GRAMMY U Business Plan Competition Winner Kirkland Lynch Spends A Day With Steve Barnett, Chairman/CEO Of Capitol Records

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By: Kirkland Lynch / GRAMMY U  Member & Business Plan Competition Winner 

October 9, 2014 marked the best day of my life thus far.  That was the day that GRAMMY U introduced me to Steve Barnett, CEO of Capitol Music Group, who took me under his wing for a day and exposed me to his burgeoning record behemoth and forward-thinking team members, to give me a taste of what it takes to run one of the world’s leading record labels.

With digital sales declining, and artists being able to promote and distribute their music through available social media platforms and outlets such as Spotify, Sound Cloud, and Pandora, I have been a strong believer for the past year that the traditional record label is simply no longer needed.  As such, I had been telling my professors, classmates, and fellow GRAMMY U members that I believe that record labels should fire all of their employees and restructure themselves as lean venture capital firms.

Almost serendipitously, this summer while I was studying for the bar exam, GRAMMY U released its first annual Business Plan Competition.  While for the past year I had been trying to get my vision of the venture capital record label in order, GRAMMY U provided me with the perfect opportunity to transfer my thoughts into a concrete, solidified, yet succinct plan.  GRAMMY U asked me “Where do you see the future of the music industry?” and I felt like my past vision of lean venture capital record labels, was the perfect answer.    

Through my winning of the grand prize of the GRAMMY U Business Plan Competition, I was granted the opportunity to spend the day with Mr. Barnett; and Mr. Barnett made that day a day I will never forget.  Throughout the day, I continuously thought to myself, what did this little kid from West Philly (read, me) do to deserve the star treatment that Mr. Barnett and his team members showed me during my time inside the storied Capitol Records building. 

Due to me being a new hire at the New York law firm, Debevoise & Plimpton, my stint in Los Angeles was extremely short.  I flew out of New York at 9:00 PM on Wednesday night, got to Los Angeles at 12:30 AM on Thursday morning and flew out of Los Angeles at 9:30 PM that same day, just to land in New York at 6:30 AM and be at work two hours later.  However, none of that fazed me as I was riding an intellectual high from the time I met Mr. Barnett until the time we parted ways.

My day with Mr. Barnett started at 9 AM when he picked me up from my hotel and drove me to the Capitol Records building.  The first thing Mr. Barnett did when I hopped in his car, aside from the obligatory introductions, was point out what he felt were flaws in my business plan.  However, he did not speak to me as if he was a music executive and I was just some kid who didn’t know what he was talking about.  I could tell Mr. Barnett truly valued my thinking process and prospective on the future of the music industry, but at the same time he knew that me not being a direct member of the music industry, there were some things that I simply did not understand how they worked.

Once we pulled up to Capitol Records and walked into the iconic building, the first thing Mr. Barnett told the young lady at the entrance, was to crank up the music.  From there, we took the elevator to the executive floor where you would think my jaw dropped because of the amazing views from Mr. Barnett’s office, but it actually dropped from the treatment I received from Mr. Barnett’s team members from the moment I stepped off the elevator.

A few days before I flew to LA, Mr. Barnett asked me to send him my “story” which I thought was going to be read just by him.  It turns out he disseminated my story throughout all of his team members and everyone was extremely ecstatic and interested in meeting me.  I’m usually one who can call “B-S” on unwarranted forced conversation right away, but either these people were America’s best actors or they thoroughly wanted to get to know me; I definitely felt welcomed right away.

My first task of the day was to sit in a meeting with Mr. Barnett regarding the October 21, 2014 release of Neil Diamond’s new album “Melody Road.”  Capitol team members spoke on everything from the current state of the album’s pre-order sales to how the label should attack its international marketing plan.  With all the planning and pre-success of the album, I can see how “Melody Road” will be the nation’s number one album when it is released next week.

Next, I met privately with the legendary Don Was, President of the preeminent Blue Note Records.  Mr. Was explained to me how he read my story and business plan and how he was also thinking of ways to approach the music industry differently, as in this current digital age, Blue Note Records has the ripe opportunity of introducing its fabled catalog, both past and present, to an entirely new generation, a generation whose sole essence revolves around music, festivals, and the digital crack pipe which some people like to call an iPhone.  While I left Mr. Was with some tidbits that I learned through my past work with Judy McGrath’s social and digital media brand, Astronauts Wanted: No Experience Necessary, Mr. Was left me with the general notion of how an executive in the music industry must continuously think about making a label fresh and innovative while simultaneously celebrating its past works and ensuring that those works aren’t pushed to the side.

After my meeting with Mr. Was, I was whisked away on a tour of Capitol Records’ studios and mastering rooms.  Walking into Studio A, I could literally feel the spirits of Frank Sinatra and Nat King Cole circling the room.  When you were in that room, you knew right away you were in a special place.  I got to play (i.e., tap some random keys on) Nat King Cole’s favorite piano and learned about the echo chambers that Capitol Records has under its parking lot to provide the utmost reverb for its recordings.  I was in awe at being in a spot that only a few non-musicians have ever seen and was extremely grateful for all the knowledge my guide and Capitol team member, Jim Kuhla, shared.

Following my extensive studio tour, I went out to lunch with Jeff Temske and Justin Seltzer whose official titles are mix a between data geniuses and A&R aficionados, but I like to just call them the future.  Speaking with these two, you could tell they just get it.  They realize the future of the music industry not only takes having an ear for good music but you have to understand all the raw data that surrounds the customers, potential customers, and untapped markets; and they know that data like a Beyoncé stan knows “Drunk In Love.”  I say give it ten years and these two will be running their own labels.

After lunch, I rejoined Mr. Barnett to sit in two meetings - one regarding the current status of Sam Smith’s classic album, “In the Lonely Hour” and the other to plan for the upcoming November 24, 2014 release of Mary J. Blige’s “The London Sessions” (which I believe will be to Mary J. Blige what The Emancipation of Mimi was to Mariah Carey - iconic, groundbreaking, and never-been-done-before).  While the Sam Smith meeting was spent listening to the team members analyze the wildfire-like success of his album and beginning to plan for the awards season, the Mary J. Blige meeting took a different turn.

During the Mary J. Blige meeting, after watching a trailer for Mary J. Blige’s upcoming album and hearing the team plan for the rollout of the album and its marketing approach, Mr. Barnett turns to me and asks, “What do you think?”  Shocked out of my mind that the leader of the future of the music industry asked my opinion, I quickly blurted out something that I now picture to be non-sensical, but I like to think that I might have saved face later on in the meeting with other suggestions I began to add to the conversation once all of my jitters were gone.

After the Mary J. Blige meeting I entered a meeting with Mike Flynn, SVP of A&R, and his A&R dream team.  As I entered the Capitol Artists Lounge where the A&R meeting was occurring, Mr. Flynn’s entire team was already there waiting for me.  I went into the meeting thinking I would serve as a fly on the wall observing, listening, and learning.  As you’ve probably predicted, that thinking was quickly debunked as Mr. Flynn turned to me and basically said he and his team have heard all of these artists already, and that they wanted my opinion.  As the team went down the list artist by artist, Mr. Flynn asked my opinion and thoughts which I truly believe he valued and processed.  I couldn’t believe it.  Thirty-five minutes ago I was getting asked my thoughts of approaching the marketing for Mary J. Blige’s album and right now I was helping pick Capitol Music Group’s newest signees - it’s cliché to say I had to pinch myself to make sure I wasn’t dreaming, so instead I’ll say I peeked out of the window to make sure the LA smog was still blocking the downtown skyline; the answer was yes.      

Before I knew it, it was 5:00 PM and time to have my final closure meeting with Mr. Barnett and Michelle Jubelirer, EVP of Capitol Music Group.  I thanked and debriefed Mr. Barnett on what a great day I had and he clued me in on the positive feedback I had received from his team members throughout the day.  Ms. Jubelirer spoke to me about how she had a similar path to me - we both went to the same college (the University of North Carolina at Chapel Hill) and she also worked as an M&A attorney at a white shoe law firm in New York City before transitioning to the music side.  Listening to Ms. Jubelirer was comforting as she understood the pain of having six figure debt while having your intellectual passion pulling you in a completely separate direction.  After the debriefing with Mr. Barnett and Ms. Jubelirer, I hopped an Uber to the airport and got mentally prepared to return to the corporate world the next day.                            

*  *  *

I once saw some street art in SoHo (I know, super trendy, *Kanye shrug*) that read “There are two secrets to success: 1. Never tell everything you know.”  With that, I have to keep mum on a lot of things I learned during my day with Steve Barnett and his Capitol Music Group team, especially since I do view them as leaders of the music industry and I would like to be a part of that movement.  However, there are three takeaways that I can share. 

First, labels hoping to be successful in the future should be focusing on signing, developing, and distributing career artists - that means more Sam Smiths and less Shmoney Dances, as those artists are the ones who bring labels both, industry respect and consumer notoriety, let alone the financial blessings that are involved.

Two, if you noticed throughout this piece, I referred to everyone as a team member.  That’s exactly how Mr. Barnett treats every single one of his employees - of course there is a hierarchy, but Mr. Barnett knows every single person’s name and you can tell he values and respects every single person’s opinion.  If you want to have a successful label as the music industry continues to evolve, a team approach rather than a corporate structure approach is what needs to be in place. 

Three, while on the topic of team members, the third takeaway is youth, youth, and more youth.  At my youthful age, I felt middle-age if not old while walking around the Capitol building.  Besides the executives who need to be older due to their years of music industry experience, the true think-tank and core base of Capitol Music Group are young adults who completely understand where the industry is today and where it will be going in the future.  Labels hoping to continue to flourish in the industry must realize that Napster, iTunes, and Spotify, were not hiccups, they represent the pace and the way the industry is evolving in this technological revolution and if you do not have the young team members who understand that AND actually have a voiced opinion, you will be left behind in the dust.  

As previously mentioned, my original vision for the future of the music industry was that record labels should fire all of their employees and restructure themselves as lean venture capital firms - having institutions and high-net worth individuals serving as limited partners and select music industry executives serving as general partners. 

With this approach, the label would take an annual piece of the fund (called the “management fee”) as well as split the profits from artist touring, merchandise, and sales between the limited and general partners (called the “carrying fee”).  Moreover, before the artist is signed to the label, an algorithm would be used to determine that artist’s success and develop a price for the reversion right of that artist’s master recordings; all before the artist inks the contract.  That is, the day the artist signed to the label, he would know that in x amount of years he could buy back his masters for x amount of money (called “the label’s exit”).  If the artist could not afford that price at that time, the label could continue to make money from the artists’ masters by way of synchs, sampling, and live performances.

While I still whole-heartedly believe in my business plan, I must admit after spending the day with Mr. Barnett and his team members, there are some parts that need to be tweaked.  While I envisioned a future label needing no more than 50 hands on deck, Greg Thompson, EVP of Capitol Music Group broke it down to me best when he said “It takes a village to raise a Katy Perry,” and after my legendary day at Capitol Records by way of GRAMMY U, I completely understand.  

Click here to view Kirkland's interview with CBS.

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