You would not know it from Sir Lucian Grainge’s tone in today’s Universal Music Group Q1 earnings call, but the chairman of the world’s largest music company confirmed what had long been expected but would never be announced: that Drake has entered into an expansive, multifaceted deal with the company , which includes footage, publishing, merchandise and visual media projects.
Such “expanded portfolios,” as Grainge noted in the call, spanning multiple creative paths and revenue streams, also include the recently announced extension and expansion of Weeknd’s deal with UMG, which brings him – like Drake – in line with Republic Records.
Of course, the nagging question is: how big is Drake’s bag?
An insider describes the event as “Lebron-sized” without putting a number on it. Drake himself has apparently referred such an agreement in the lyrics to “Lemon Pepper Freestyle” (outside of his “Scary Hours 2” EP), which includes the lyrics “Three-sixty upfront, it all comes full circle” – or $ 360 million. He also alludes to “owning masters” on “The Remorse”, the latest issue of “Certified Lover Boy”. And in Migos’ “Having Our Way,” Drake raps, “billionaires speak differently to me when they see my paycheck from Lucian Grainge,” as the name checker UMG’s CEO.
Since 2014, Drake has moved over 37 million album project units. He is also the first artist ever to surpass 50 billion combined streams on Spotify. Estimating that Drake’s music brings in $ 50 million annually is no stretch, sources say, and that the deal could be close to $ 400 million or more, is neither.
For UMG, which is traded on the Euronext exchange, the trade helps to strengthen its catalog portfolio. The company owns 3 million audio recordings and boasts 4 of the top 5 most streamed artists of the last decade on Spotify, according to a report to investors issued by UBS Research in the summer of 2021. This report listed Drake among UMG’s “signatures” and noted 1, € 52 billion spent on catalog acquisitions and artist progress in 2020 (Drake is listed alongside Bob Dylan and Cash Money; his songs have also been included in the UMPG system).
It was almost three years ago when Drake released “Scorpion”, which broke streaming records and, as reported by Variety at the time, making the rapper a free agent. In the meantime, 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” by Lil Durk) and as a featured guest (Futures “Life Is” Good, “DJ Khaleds” Popstar “) and Into 2021 (” What’s Next “,” Wants and Needs “b. Lil Baby,” Way 2 Sexy “, Yung Bleus” You’re Mines Still “) and now 2022 (Future’s Wait For You co-featuring Tems).
“Drake benefits from a deep catalog that performs well,” says an industry veteran. “He also became a free agent at a young age.”
In June 2018, Variety assessed what type of deal Drake could order once his obligations to UMG were met, and outlined several options, including a rich touring deal. But with the coronavirus pandemic wiping out concerts for most of 2020 and 2021, and the insane buying-selling of artist catalogs – with multiples north of 20x in some cases – the environment is ripe for UMG to lock its most successful artist down by to “renegotiate and pay him a lot of money,” offers an industrial observer with knowledge of similar agreements.
In July 2020, entrepreneur Steve Stoute and rapper Russ discussed the possibility of Drake becoming self-employed and predicted a big payday on the horizon. “Drake is getting by far the biggest bag in the history of the music industry,” said Stoute, chief executive of the United Masters, after comments from Russ, who remarked: “You think that if Drake right now, completely independent … if Drake posts a picture on ‘Gram’ of his new album, link in cinema – f-ka link in cinema, “new album out” – and he was completely independent, Drake will earn $ 10 million a week for 60 weeks . ”
Stoute added: “If Drake becomes self-employed, the music business is over.”
A top music lawyer says: “Drake has the bargaining power to negotiate a net profit sharing with the best terms and conditions and a huge advance in advance.”
The Toronto native’s business bonafides are not just limited to his own record career. His OVO label imprint, which is under Warner Records, is home to several artists, including PARTYNEXTDOOR and Dvsn, and the OVO streetwear series reportedly earned $ 50 million in revenue by the end of 2018. Elsewhere in his clothing portfolio, a Nike deal and line, “Nocta,” is attached to “Certified Lover Boy.” He also recently launched “Better World Fragrance”, a luxury lighting company.
It is said that Drake ended his contractual obligations to the Young Money / Cash Money company – “As soon as this album falls, 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 companies. On Lil Wayne’s “Family Feud” remix, Drake raps, “Ayy, tell me if TD Bank approves loans / I’m thinking of paying Wayne what Universal owes / My n – a spent a lifetime going on platinum and gold / He should own half the label, shit out of control. In the next line, the rapper shouts Apple’s head of original content. “Someone’s getting Larry Jackson on the phone, I need some ownership if we press / for business is booming on my behalf / I need a bite out of the apple like Adam and Eve. “
On “BB King Freestyle,” Drake strikes, “Classics I keep scribblin ‘, the lights in the Universal building just keep flickering.”
And on 2019’s “Omerta” Drake boasts: “I wish I was playing in a sport where we got called / I would not have room on any of the hands for anything.”
“LeBron size” could be a more appropriate description of the wealth of Drake’s deal. Aside from the oft-heard claim that rappers want to be basketball players and vice versa, it’s no different how NBA and hip-hop superstars get attention – and big money – in their industry’s respective free markets. LeBron James signed a $ 154 million, four-year contract to join the Lakers in 2018, adding another $ 85 million to extend for another two years, but he also claims deals with Nike, McDonald’s and ABC Studios. On his home turf, James helped boost Cleveland’s economy by returning to his hometown of the Cavaliers, bringing in millions of dollars to the city from new businesses. When it comes to music, Drake has the same market power – and also boasts a lucrative partnership with Nike, among other brands – but on a worldwide scale.
UMG’s earnings for the first quarter of 2022 increased revenue by 21.6% (16.5% in constant currency) to EUR 2.199 billion (USD 2.31 billion). Music publishing revenue increased 32.5%, recorded music revenue increased 11.3% and merchandising and other revenue increased as much as 69.8% year-on-year in constant currency.
Variety has contacted representatives of Drake, UMG and Republic Records for comment.
With reporting by Jem Aswad and Jordan Rose