Universal Music CEO Takes aim at Spotify and Apple: Artists are “Undervalued” in Streaming

Lucian Grainge, CEO of Universal Music Group said that music streaming business models must “evolve” in order to reward musicians — no matter if they’re signed to major labels — and listeners.

The executive sent a Wednesday message to employees. He criticized the streaming service’s royalty model. These services determine the payments they make to rights owners based on the pool of money that comes from ads and subscriptions, which is then divided by the contributions made to total streams.

Although Grainge mentioned Spotify and UMG’s collaborations as part of streaming’s industry shift, the CEO stated that it was time for a new model to be developed “to keep up with changes.”

There is an increasing disconnect between the fans’ devotion to artists they value and the payment of subscription fees by platforms. Grainge stated that the current system undervalues the contributions to too many artists and the engagement of many fans.

While Grainge did not give details, he said that the best model wouldn’t pit artists against each other but instead would support “DIY”, indie, and major artists. He also noted that UMG was working towards that model and stressed fair compensation for music creators.

Grainge made these comments approximately four months ago, when major music streaming platforms and music publishers including Universal reached an agreement regarding royalty rates for songowners through 2027. The agreement provides that song owners will receive an increase in their royalty rates to 15.35 percent starting this year and increasing incrementally until 2027.

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