You wouldn’t know it from Sir Lucian Grainge’s tone in today’s Universal Music Group Q1 earnings call, but the chairman of the world’s biggest music company confirmed what had long been expected, but never to be announced: that Drake has entered into an expansive, multi-faceted deal with the company that encompasses recordings, publishing, merchandise and visual media projects.
Such “expanded portfolios,” as Grainge noted in the call, spanning multiple creative lanes and revenue streams, also include the recently-announced extension and expansion of the Weeknd’s deal with UMG, which aligns him — like Drake — with Republic Records. (Drake’s deal was completed in 2021.)
Of course, the nagging question is: how big is Drake’s bag?
One insider describes the arrangement as “Lebron-sized,” without putting a number on it. Drake himself has seemingly referenced such a deal in the lyrics to “Lemon Pepper Freestyle” (off of his “Scary Hours 2” EP), which includes the lyric, “Three-sixty upfront, it all comes full circle” — or $360 million. He also alludes to “owning masters” on “The Remorse,” the last track of “Certified Lover Boy.” And in Migos’ “Having Our Way,” Drake raps, “Billionaires talk to me different when they see my pay stub from Lucian Grainge,” name-checking the UMG chief executive.
Since 2014, Drake has moved over 37 million album project units. He’s also the first artist ever to surpass 50 billion combined streams on Spotify. To estimate that Drake’s music brings in $50 million annually is no stretch, say sources, and that the deal could be in the vicinity of $400 million or more isn’t either.
For UMG, which is traded on the Euronext exchange, the deal helps solidify its catalog holdings. The company owns 3 million sound recordings and boasts 4 of the top 5 most streamed artists of the last decade on Spotify, per a report to investors issued by UBS Research in summer 2021. That report listed Drake among UMG’s 2021 “re-signings” and noted €1.52 billion spent on catalog acquisitions and artists advances in 2020 (Drake is listed alongside Bob Dylan and Cash Money; his songs have also been ingested into the UMPG system).
It was just under three years ago when Drake released “Scorpion,” shattering streaming records and, as reported by Variety at the time, making the rapper a free agent. In the time between, Drake’s stature — and leverage — has only increased as the Canadian artist continued to drop hit songs on his own in 2020 (“Laugh Now Cry Later” f. Lil Durk) and as a featured guest (Future’s “Life Is Good,” DJ Khaled’s “Popstar”) and into 2021 (“What’s Next,” “Wants and Needs” f. Lil Baby, “Way 2 Sexy,” Yung Bleu’s “You’re Mines Still”), and now 2022 (Future’s Wait For U co-featuring Tems).
“Drake benefits from a deep catalog that performs well,” says one industry veteran. “Also he became a free agent at a young age.”
In June 2018, Variety assessed what type of deal Drake could command once his obligations to UMG were fulfilled and outlined several possibilities, including a rich touring deal. But with the coronavirus pandemic wiping out concerts for most of 2020 and 2021, and the frenzied buy-sell of artist catalogs — at multiples north of 20x in some cases — the environment is ripe for UMG to lock down its most successful artist by “renegotiating and paying him a lot of money,” offers one industry observer with knowledge of similar deals.
In July 2020, entrepreneur Steve Stoute and rapper Russ discussed the possibility of Drake going independent and predicted a big pay day on the horizon. “Drake is about to get the biggest bag in the history of the music business by far,” said Stoute, chief executive of United Masters, following comments by Russ, who remarked: “You think that if Drake right now, completely independent … if Drake posts a picture on the ‘Gram of his new album, link in bio — f–k a link in bio, “new album out” — and he was fully independent, Drake will make $10 million a week for f–ing 60 weeks.”
Added Stoute: “If Drake goes independent, the music business is over.”
Says one top music attorney: “Drake has the bargaining power to negotiate a net profit split with the best deal terms and a humongous advance up front.”
The Toronto native’s business bonafides aren’t only limited to his own recording career. His OVO label imprint, housed under Warner Records, is home to several artists including PARTYNEXTDOOR and Dvsn, and the OVO streetwear line reportedly raked in $50 million in revenue at the end of 2018. Elsewhere in his apparel portfolio, a Nike deal and line, “Nocta,” is tied to “Certified Lover Boy.” He also recently launched “Better World Fragrance,” a luxury candle company.
Word is that Drake ended his contractual obligations to the Young Money/Cash Money label — “Soon as this album drop I’m out of the deal,” he rapped on the song “Is There More” — which is distributed through Republic Records.
The multiple Grammy winner has at times been critical of his and others’ dealings with corporations. On Lil Wayne’s “Family Feud” remix, Drake raps, “Ayy, tell me if TD Bank is approvin’ loans/ I’m thinkin’ of payin’ Wayne what Universal owes/ My n–a spent a lifetime goin’ platinum and gold/ He should own half of the label, shit outta control.” In the next line, the rapper shouts out Apple’s head of original content. “Somebody get Larry Jackson on the phone, I need some ownership if we pressin’ go/ ‘Cause business is boomin’ on behalf of me/ I need a bite outta the Apple like Adam and Eve.”
On “B.B. King Freestyle,” Drake jabs, “Classics I keep scribblin’, lights in the Universal building just keep flickerin’.”
And on 2019’s “Omerta,” Drake boasts: “I wish that I was playin’ in a sport where we were gettin’ rings / I wouldn’t have space on either hand for anything.”
“LeBron-sized” might be a more appropriate description for the richness of Drake’s deal. Besides the oft-heard claim that rappers want to be basketball players and vice versa, how NBA and hip-hop superstars command attention — and big bucks — in their industry’s respective free markets are not dissimilar. LeBron James signed a $154 million, four-year contract to join the Lakers in 2018 and added another $85 million to extend for two additional years but he also lays claim to deals with Nike, McDonald’s and ABC Studios. On his home turf, James helped boost Cleveland’s economy by returning to his hometown Cavaliers, bringing in millions of dollars to the city from new businesses. When it comes to music, Drake has that same market power — and also boasts a lucrative partnership with Nike, among other brands — but on a worldwide court.
UMG’s earnings for the first quarter of 2022 saw revenue rise 21.6% (16.5% in constant currency) to €2.199 billion ($2.31 billion). Music publishing revenue was up 32.5%, recorded-music revenue up 11.3% and merchandising and other revenue up a whopping 69.8% year-over-year in constant currency.
Variety has reached out to reps for Drake, UMG and Republic Records for comment.
With reporting by Jem Aswad and Jordan Rose
From Variety US