Rob Stringer plans to “drive a culture of entrepreneurship” across Sony Music as CEO – while spearheading a “very aggressive” worldwide investment strategy.
These were two of the overriding messages from Stringer’s first address as boss of the music company on Tuesday (May 23) – and MBW has all the details.
Speaking to analysts and Sony Corp shareholders in Tokyo, Stringer confirmed that the Sony Music International HQ in London has officially been eliminated – as indicated by the exit of that division’s boss, Edgar Berger, in January.
Instead, Sony Music’s regional ex-US regional heads now report directly into its global headquarters in New York.
“Today we have a more efficient, streamlined structure,” said Stringer. “We have eliminated the international HQ layer, to create direct lines between our New York centers, our US creative centers and our international operations.”
“Our business is our people, and we feel this enables greater co-ordination and collaboration between our business units – and provides a nimbleness in executing initiatives and strategies from New York.”
Rob Stringer, Sony Music
The move follows a similar reshuffle by Sir Lucian Grainge at Universal Music Group in late 2015 and early 2016.
Added Stringer: “Our business is our people, and we feel this enables greater co-ordination and collaboration between our business units – and provides a nimbleness in executing initiatives and strategies from New York.”
And in what could be read as a characterization of the type of executive Sony will be hiring for the now-vacant top jobs at Columbia and Epic, Stringer continued: “In addition to having a more effective structure, I will drive a culture of entrepreneurship.
“Our business units will be run by smart, risk-taking entrepreneurs who are natural self-starters and innovative in how they source talent, how they think about positioning and marketing that talent – and how they run their [labels].”
Cards close to his chest, then – but Stringer was certainly more forthright when it came to Sony’s ability to splash the cash on new artist deals and catalogue acquisitions.
“We’ll be very aggressive in our investment strategy,” he added.
“As the [music] industry is now growing again, it is essential that, in addition to being strong marketeers, we expand our creative reach and increase our repertoire flow by investing in catalogue acquisitions, securing new deals with established talent, pursuing licensing and distribution deals [and] creating joint ventures and partnering with new entrepreneurs.”
Sony has considerably out-spent its rivals in terms of company buyouts in the past three years – investing what MBW estimates is more than $1bn on music acquisitions since early 2015.
It acquired the 50% stake in distributor The Orchard it didn’t already control for $200m in March 2015.
A spate of Sony Music UK-led buyouts then followed including Ministry Of Sound (£67m), Essential Music & Marketing (£3.7m), Century Media (£12.2m) and an additional 50% stake in Simon Cowell’s Syco Holdings (£86.5m).
“We’ll be very aggressive in our investment strategy… It is critical that we move quickly [on] our investment strategy.”
Rob Stringer, Sony Music
And in October last year, a giant music publishing deal arrived when Sony Corp laid out $750m to acquire the 50% in Sony/ATV it didn’t already own.
Now, MBW is hearing that Sony is a front-runner to acquire Dutch label Spinnin’ Records in a deal likely to be worth north of $100m – having already snapped up indie distributors Phonofile and finetunes this year.
In a clear recommendation for Sony Corp to keep the money flowing, Stringer added: “It is critical that we move quickly [on] our investment strategy to ensure that we get the full and immediate benefit of our expanding content base in this growing music market.”
He added: “Our further investment in The Orchard is a key piece in this strategy. We strongly believe we can profitably grow this business and expand the artist, label and distribution services that we provide to indie labels and unsigned artists – a growing segment in the digital music sphere.”
Stringer was also happy to discuss his broader vision for Sony Music worldwide under his charge.
Discussing his key priorities as CEO, the British exec commented: “My vision for Sony Music is to be a global entertainment leader dedicated to building artist brands, long-term careers and maximizing profit at the same time.
“We will have the best creative teams in the industry, promoting a culture of entrepreneurial innovation, leveraging available data in our decision-making process and aggressively seeking growth investments and new revenue opportunities.”
Rob Stringer, Sony Music
“This will be accomplished by having the best creative teams in the industry, promoting a culture of entrepreneurial innovation, leveraging the available data and analytics in our decision-making process and aggressively seeking growth investments and new revenue opportunities.”
Referencing his new international setup, Stringer said he intended to “make the most of our local teams to ensure they are identifying and signing the best talent in the marketplace”.
He spoke of his confidence that streaming would continue to grow the global recorded music business, boosted by recent entrants to the on-demand market – including Amazon, Pandora and iHeartRadio – as well as further product innovation, especially around voice activation.
Data was a key theme of Stringer’s address, as he made clear his desire to ensure Sony has the best digital tools to assist A&R discovery.
“All our business units must now leverage data and analytics in innovative ways to dig deeper than ever for new talent,” he said. “The modern day talent-spotter must have both an artistic ear and analytical eyes.
“We are building out our teams of research analysts to mine the vast data now available from social media, and from third-party research companies, to be the first [to] identify the most promising talent.”
“The modern day talent-spotter must have both an artistic ear and analytical eyes.”
Rob Stringer, Sony Music
Stringer later added: “The data analytics we’ve invested most in over the last three years are [focused on] talent spotting. Which is to say now the A&R [teams] at the company have extremely large data analysis departments.
“We have a team of extremely gifted and analytical talent spotters who basically mine as deep as they possibly can for early edge. The record industry has always been about edge, finding something first; that’s the point of our data analysis.”
He added that Sony, particularly in the US market, had seen “an ability to decline marketing costs through good data analysis; [spending] less money per unit on marketing costs as a result of being able to find our consumers [more easily] due to good data”.
Stringer faced down a short analyst Q&A after his speech, which saw him juggle with a couple of spicy industry issues – without giving too much away.
Although not explicitly referred to, the fact that Sony is yet to re-license Spotify on a long-term basis was always bound to hang in the air.
“It would be fair to say we are under constant pressure to discuss all elements of pricing and all elements of our content being across our partners,” said Stringer in response to a general question about margin pressures.
In an obvious nod to Spotify, he added: “We are negotiating currently with our major streaming partners. It would be fair to say that no-one would be surprised if there was pressure on pricing.”
“We are negotiating currently with our major streaming partners. It would be fair to say that no-one would be surprised if there was pressure on pricing.”
Rob Stringer, Sony Music
Perhaps more interestingly, Stringer also hinted at the future of Sony’s music video strategy – and, therefore, the future of online distribution vehicle Vevo (in which both Sony and Universal are key stakeholders).
“We have our streaming partners asking for video content now,” he said.
“As yet we don’t provide all our video content to all our partners – but we envisage that at some point, in the relatively short term, we will provide all of our video content to [various] streaming partners too.”
As for other highlights of Stringer’s address, he made special mention of China as a key area of focus for his company.
“Given the vast potential in China, we are expanding our operations there – investing aggressively in local talent and expanding our relationships with local digital music providers,” he said.
Sony recently signed a new multi-year deal to sub-license digital content to Tencent in China – which also now counts Universal and Warner as clients on a similarly exclusive basis.
(Sony Music COO Kevin Kelleher further commented: “Ideally we would like to be the No.1 company in China in three years… We believe the Chinese marketplace will be a Top 5 global music market in 3-5 years.”)
The rest of the discussion was less forward-looking, and more of a chance for Stringer to crow about Sony Music’s full-year FY 2016 results.
“Given the vast potential in China, we are expanding our operations there – investing aggressively in local talent and expanding our relationships with the local digital music providers.”
Rob Stringer, Sony Music
As previously reported, Sony Music’s basic recorded music performance was down in Japanese Yen terms – but when reverse-exchanged into US dollars, it showed growth.
“I am positive about the future of the music business,” added Stringer. “I believe Sony Music is very well positioned to grow and capitalize on all the exciting developments in our industry.”
He claimed that Sony had gained half a point of global recorded music market-share in 2016 (up to 26%, according to the slide above), while Kevin Kelleher told shareholders that he was “optimistic that we will be able to gain [further] market-share”.
Just in case they missed it, ex-Columbia chief Stringer also couldn’t resist pointing out one bit of retrospective trivia to his Japanese bosses.
“Columbia Records alone in the Unites States earned more awards than all of Universal Music Group at this year’s Grammys,” he noted – almost certainly grinning as he spoke.Music Business Worldwide
