Young Brit helps Warner Music and Ed Sheeran sing a new tune

Max Lousada presents a model for how record labels can navigate a turbulent new phase, marked by the growing power of streaming services

Ed Sheeran's new album No 6 Collaborations Project features some of the biggest names in music. Paul Kane/Getty

Max Lousada was on a mission to launch Ed Sheeran into music’s stratosphere - the pop artist was about to release his third album in early 2017 and it fell to the Warner Music team led by Mr Lousada to make the collection Sheeran’s biggest yet.

The campaign started when Warner Music Group released two Sheeran singles at once, a tactic from the days of Elvis and Fats Domino. Later, the UK-born Mr Lousada bucked modern convention again by spurning promotional offers from streaming services and releasing the album to everyone at the same time. The world’s three biggest pop stars - Taylor Swift, Adele and Drake - had previously restricted online access to their new works to paid services and rang up big sales as a result.

“There was this misnomer that if you put it on Apple or YouTube or free services, it would corrode physical sales,” Mr Lousada said.

The gambit worked, showing why Warner Music chose the 44-year-old career music executive to head its recording business. The company led the industry last year with a 10 per cent revenue gain, demonstrating that traditional labels can succeed in the digital era.

Sheeran, an unknown singer-songwriter seven years ago, bested Drake and Swift to be crowned the most popular artist in the world, the International Federation of the Phonographic Industry said this week. One single, Shape of You, was the most popular song of 2017, while the symbol-titled ÷ was the best-selling album.

In the job only since October, Mr Lousada can’t claim sole responsibility for those successes, although he also helped birth a cultural phenomenon in rapper Cardi B last year and saw Warner Music artist Bruno Mars sweep the top Grammy Awards in January. He’s moved up the ranks at Warner Music by bringing along acts like Sheeran, James Blunt and Mars.

Nor can Warner Music rest on its laurels. It’s the smallest of the three major recording companies, trailing Universal Music and Sony Music, and as such has less leverage in negotiations with the technology giants that distribute its music.

His hands-on, artist-friendly strategy is a model for how record labels can navigate a turbulent new phase, marked by the growing power of streaming services like Spotify Technology and tech giants including Apple, Amazon, Facebook and Alphabet, owner of Google and YouTube.

These new players have boosted industry sales but are also trying to undercut record labels to save money on royalties. Streaming services offer data and analytics about when to release music, and where, while small start-ups track and collect royalties for a fraction of what a major label charges. These upstarts offer artists tools to release their music directly on YouTube and Spotify – no CD plant required.

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“The old model favoured certain gatekeepers. Artists had to be signed to a label,” Spotify chief executive Daniel Ek wrote in filing Wednesday announcing plans to list on the New York Stock Exchange. “They needed access to a recording studio, and they had to be played on terrestrial radio to achieve success. Today, artists can produce and release their own music.”

Perhaps most troubling, the services spend millions of dollars promoting artists, eager to show an act can make it without a traditional label deal. YouTube has funded the production of music videos, while Spotify has plastered artists’ visages on billboards in major cities. Some speculate they will eventually sign artists directly.

“Apple, YouTube and Spotify all feel they have an ownership of a Bruno Mars or Coldplay, and our job is to manage all these external relationships to the benefit of the act,” Mr Lousada said. “The narrative of streaming services is that they don’t want to become labels, and history will tell us whether those statements are true or false.”

Mr Lousada began his career in the record business before the internet wreaked havoc on the industry. CDs were flying off shelves and music industry sales peaked at 23.8 billion in 1999, when he won airtime for Mos Def’s “Ms Fat Booty” on BBC Radio 1, the UK’s top music station. One of millions of young white kids who’d fallen in love with hip-hop, he helped US rappers succeed across the Atlantic.

"I haven't met an artist yet that doesn't like Max or want to work with him," said Stuart Camp, Sheeran's manager, who worked with Mr Lousada years ago at Mushroom Records. "Max is the peacemaker and the deciding vote. He has an understanding and wisdom that everyone appreciates."
 That helped when the industry was in the early years of a freefall that saw revenue shrinking 40 per cent from the combination of piracy, the decline of CD sales and free music on YouTube. Mr Lousada zeroed in on the certain route to the top: finding great talent and turning them into stars. He joined Warner Music in 2004, working directly with artists at the UK outpost of Atlantic Records, the home of Aretha Franklin, Ray Charles and Led Zeppelin.
Mr Lousada developed Blunt and Paolo Nutini, and was named chairman of Atlantic in 2009. Atlantic won the award for UK label of the year two years later, paving the way for him to take over Warner's British record business.

That same year, Warner Music traded hands for the third time in Lousada’s tenure, when Ukrainian-American billionaire Len Blavatnik acquired control.

Mr Lousada has wasted no time putting his imprint on the company. He oversaw the launch of Warner Music Middle East to tap into an increasingly global music market. He revamped the company’s system for managing promotion and priorities across the globe to do the same. And he has increased his investment in original programming.

And for new artists who thinks they can do it with a streaming service alone, Mr Lousada can point to Dua Lipa. Over the past couple years, the label set up her recording sessions, flew her to Los Angeles for writing, finalised the songs and planned out the marketing. It remained committed when the single released right before her album flopped, convinced that New Rules would be a smash.

The song has since earned more than 1 billion views on YouTube, and Lipa was just named female artist of the year at the British music awards.

“Max has been incredibly supportive of my ambition from the minute I signed to Warner and I feel so lucky to have him as the boss of my label,” Lipa said.

“He’s a real music man and I always really value what he has to say about my songs.”