The Steve Cooper exit interview: ‘All profitable corporations get to some extent the place they’d profit from recent eyes.’
Krispy Kreme donuts. That’s it. That’s the model on Steve Cooper’s résumé that actually leaps out and whacks you within the kisser.
Not simply because its flagship shiny treats depart even essentially the most health-nutty Angeleno salivating like a Pavlov hound. However as a result of Cooper’s reign as CEO of Krispy Kreme Inc (from 2005 to 2006) sums up how very un-music-industry he was. Till he wasn’t.
Steve Cooper wasn’t even Steve Cooper again then. He was Stephen F. Cooper – described by everybody from Wharton to the Wall Avenue Journal as a company “turnaround guru”. His occasion trick? Taking maintain of distressed companies, chopping out the foundation reason for that misery, and making the numbers level in the fitting course.
And so it was with Krispy Kreme: Cooper efficiently rescued a failing firm beforehand dogged by poor fiscal efficiency and dodgy accounting scandals.
Cooper was so good and so reputed at these salvage jobs, he bought the decision about one of many all-time worst company implosions, Enron, which he resuscitated and solidified as interim CEO from 2002 to 2005. Different restructuring missions included MGM, the place he turned Vice Chairman in 2009.
After which, in 2011, Warner Music Group got here knocking. Stephen F. Cooper was employed as CEO of the WMG within the wake of Len Blavatnik / Entry Industries’ $3.3 billion acquisition of the ‘third main’ – throughout a interval of painful and repeated decline for the report enterprise.
The writing appeared on the wall: Cooper would absolutely take a chainsaw to Warner Music Group, slim down its operations, revoke acquisitive progress plans, kill off frontline labels.
However Stephen F. Cooper didn’t try this. He turned Steve Cooper. And he flipped the script.
Inside two years of Cooper’s arrival as WMG CEO, with the report {industry} nonetheless in decline, Warner Music Group dedicated to paying GBP £487 million (round USD $765m) to accumulate Parlophone Label Group.
Worldwide big-spending quickly adopted, with pioneering acquisitions together with Gold Hurricane in China (2014), adopted by buyouts of Spinnin’ Data (2017) and Germany’s EMP (2018).
Removed from downsizing Warner, Steve Cooper as a substitute wager on music’s progress in all corners of the globe.
This ‘company restructuring guru’ didn’t see Warner as a distressed asset – as a substitute he and Len Blavatnik noticed it as grossly undervalued. They had been emphatically right.
Over the previous decade, Warner Music Group’s annual revenues have greater than doubled, up from $2.87 billion in FY 2011 to $5.92 billion in FY 2022.
In the meantime, WMG’s market worth has grown greater than 5 instances throughout Cooper’s reign as CEO – from $3.3 billion in 2011 to $17.1 billion as we speak (even amid a punishing macroeconomic local weather for share costs).
In the meantime, Warner Music Group has outperformed the broader {industry}: the agency’s international recorded music market share grew from 15.1% in 2011 to 16.7% in 2021, based on Music & Copyright information.
Alongside the best way, Warner has damaged superstars equivalent to Ed Sheeran, Lizzo and Dua Lipa, whereas forging expanded partnerships with artists like Coldplay, Prince, and Madonna.
Little of this might have been doable with out Steve Cooper’s perception, from day one, that Warner was an asset to be invested in, and to not be folded down right into a shell of its former self.
That mindset of enlargement has been epitomized extra just lately by additional WMG acquisitions together with 300 Leisure (US), Qanawat (Center East), and Africori (Sub Saharan Africa), along with nine-figure catalog buyouts with stars like David Bowie and David Guetta. And naturally, Cooper led Warner to efficiently float on the NASDAQ in the midst of a pandemic, in summer season 2020.
Even triumphant company management tales like these, nonetheless, should come to an finish.
On the shut of this yr, Steve Cooper will hand over the reins of Warner Music Group to the most important’s new CEO, Robert Kyncl. Cooper’s remaining quarterly earnings name is already behind him.
Right here, in Cooper’s final public interview as CEO of WMG, MBW asks him about his greatest achievements in music, the scariest points he’s needed to overcome – and whether or not the subsequent 10 years of the music enterprise have any probability of being as shiny because the earlier decade…
Since turning into CEO in 2011, you appeared to have timed loads of your strikes properly. now that you just’re leaving Warner, does that imply you assume the {industry}’s about to hit a rocky patch?
[Laughs] Completely not! And you understand that. The following decade will construct actually positively on the final ten years. There’s a lot alternative on the horizon for our artists and songwriters, and for WMG.Since 2010, the expansion of streaming has been a gradual burn in the direction of what we’ve seen over the past couple of years – an explosion of recent enterprise fashions. The makes use of of music will likely be limitless, extra interactive, and encompass us in our each day lives. Plus, in an more and more loopy world, music will proceed to be a supply of solace, hope and leisure.
All profitable corporations get to some extent the place they’d profit from recent eyes. I’m so happy with what our workforce has achieved. It’s a very good second for somebody new to come back in and maintain the ball rolling.
Going proper again to the start, many individuals assumed you had been a turnaround knowledgeable who would restructure the corporate and transfer on. Did Sir Len Blavatnik provide you with a short when he requested you to develop into CEO? Are you able to give me a way of what’s it been like working with him and why you’ve stayed longer than anticipated?
In fact, Len wished somebody who was going to take care of his funding. However he additionally got down to create change, lead the pack, and do cool stuff.
We’ve identified one another a very long time now and we’ll be mates lengthy after I depart Warner. We’ve by no means disagreed on the large choices, together with our main acquisitions, investments in rising markets, and calculated dangers with tech. He’s concerned however not intrusive, is the best way I’d put it.
“I stayed at WMG due to that backing from Len, Entry, and our Board. I stayed as a result of it’s been loads of enjoyable.”
I stayed due to that backing from Len, Entry, and our Board. I stayed as a result of it’s been loads of enjoyable. There’ve been some fascinating puzzles to unravel. Our artists and songwriters are unimaginable. I’ve loved working with the workforce right here, who’re among the greatest human beings I’ve met in any {industry}.
During the last decade, has there been a time while you’ve been up at evening worrying that it’s all going flawed? What did you do?
There have been loads of anxious moments throughout these first couple of years. However worrying doesn’t get you wherever.
Folks all the time discuss 2014. The {industry} dipped under $15 billion for the primary time. The bottom ebb. However I bear in mind 2013 as a harder yr. I used to be solely eighteen months in. The {industry} noticed the steepest international drop in revenues since 2008, and we’d simply acquired Parlophone, which was most of EMI’s recorded music enterprise in Europe.
“I prevented the kneejerk response to radically reduce prices.”
I prevented the kneejerk response to radically reduce prices. It was an enormous workforce effort in steadiness and perception. We put stress on the backburner and stored investing in our rosters and international footprint.
It’s essential to recollect, streaming alone didn’t save the music enterprise. There’s little question it helped, however we had been those that stored the lights on by the darkish instances, and made certain music thrived on the opposite facet.
Have you ever made any errors that you just thought had been damaging however which have turned out to be useful?
I like that query. I’ve made loads of errors, however I’m an enormous believer in not beating your self up an excessive amount of. Or getting too excessive on your self both.
Enterprise is actually an infinite stream of issues to unravel. And while you remedy one drawback, it simply creates a brand new set of challenges. You’ve bought to take pleasure in fixing issues.
“Enterprise is actually an infinite stream of issues to unravel.”
To present you a solution…it makes me consider the instances when good folks have wished to go away Warner, and we’ve not tried to cease them. On the time, some felt it was a mistake to allow them to depart, however now we now have a variety of nice examples the place these folks have come again to Warner, and their dedication is stronger than ever.
I consider folks ought to work out for themselves the place they actually need to be and what they actually need to do.
In 2016, Warner was the primary main recorded music firm to declare streaming as its largest income supply. What did you study from that transition that’s nonetheless helpful for folks to know as we speak?
The traditional knowledge is that streaming’s been nice for the {industry} as a result of it’s recurring income at scale. That’s true, however the transition is extra basic than that.
Streaming has endlessly modified folks’s listening, discovery, and sharing habits. We’re nonetheless seeing the implications of that fluidity play out.
“Don’t get seduced by your individual model and imaginative and prescient of the longer term, otherwise you run the chance of dropping sight of the bottom beneath your ft.”
What I’ve discovered is that this: you will need to keep open and pragmatic. Nobody is aware of for certain the place that is all going. So don’t get seduced by your individual model and imaginative and prescient of the longer term, otherwise you run the chance of dropping sight of the bottom beneath your ft.
Work ahead from wherever you might be as we speak. That’s additionally simpler than making an attempt to vary the previous [laughs].
There have been instances while you’ve been extra prepared to be overtly combative with tech corporations than different music CEOs, particularly round topics like streaming ARPU. Do you’re feeling that’s helped long-term?
Sure. A lot of the vital streaming corporations, by themselves, dwarf your complete music enterprise. Isn’t it essential that they know we may be cussed when it issues? We’re an organization with a thoughts of its personal, and a willingness to rock the boat to do what’s proper for our artists and songwriters.
We’ve additionally very intentionally constructed a popularity as the primary cease for anybody who desires to do one thing modern in music. We had been typically first to do offers with the social media corporations. It’s honest to say, we’ve led the best way in Net 3.0.
“Know-how ought to work on behalf of music, not the opposite means round.”
WMG brings collectively many various cultures and identities – Atlantic, Warner Data, Warner Chappell, ADA and so forth. However we additionally consider within the energy of transferring as one firm. And we need to do our justifiable share…greater than our justifiable share…to get the worth of music acknowledged.
Know-how ought to work on behalf of music, not the opposite means round.
As you stated, you’ve been very energetic with regards to Net 3.0. It’s one thing that’s come up many instances on Warner’s earnings calls. How actual is that promise?
It’s clearly early days. The music enterprise has all the time been pushed by fandom. Net 3.0 is a really actual alternative to deliver collectively artists and followers in a very direct and really dynamic relationship, arguably for the primary time.
We’re being very considerate about constructed our experience, relationships, and investments. Our expectation is, when the primary massive wave comes, we’ll be those browsing on high of it.
Warner has additionally been a pioneer when it comes to opening up new and rising markets. What has a extra international perspective taught you?
Have you learnt Extraordinary Lawyer Woo? It’s one in all my favourite exhibits. South Korean TV is the very best on the planet proper now.
I’m lucky to have develop into mates with Miky Lee, on the Korean firm CJ ENM, which was behind ‘Parasite’ and a treasure trove of different IP.
“As international tastes develop into extra home, we’ve systematically been constructing our native experience.”
She and I’ve talked about the way it’s a very good factor that streaming has democratized entry to the humanities and cultures across the globe. However what it hasn’t carried out, and by no means will, is democratize expertise. Real voices are as uncommon as ever, and until they’ve the right backing of a world workforce, the noise can drown them out.
As international tastes develop into extra home, we’ve systematically been constructing our native experience. We’ve got an incredible community of groups everywhere in the world, and a superb numerous technology of management coming by in Latin America, Africa, Asia, India, UK, Europe, everywhere in the world. It’s very thrilling.
Talking of which, throughout your tenure, virtually each senior management place has modified. Atlantic, below Julie Greenwald and Craig Kallman, has been a continuing although. What has your relationship been like with them? I’m assuming it wasn’t simple when Lyor Cohen left…
They’re phenomenal. While you have a look at Atlantic’s consistency of hits, their monitor report of artist growth, and the powerhouse they’ve constructed over the past 15 years, Julie and Craig are operating the No. 1 report label on the planet.
Within the early days, Julie and I bought into it fairly a bit. But it surely was all the time a wholesome debate between two those that wished to get to the very best answer. I’ve large respect for the way exhausting she fights each day for Atlantic’s artists, and the way a lot she cares about her folks. I used to be delighted to see her acknowledged for the unimaginable job she’s carried out when she was promoted [to CEO of Atlantic Music Group, in October].
On the very high, Warner is totally different from the opposite two majors. Rob and Lucian got here up by report labels, however you had been an outsider. For the final 5 years you’ve partnered with Max Lousada, in addition to extra just lately Man Moot and Carianne Marshall on the publishing facet. How has that totally different formation affected Warner’s trajectory?
As Soiled Harry as soon as stated, “A person’s bought to know his limitations.” We’ve handed the artistic leaders accountability for the artistic choices. Company has set some technique, and offered the monetary framework, however we’ve by no means questioned the artistic choices across the signing of an artist or songwriter.
Max leads by instance. He cares passionately in regards to the music, the artists, the workforce, and he’s one of the vital enterprising, hardest-working folks within the {industry}.
“As Soiled Harry as soon as stated, ‘A person’s bought to know his limitations.’
Man and Carianne are doing an outstanding job, they usually’ve had a large influence…creatively, commercially, culturally on publishing.
I need to shout out our nice behind-the-scenes groups at Company right here too. The variations in our construction have meant that our assets work more durable and smarter. That’s helped to strengthen our price propositions for our artists, our songwriters and our colleagues. On the identical time, no single character dominates the conversations – this creates a one world, one firm, one workforce mentality.
Warner’s determination to go for an IPO in 2020 was a milestone second for the {industry}. However has it modified the best way you run the corporate day-to-day? And the way a lot do you focus in your share worth?
Don’t overlook that when Entry purchased the corporate in 2011, we dedicated to ongoing transparency and public reporting. For 9 years, we held quarterly earnings calls after we didn’t should. We’ve benefitted from that readability being baked in.
The share worth is a bit like rankings for a TV present. For a begin, there are many elements exterior of your management. And in the event you make decisions solely based mostly on what may increase the rankings for a single episode, you’ll doubtless spoil what makes the present nice total.
The share worth is essential, nevertheless it solely reinforces that you will need to do what’s proper for the long-term well being of the corporate. If we do our jobs properly, the share worth will comply with. Decide us on the yr, not the quarter. I may even say choose us on the last decade, not the yr.
What are the missed alternatives throughout your tenure as CEO? What’s the one factor you’ve not bought carried out that you just want you had?
I might have favored to experiment extra with direct-to-consumer enterprise fashions.
Additionally, within the reside music area, the worth varies relying on who you’re seeing and what your expertise is. I believe the recorded music area must be extra like that. Ever since we had 99 cent downloads, there’s been a bent for music to be priced the identical. And everyone knows that every one music isn’t equal.
I additionally hoped to do extra to enhance the intricate net of rights and collections societies. As an {industry}, we’ve bought make licensing less complicated and extra international.
All of us working in music like to inform ourselves it’s particular, like no different {industry} on earth. However you’ve labored in the whole lot from Enron to Krispy Kreme. Is music actually all that totally different?
It’s two phrases: Music… Enterprise. That’s a difficult juxtaposition nevertheless it’s additionally what makes it so fascinating.
The music bit is in contrast to anything. It’s not about merchandise, it’s about human beings. Emotional storytelling that modifications lives, all by the car of sound.
“Music is in contrast to anything… Emotional storytelling that modifications lives, all by the car of sound.”
However the enterprise bit is topic to the identical mathematical legal guidelines as all different industries. There shouldn’t be a lot mystique to that half.
Artists and songwriters, and the businesses that again them, all should be correctly compensated for the worth they create. Interval.
That are the artists you’ve most loved assembly?
Ah, I don’t need to single out any artists or songwriters. I do have some actually enjoyable, blissful reminiscences – whether or not that’s one in all Tom [Corson] and Aaron [Bay-Schuck]’s first signings [at Warner Records], or my current go to to our new Madrid workplace. It’s all the time superb to satisfy such gifted folks as they take the worldwide stage for the primary time.
“I noticed this job as about empowering our artistic leaders – in order that they in flip may help our artists and songwriters.”
I noticed this job as about empowering our artistic leaders – in order that they in flip may help our artists and songwriters. I’ve targeted on making our workforce the very best it may be and equipping us with the very best instruments and assets. Collectively, we wish the strongest partnerships with, and providers for, the artistic group.
I’m assuming you knew Robert Kyncl earlier than however have spent much more time with him just lately. Why do you assume he’s a sensible choice? How will the month-long overlap with Robert work?
Robert’s skillset is on the intersection of expertise, creativity, and enterprise. Typically, people who find themselves very robust in even two of these areas make for precious execs. However Robert’s going to be a triple menace.
He’s all the time been formidable in negotiations. Now, he’s on this facet of the desk, and he’s an enormous music fan.
We’ve had some nice discussions and the transition goes to be tremendous simple. I’m in cost till the tip of the yr, when Robert will take over. I’ll be round for January, so we are able to discuss issues by as he will get totally on top of things.
What’s your individual plan for the longer term?
I can’t sit nonetheless for lengthy. I’ll maintain energetic and keep engaged. However I’ll have extra flexibility to take pleasure in all of the issues that I need to pursue, as a result of I received’t be operating a world media firm.
I plan to make some investments. I’m going to contribute to some boards for personal corporations. I’m going to ski and golf. There’ll be extra time for household and mates.
Final query: Any phrases of knowledge for folks simply beginning out within the music enterprise?
It’s all about teamwork. You’ve bought spend extra time listening than speaking. Follow placing your self in different folks’s sneakers. Construct your empathy muscle.
You’ll be able to boil all of this all the way down to 4 phrases: Communication. Collaboration. Cooperation. Coordination. That’s what defines a very artistic tradition.Music Enterprise Worldwide
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