The Steve Cooper exit interview: ‘All profitable firms get to a degree the place they’d profit from contemporary eyes.’
Krispy Kreme donuts. That’s it. That’s the model on Steve Cooper’s résumé that basically leaps out and whacks you within the kisser.
Not simply because its flagship shiny treats go away even probably 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 celebration trick? Taking maintain of distressed companies, chopping out the basis explanation for that misery, and making the numbers level in the proper route.
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 obtained 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 document enterprise.
The writing appeared on the wall: Cooper would certainly 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 document {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’ Information (2017) and Germany’s EMP (2018).
Removed from downsizing Warner, Steve Cooper as an alternative wager on music’s progress in all corners of the globe.
This ‘company restructuring guru’ didn’t see Warner as a distressed asset – as an alternative he and Len Blavatnik noticed it as grossly undervalued. They have 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 immediately (even amid a punishing macroeconomic local weather for share costs).
In the meantime, Warner Music Group has outperformed the broader {industry}: the agency’s world recorded music market share grew from 15.1% in 2011 to 16.7% in 2021, in response to Music & Copyright information.
Alongside the way in which, Warner has damaged superstars akin to Ed Sheeran, Lizzo and Dua Lipa, whereas forging expanded partnerships with artists like Coldplay, Prince, and Madonna.
Little of this is able to have been attainable 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 growth 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 course of a pandemic, in summer time 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 foremost’s new CEO, Robert Kyncl. Cooper’s ultimate quarterly earnings name is already behind him.
Right here, in Cooper’s final public interview as CEO of WMG, MBW asks him about his largest 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 vivid because the earlier decade…
Since turning into CEO in 2011, you appeared to have timed a number 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 realize that. The subsequent 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 sluggish burn in direction of what we’ve seen over the past couple of years – an explosion of recent enterprise fashions. The makes use of of music shall be limitless, extra interactive, and encompass us in our every day lives. Plus, in an more and more loopy world, music will proceed to be a supply of solace, hope and leisure.
All profitable firms get to a degree the place they’d profit from contemporary eyes. I’m so happy with what our workforce has achieved. It’s second for somebody new to come back in and preserve the ball rolling.
Going proper again to the start, many individuals assumed you have been a turnaround skilled who would restructure the corporate and transfer on. Did Sir Len Blavatnik provide you with a short when he requested you to change 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 needed 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 recognized one another a very long time now and we’ll be mates lengthy after I go away 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 way in which 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 a number of enjoyable.”
I stayed due to that backing from Len, Entry, and our Board. I stayed as a result of it’s been a number of enjoyable. There’ve been some fascinating puzzles to resolve. Our artists and songwriters are unimaginable. I’ve loved working with the workforce right here, who’re a number of the greatest human beings I’ve met in any {industry}.
Over the past decade, has there been a time while you’ve been up at evening worrying that it’s all going improper? What did you do?
There have been a number of anxious moments throughout these first couple of years. However worrying doesn’t get you wherever.
Individuals at all times discuss 2014. The {industry} dipped beneath $15 billion for the primary time. The bottom ebb. However I bear in mind 2013 as a more durable yr. I used to be solely eighteen months in. The {industry} noticed the steepest world drop in revenues since 2008, and we’d simply acquired Parlophone, which was most of EMI’s recorded music enterprise in Europe.
“I averted the kneejerk response to radically reduce prices.”
I averted the kneejerk response to radically reduce prices. It was an enormous workforce effort in steadiness and perception. We put stress on the backburner and saved investing in our rosters and world footprint.
It’s necessary to recollect, streaming alone didn’t save the music enterprise. There’s little question it helped, however we have been those that saved the lights on by means of the darkish instances, and made certain music thrived on the opposite aspect.
Have you ever made any errors that you just thought have been damaging however which have turned out to be useful?
I like that query. I’ve made loads of errors, however I’m a giant believer in not beating your self up an excessive amount of. Or getting too excessive on your self both.
Enterprise is actually an limitless stream of issues to resolve. And while you remedy one drawback, it simply creates a brand new set of challenges. You’ve obtained to get pleasure from fixing issues.
“Enterprise is actually an limitless stream of issues to resolve.”
To provide you a solution…it makes me consider the instances when good folks have needed to depart Warner, and we’ve not tried to cease them. On the time, some felt it was a mistake to allow them to go away, however now now we have plenty 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 immediately?
The standard 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 without end 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 personal model and imaginative and prescient of the longer term, otherwise you run the chance of shedding sight of the bottom beneath your ft.”
What I’ve discovered is that this: you have to keep open and pragmatic. Nobody is aware of for certain the place that is all going. So don’t get seduced by your personal model and imaginative and prescient of the longer term, otherwise you run the chance of shedding sight of the bottom beneath your ft.
Work ahead from wherever you might be immediately. 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 brazenly combative with tech firms than different music CEOs, particularly round topics like streaming ARPU. Do you’re feeling that’s helped long-term?
Sure. Many of the vital streaming firms, by themselves, dwarf all the music enterprise. Isn’t it necessary that they know we could 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 fame as the primary cease for anybody who desires to do one thing modern in music. We have been typically first to do offers with the social media firms. It’s truthful to say, we’ve led the way in which in Net 3.0.
“Know-how ought to work on behalf of music, not the opposite method round.”
WMG brings collectively many various cultures and identities – Atlantic, Warner Information, Warner Chappell, ADA and so forth. However we additionally consider within the energy of shifting 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 method round.
As you stated, you’ve been very lively in terms of 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 at all times been pushed by fandom. Net 3.0 is a really actual alternative to convey collectively artists and followers in a completely 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 huge wave comes, we’ll be those browsing on high of it.
Warner has additionally been a pioneer by way of opening up new and rising markets. What has a extra world perspective taught you?
Have you learnt Extraordinary Legal professional Woo? It’s considered one of my favourite exhibits. South Korean TV is the perfect on the earth proper now.
I’m lucky to have change into mates with Miky Lee, on the Korean firm CJ ENM, which was behind ‘Parasite’ and a treasure trove of different IP.
“As world tastes change into extra home, we’ve systematically been constructing our native experience.”
She and I’ve talked about the way it’s factor that streaming has democratized entry to the humanities and cultures across the globe. However what it hasn’t achieved, 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 world tastes change into extra home, we’ve systematically been constructing our native experience. We have now an incredible community of groups everywhere in the world, and an excellent various technology of management coming by means of 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, underneath Julie Greenwald and Craig Kallman, has been a continuing although. What has your relationship been like with them? I’m assuming it wasn’t straightforward when Lyor Cohen left…
They’re phenomenal. While you have a look at Atlantic’s consistency of hits, their monitor document of artist improvement, and the powerhouse they’ve constructed over the past 15 years, Julie and Craig are operating the No. 1 document label on the earth.
Within the early days, Julie and I obtained into it fairly a bit. But it surely was at all times a wholesome debate between two folks that needed to get to the perfect answer. I’ve great respect for the way arduous she fights daily 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 achieved when she was promoted [to CEO of Atlantic Music Group, in October].
On the very high, Warner is completely different from the opposite two majors. Rob and Lucian got here up by means of document labels, however you have 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 aspect. How has that completely different formation affected Warner’s trajectory?
As Soiled Harry as soon as stated, “A person’s obtained to know his limitations.” We’ve handed the inventive leaders accountability for the inventive choices. Company has set some technique, and supplied the monetary framework, however we’ve by no means questioned the inventive 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 crucial enterprising, hardest-working folks within the {industry}.
“As Soiled Harry as soon as stated, ‘A person’s obtained to know his limitations.’
Man and Carianne are doing an outstanding job, they usually’ve had a large affect…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 tougher and smarter. That’s helped to strengthen our worth propositions for our artists, our songwriters and our colleagues. On the identical time, no single persona 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 way in which 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 need to. We’ve benefitted from that readability being baked in.
The share worth is a bit like scores for a TV present. For a begin, there are many elements exterior of your management. And should you make decisions solely based mostly on what may enhance the scores for a single episode, you’ll doubtless wreck what makes the present nice total.
The share worth is necessary, however it solely reinforces that you have to do what’s proper for the long-term well being of the corporate. If we do our jobs properly, the share worth will observe. Decide us on the yr, not the quarter. I might 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 obtained achieved that you just want you had?
I might have appreciated to experiment extra with direct-to-consumer enterprise fashions.
Additionally, within the dwell music house, the value varies relying on who you’re seeing and what your expertise is. I believe the recorded music house 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 each one music isn’t equal.
I additionally hoped to do extra to enhance the intricate internet of rights and collections societies. As an {industry}, we’ve obtained make licensing easier and extra world.
All of us working in music like to inform ourselves it’s particular, like no different {industry} on earth. However you’ve labored in every part from Enron to Krispy Kreme. Is music actually all that completely different?
It’s two phrases: Music… Enterprise. That’s a difficult juxtaposition however 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 means of the car of sound.
“Music is in contrast to anything… Emotional storytelling that modifications lives, all by means of 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 need to 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, joyful recollections – whether or not that’s considered one of Tom [Corson] and Aaron [Bay-Schuck]’s first signings [at Warner Records], or my latest go to to our new Madrid workplace. It’s at all times wonderful to satisfy such proficient folks as they take the worldwide stage for the primary time.
“I noticed this job as about empowering our inventive leaders – in order that they in flip might assist our artists and songwriters.”
I noticed this job as about empowering our inventive leaders – in order that they in flip might assist our artists and songwriters. I’ve centered on making our workforce the perfect it may be and equipping us with the perfect instruments and assets. Collectively, we wish the strongest partnerships with, and companies for, the inventive neighborhood.
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 good selection? 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 sturdy in even two of these areas make for invaluable execs. However Robert’s going to be a triple menace.
He’s at all times been formidable in negotiations. Now, he’s on this aspect 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 will speak issues by means of as he will get absolutely on top of things.
What’s your personal plan for the longer term?
I can’t sit nonetheless for lengthy. I’ll preserve lively and keep engaged. However I’ll have extra flexibility to get pleasure from 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 private firms. 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 obtained spend extra time listening than speaking. Follow placing your self in different folks’s footwear. Construct your empathy muscle.
You possibly can boil all of this right down to 4 phrases: Communication. Collaboration. Cooperation. Coordination. That’s what defines a very inventive tradition.Music Enterprise Worldwide
