Spotify Cannibalization Is “Absolutely Bogus,” Says Resigning Universal Music Exec…

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Rob Wells, president of Universal Music Group’s global digital business, speaking to a group of label executives in London in 2012:

“We’ve done an awful lot of analysis over the last six months in terms of the value to individual artists and specific genres from subscription services around the world.  And, specifically through the model of payment, comparative to other modes and methods of consumption.  A lot of the analysis that we’ve done has shown us that certain genres and certain bands will inflect far faster than others.”


“We’ve conducted research with four of our artists, and every single one of those bands has earned more money from its album being on Spotify than it has from being on any other services within that period of time.  Some of them haven’t inflected yet, but the trajectory – assuming zero growth on subscriber levels on any of these services – inflects within five years.”

“The argument that streaming harms records sales is absolutely bogus.


Rob Wells, president of Universal Music Group’s global digital business, in a resignation letter this week:

“With a heavy heart but an incredible sense of accomplishment and pride, I write you today to tell you that I have decided to leave my position and to explain why.  While leaving isn’t easy, I take comfort in the extraordinary digital team that I am leaving behind–who have become more than just work colleagues but a true family–and the knowledge that whatever entrepreneurial opportunity I explore next, I will always have a close relationship with everyone at Universal Music Group, both here in the US and in every territory around the world.”

44 Responses

  1. Irving Mindreader

    What I’m more curious to learn is why UMG’s heir apparent is stepping down to begin with.

    • It's Just Math...

      Someone please get calculators to the management of the major labels. The Digital Departments were never really “music” people. They fantasized about VC’s and DotCom’s and they got to play with house money from supplied by Artists.

      Digital Music Executives got some juice after Steve Jobs made Apple a success story. Someone believed these people understood “new media” and “new markets” but they were wrong. Because “new media” and “new markets” came with no money. So then they doubled down on bad math.

      Expect more heads to roll. Spotify, Pandora and YouTube are not going to replace transactional revenues without aggressive windowing, higher subscription fees, and no free tier after 30 days… watch and learn…

  2. Chris H

    Didn’t exactly explain why he was leaving. My guess is he ran out of road in trying to explain how revenues were “just about to explode” because of streaming and his brilliant digital strategies.

    • Willis

      Seems this is the focus by many who are commenting. What does it matter, really?

  3. Aman

    UMG needed a scapegoat and he’s in the bull eye. UMG under behest of Wells decided to fuel the ad-supported, free music everywhere fire and allow Goldman Sachs and Sean Parker call the shots, and look what they got them. You have Taylor Swift bailing on the biggest UMG bet in the world but more coming soon.

    Have fun surfing Wells.

    • Remi Swierczek

      AMEN, Thank you Aman!

      …but we have escape door!

      Let’s convert to all Radio and streaming to music store!

      We just have to amputate Vevo and leave the dead meet in Sharks mouth!

  4. David

    So the first head rolls. The funny thing is, while Wells and other label execs were still arguing that streaming wouldn’t cannibalise record sales, Daniel Ek was quite explicit in saying that ‘access’ (i.e. streaming) would replace ‘ownership’ (i.e. people actually buying records). Maybe the execs were too busy counting their ‘advances’ to notice that bit.

    • Paul Resnikoff

      I don’t think that’s completely accurate. I’d have to check, but fairly certain Ek was also claiming that streaming was stimulating download sales, and growing the sales pie. And he’s always been quick to point out the ‘recovery’ and ‘growth’ in Sweden.

      • Name2

        How inconvenient for your rhetorical flourish that there actually is recovery and growth in Sweden.

      • steveh

        Not true Paul. For the first few weeks after Spotify’s big UK launch in 09 Ek was full of the “this is the end of ownership” and “music is like water” line – and that is what turned people like me implaccably against him.

        Then it appears someone (maybe Rob Wells) told him to STF up and he stopped shooting his mouth off.

        I guess they thought Ek was going to upset the music creators – and indeed he did upset them and we are still after Ek’s ass.

        • Paul Resnikoff

          Let me address the two comments above.

          One, Sweden has partially recovered, only a percentage of its previous recording revenues, and is now declining year-over-year. More on that here:

          The same is actually true of Norway, a sort of ‘parallel’ situation with regards to streaming, ‘recovery,’ etc.

          Addressing the next point, I’ll profess I can’t exactly remember. I thought Ek said at some point that Spotify was actually furthering iTunes sales and growing the pie, and if I poked around for a few hours I think I’d find the money quote. And yes, prior to that there was a ‘iTunes killer’ mantra floating around, but this was after that phase.

          • steveh

            Honestly Paul you are referring to quotes from a period later than when Spotify launched in the UK in the spring of 2009.

            By the time Spotify launched in the US, Ek had his narrative a lot more under control.

            “You will not need to own music any more” was their first sales pitch in the UK. Honestly, it was.

          • Paul Resnikoff

            A narrative is a story, in this case used to advance the interests of a business, and perk the interest of those around it (investors, subscribers, labels, etc.) Reality, by contrast, is what is objectively happening. The fact that the ‘narrative’ changed dramatically exemplifies that narratives are typically loosely molded around reality to achieve a narrow business goal, rather than to describe what is actually happening.

          • steveh

            Good point Paul, but I think it is fair to say that Ek’s original narrative – before he was encouraged to put a sock in it – pretty much exposed his true intentions and vision for Spotify.

          • steveh

            Yep – iTunes Killer that was also part of their initial pitch.

  5. small labe1

    …said Robert Wells, as he sets up his new employment with Spotify…

    what a goober of a statement, good riddance!!!

  6. Irving Mindreader

    I’m saddened by the volume of speculative, spiteful, and uniformed responses so far. That kind of attitude doesn’t help anything.

    Say what you will, Rob was more forward thinking than most. At a time when so much of this industry’s future depends on innovation and cooperation, we need 10 more of him, not one less. Show me a room full of forward thinking record executives in real positions of power, and I’ll show you a nearly empty room with one less occupant than before.

    It’s a bad day for UMG. Maybe a bad day for all of us.

    Still curious to hear the impetus for his departure.

    • Vail, CO

      Forward thinking?

      Screwing artists by not paying them.
      Exploiting artists by pushing them into Spotify licenses
      Taking huge percentages of Spotify equity to cash out in billions
      Destroying the long-term price of recordings to $0 by encouraging free access (and get huge payout later)
      Lying that artists weren’t losing money on Spotify
      Not making a long-term revenue strategy besides licensing Spotify, Beats, Deezer, etc.

      • Irving Mindreader

        “Forward thinking?” Yes.

        “Screwing artists by not paying them.” Not his department.

        “Exploiting artists by pushing them into Spotify licenses.” His charter was to exploit the catalog.

        “Taking huge percentages of Spotify equity to cash out in billions” Good for him. They made big $ on Beats, and Spotify will likely reap well for them too.

        “Destroying the long-term price of recordings to $0 by encouraging free access (and get huge payout later)” Save the rhetoric. The streaming play is to drive people into subscriptions, not free access.

        “Lying that artists weren’t losing money on Spotify” You’re parsing again.

        “Not making a long-term revenue strategy besides licensing Spotify, Beats, Deezer, etc.” I have firsthand knowledge to the contrary.

        Summary: You’ve added nothing to the conversation.

  7. GGG

    Ugh. This is why I hate this debate. People on both sides can’t just keep putting this in black and white and/or completely ambiguous terms.

    Anyone who knows me on here knows that I’ve questioned cannibalism’s influence BUT I’ve never questioned that it happens. Of course it does. It’s always been to what extent related to different aspects of artists, though. What level artists are these 4 he talks about? (really that’s not even enough) What genres? How far into their careers? etc etc There are so many factors that can change streaming’s effects on an artist you can’t just leave it that simple. How else did it affect their careers? Ticket sales? Radio play? merch, branding, syncs, whatever.

    I don’t understand why we still look at everyone in this same vacuum. There are radio stars, there are internet stars, there are culture stars, there are touring stars, etc. This shit doesn’t play out the same for all of them.

  8. arrogant212

    Wow— research on four of their artists – well i guess that’s all you need to be statistically accurate.

    “We’ve conducted research with four of our artists, and every single one of those bands has earned more money from its album being on Spotify than it has from being on any other services within that period of time.

  9. steveh

    OMG what great news!! I feel the same joy as I felt the day Margaret Thatcher resigned!

    This guy is a total complete utter c*nt!!! A wanker of the highest order. The total complete idiot that powerhoused the Spotify Ponzi scheme and masterminded the Unversal Spotify equity deal.

    Good F***ing riddance. And don’t come back!!!

  10. Anonymous

    Your quotes are from 2012. In 2012 download sales were still increasing and Spotify cannibalization was nearly nonexistent. I don’t see what you are getting at.

    • GGG


      Not sure who I’m more upset at; myself for not reading more carefully or Paul for posting this like it’s a recent thing…

      • Paul Resnikoff

        Because… nothing really changed after 2012? Usually you hire someone to construct multi-year projections and models.

        • GGG

          How do you know? What data do we really have on an artist by artist basis at major levels? Even this quote is a whole bunch of nothing. 4 artists? That’s nothing for UMG. That could mean Justin Bieber or some shit band. Or it could mean a good cross section of levels. But we have no idea because this guy didn’t even say anything.

          Not to mention, the Spotify numbers have grown a lot (relatively) in 3 years. It’s a totally different ballgame, potentially for the negative based on lower avg per stream rates we’ve seen.

        • Name2

          At the end of the day, is it too, too much to ask you check the tense of the verbs in your headline?

          “Outgoing exec says …”

          is not the same as,

          “Back in 2012, outgoing exec said…”

  11. Anonymous

    they better get it figured out, as great artists and historically relevant and important superstars are measured only by the units they ship and money they make, period, and not about the music, some of the greatest artists ever didnt write or produce and some even lip synched everything

  12. JTVDigital

    Paul, it sounds very unfair to me to create a parallel between statements about streaming/Spotify dated from 2012 and this resignation happening this week (3 years later).
    Maybe you should dig into what happened at UMG after the EMI acquisition, instead of focusing on Spotify (= looking in the wrong direction…).

    • steveh

      Not unfair at all. Wells was the biggest cheerleader bar none in the major labels for Spotify. Perfectly reasonable to hang him out to dry for his ludicrous and bogus contentions.

    • Chris H

      My thought is; if he had more than four bands to cite or an overall tidal wave of cash rocking UMG’s shores, his resignation would not be forthcoming.

    • Paul Resnikoff

      Fair criticism, JTVDigital, but let me defend this article. I’m merely putting together two things: (1) a very bullish, strong statement made in 2012; and (2) a resignation letter. You can make whatever conclusions you want, I’m just – as they say – ‘putting it out there’.

      • Name2

        Aim high, Paul. Aim high.

        If “putting it out there” is good enough for tabloid TV, it’s good enough for DMN.

      • JTVDigital

        Alright. Such statements are called “show off”, punchline, corporate communication to motivate troops…etc., that’s it.
        Linking a show off statement from 2012 with a “resignation” happening in 2015 does not sound right to me, that’s it.
        And you perfectly know that in giant corporations like major labels or others, “resignations” are not really “resignations”. People don’t resign from such jobs (he was sitting at the executive board).
        I did not know him personally but never heard anything “bad” about him, and the rare operations-related communications we had, by email, were always professional.
        Using his “resignation” to shoot on streaming / Spotify once again…it’s way too easy. I’d suggest to look into the details of what’s happening in these major labels, instead of focusing on individuals who “resign”.

  13. Tcooke

    Umg rammed it up artists asses. They knew then, they used this guy Wells, and now he is out, probably stayed longer than he or they expected. This happens all the time. Really has nothing to do with music. This is wallstreet. Stop defending spotify. The model is a shiest. Youve just been raped by a train of baboons and ur talking about the babooms just having a bad day. You can’t handle the truth for fear you might not constrain your sanity or commit a violent act and belocked away with baboons. Remi, are you a leader? Can artists even work together?

  14. Manny Sheean

    This is what happens when you think breaking artists means breakage for you and breaking even for artists. Look at all the names Wells mentions in his self-congratulatory departure memo:

    Pandora: Steering payola
    Apple: destroyed the album format
    Spotify: Free service is an utter disaster
    YouTube: Financial black box that survives by paying big advances to major labels
    Vevo: The money goes in but never comes out

    Pandora, YouTube and Spotify openly attack songwriters and artists. Pandora is in continual lawsuits. YouTube threatens to bring Google’s litigation muscle against songwriters and artists who don’t take their crappy deal.

    And these are the successes?

    Anyone who got sued by Bleeker Bob’s please raise your hand.

  15. Shlomo

    Can’t have a worldwide pirate running a billion dollar company. Looks like Daniel has a nice father figure coming soon. Who although isnt a tech pirate, was able to use artists earnings to fund his wild notions at UMG with no punishment for awful decisions like giving Spotify your catalog, relying on as based digital models and thinking you understand the music business.

    Take a hike Rob. Go be an angel investor and spend your own money.

  16. Adam

    So, by this logic, piracy and p2p wouldn’t affext record sales either… Guess we should just give up.

  17. Janey

    It’s a shame that executives can’t stick to what they’ve believed in and signed up to from the start. This excludes Rob Wells. He was/is forward thinking and actually had vision, believed in a product and carried that forward…. No reverse gear on his behalf! So now what’s left??? Looking forward to seeing UMG’s performance moving forward (or backward)!