UMG chief Luke Lewis is a constant in shifting music industry

December 19, 2010

Luke Lewis has what he calls "longevity." Lewis, 63, has served at the helm of a major record label for 19 years, longer than any other label executive in Nashville during a period of tremendous upheaval in the music business.

As chairman of label UMG Nashville, Lewis oversees the MCA, Mercury and Lost Highway labels. His roster includes country superstars like Sugarland, Vince Gill, George Strait and Lee Ann Womack. He was the businessman who engineered Shania Twain's success — Twain remains the best-selling female country artist of all time, selling 80 million units worldwide. He is also behind newcomers like Easton Corbin, the best-selling new artist of 2010.

Lewis was recognized earlier this year with a lifetime achievement award from the Americana Music Association for launching the Lost Highway imprint a decade ago. Originally envisioned as a marginally profitable label featuring well-known singer-songwriters, the label's first release — the Oh Brother, Where Art Thou? soundtrack — sold 7 million albums and its roster has included Lucinda Williams, Lyle Lovett, Elvis Costello among others.

Meanwhile, UMG Nashville's parent company, Universal Music is undergoing a leadership change, replacing longtime CEO Doug Morris with Lucian Grainge, who headed international operations. Grainge will be based in Los Angeles.

Lewis sat down with Tennessean reporter Anita Wadhwani to discuss industry challenges and what the future may hold for the music business.

What is your job description?

I have to make decisions on personnel, on artists, whether to sign them or keep them. I oversee budgets and make decisions on how much we spend and where we spend it. I make decisions on singles.

Everybody has an opinion. It's a subjective business. But at the end of the day somebody has to make a final decision on whether the music is good enough to put out, or what the single on the album is going to be.

I also have to determine how to (use) resources. With the business changing as much as it has in the last few years, our distribution has changed radically, moving from the physical product to the digital world. It has required changes in staffing to adapt. Primarily, though, we're a content company, and I've concentrated on developing content and monetizing it.

Describe the changes in the music industry's distribution model; how does that impact your label?

There didn't used to be an iTunes, and now they're our No. 1 customer. That's pretty radical.

We don't manufacture for them. We don't take returns from them. It changes everything in the way we market, the way we sell, in the way it's delivered, what happens to it after it's out the door.

Here's the dilemma: We're still — and I'll speak generally for the labels in this town — we're still sending more than 50 percent of our music out in a physical form. That's shifting every year, but it's shifted much more radically in the pop world. Country music is still incredibly dependent upon Walmart, BestBuy and Target's commitment to music. And they're seeing declining sales and have to decide if they want to devote the same space to music.

Many have been critical of record labels for not taking a greater leadership role or for being too aggressive policing illegal downloading. What's your response?

We're a pretty essential part of the food chain, and the impact of losing half your revenue makes its way all the way down to truck drivers who don't work because of it, studio engineers, players and writers and publishers; everybody's impacted by it.

I don't know why everybody thought we were the cops. We had representatives with the RIAA go after (people illegally downloading music), but that didn't work.

People suggested maybe the record labels should have bought Napster the year it started, and maybe we'd all be OK now. I have a hard time believing that.

Looking back, I think it was purely market forces. Sometimes we just get cast as the bad guys. Maybe sometime we have been or fell asleep at the wheel for a minute — that's fair enough I suppose. But I don't know anybody in this industry who's not trying as hard as they can to make it work.

I can get angry at some people taking an unfair share of the pie — like radio broadcasters. For 75 years, radio has never had to pay the artist. Frank Sinatra never got a dime from a radio station and a lot of them made a lot of money playing his music. That's got to change.

Universal Music has a new chief, Lucian Grainge, who takes over the company in January. What does that mean for your job and the company?

The new boss is an old friend of mine, and he's what I refer to as a record man, as opposed to a record producer or a banker. He's someone who has spent his life in the record business. That's good news for people who work at a record company.

I'm not going anywhere. I have a long term contract here. Unless they throw me out, and I don't think they're going to.

Why do you think you've remained in your position so long?

I've never had a year where we've lost money, which seems to keep people happy. I've got 62 people working here, and almost half have been here more than 10 years. And I guess I've had incredible good fortune with artists. We all have "colds" — the trade name for it. I've certainly been cool before, but I've never been ice cold.

Experience speaks for a lot. I started in a record store; then I worked in a warehouse. I worked for a distributor, as a salesman, a sales manager, ran a distribution company. I held just about every job you could have in the music business on the way to doing what I do now. I know that was helpful and put me in a position where I can understand how the whole thing works. But you need the magic.

Have labels changed in how they work with artist?

We've started to change our contractual terms. There is a movement where labels are beginning to share in touring revenue and merchandising revenue — and in some cases, even in publishing revenues. The success of those changes remains to be seen.

The process of developing an artist hasn't fundamentally changed. All of us are constantly on the lookout for new talent. It's competitive. You're looking at people that are pretty raw and haven't made records before. And they have to be capable of having hits.

Some of that has to do with the country music business, which is slower to change than the rest of the business. We still have a radio format that drives our sales. We have two video broadcast outlets, CMT and GAC. The most priceless thing we've got is that consumers and fans have incredible loyalty.

Describe the business model behind the Lost Highway imprint.

It was launched as all singer-songwriters. There were no rookies. It was more of a press-driven sort of a label. Most of the artists had their own fan base. The music is for discerning music junkies, collectors rather than passive listeners.

The goal was to try and make enough money to keep the doors open. We made records for less money. We spent less money. We weren't reliant on hits. I like to think we were pretty selective

I never expected it to be incredibly profitable, but we were fortunate with the Oh Brother, Where Art Thou? album, which sold 7 million. We had Lucinda Williams, Ryan Adams, Robert Earl Keen and a Hank Williams tribute record that won a Grammy that year. So we've had a good run

The challenge confronting Lost Highway now is that the print media that had a lot to do with the success for artists is not as potent as it used to be. We've lost a lot of big, influential music magazines these last few years

What lies ahead for record labels?

I don't have a clear picture in my mind of where it might go. I don't think anybody does. I'm a believer in subscription models. There's Pandora. There's Rhapsody. But we're in the middle of a pretty severe evolutionary switch, and I'm not sure anybody has the answer yet of what the future might hold.

I think the evolutionary process is kind of fun, but it's not fun to have half of your business disappear because of piracy … which is pretty much what's happened. There's a whole generation that feels that music should be free.

The Tennessean