a while but today was perfect timing given the departure of its CEO and Chairwoman, Ethiopia Habtemariam. Let’s jump in.

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what’s next for Motown Records and Ethiopia Habtemariam?

Last week, Motown Records’ Ethiopia Habtemariam announced that she would step down from her CEO and Chairwoman role. It marks the end of a decade with her as the face of the storied label. She had less than two years in the elevated leadership position. Ethiopia was one of just a few Black women at her level. It’s a shorter tenure than expected.

As Billboard’s Gail Mitchell reported from a senior-level exec, maybe Motown “has never been set up to run on its own,” in the first place. There’s truth to that, but the results also matter.

from good to great with the right joint venture

Motown’s biggest win in the past decade is its 2015 joint venture with Quality Control Music. QC artists like Migos, Lil Baby, and City Girls were a breath of fresh air for the legacy record label that had survived on its laurels from the Berry Gordy era in the 60s and 70s. Motown’s U.S. recorded music market share grew from 0.4% in 2017 to 0.95% in 2022.

These deals don’t come around often, but when they do they can change the trajectory for both companies. In 1992, Interscope Records signed a distribution deal with Death Row Records, which gave then-CEO Jimmy Iovine and Interscope a much-needed boost after its legacy in rock and roll. Interscope continued to benefit even as Suge Knight’s record label self-destructed. Cash Money Records’ 1998 distribution deal was huge for Baby and Slim, but it was arguably a bigger win for Republic Records.

While Interscope and Republic became the two of the strongest labels, Motown continued under the Capitol Music Group umbrella, which has had frequent CEO turnover and recently dealt with the embarrassing FN Meka controversy.

When Ethiopia’s promotion was announced, the public perception was that she now had a direct line to Universal Music Group CEO Lucian Griange, and that her label was no longer under Capitol. It felt like a celebratory moment, especially in the wake of the music industry’s commitment to elevating Black executives in the wake of George Floyd’s murder. But looking under the hood, her leadership may not have been quite as autonomous as other UMG label heads who report directly to Grainge.

a hefty budget

Despite the level of control, Ethiopia and Motown did have more influence on the artists signed. Since she became CEO and Chairwoman in March 2021, here are some of the bigger artists that Motown has signed:

• ​Brandy (who said she only signed to Motown because of Ethiopia)
• ​Diddy (who will release his own imprint Love Records)
• ​NBA YoungBoy (whose label was already working with Motown)
• ​Smino​

Some of those deals are expensive bets. Brandy and Diddy are big names, but they are now in different phases of their careers. It’s less likely that they will generate substantial music revenue moving forward.

And while NBA YoungBoy is in his prime, he just ended his deal with Atlantic Records and recently posted on Instagram that he’s a “$60 million n*gga.” That was two months before this Motown deal went public. Was that the price of Motown’s deal with the Baton Rouge rapper?

Winning a potential bidding war for the second-most streamed artist of the year is a flex, but the numbers have to add up. His massive YouTube streams are likely less lucrative than streams from digital streaming providers, and the YoungBoy fanbase isn’t exactly known for buying many physical or digital albums.

Other Motown artists, like Vince Staples, get tons of press. But Vince’s last solo album in April 2022, Ramona Heart Broke My Heart sold under 20,000 units in its first week. Even if the album is well-regarded, the people in power want to see the results.

It would have been great to see Motown land more artists at Lil Baby’s level. In 2022, Columbia had a huge year thanks to Beyonce and Harry Styles. Interscope had a huge year with Kendrick Lamar and others. Republic had two Drake drops, and big albums from Taylor Swift and The Weeknd. It’s getting harder to find those artists, but those are the ones who can move the balance sheet and justify the spending.

what’s next?

Ethiopia has spent the past 20-plus years with Universal. If she runs another record label, it would likely be an option that gives her more opportunity to run a true standalone entity. That could be at a prominent label or her own venture.

Another option is to join a big tech company to lead its music operation. But timing may be tough given the tens of thousands of employees laid off at big tech firms. The option with the most financial upside is to join a startup with unicorn potential or to get more involved with investing itself.

Motown itself will likely have another leader soon. The brand has plenty of cache and value. Motown has come a long way in the past decade. There’s plenty of room to keep growing, but any further growth may likely need a bit more control for the vision of the label to be fully executed.

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money moves

• so you want to be a TikTok star?
• new joint venture between SoundCloud and Kei Henderson’s Third & Hayden​
• Cardi B got paid $1M to perform 35-min at a 400-person private event
• Jay Z and Roc Nation want to open a casino in Times Square​

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