Drake strikes massive, multifaceted deal with Universal Music Group

You wouldn’t know it from Sir Lucian Grainge’s tone during Universal Music Group’s first quarter earnings call, but the chairman of the world’s largest music company has confirmed the long overdue. , but which was never announced: that Drake has entered into an expansive, multi-faceted deal with the company that encompasses recordings, publishing, merchandise and visual media projects.

These “expanded portfolios,” as Grainge noted in the call, spanning multiple creative avenues and revenue streams, also include the recently announced extension and expansion of Weeknd’s deal with UMG, which aligns him – like Drake – with Republic Records. (Drake’s deal was done in 2021.)

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Of course, the nagging question is: how big is Drake’s bag?

An insider describes the arrangement as “Lebron-sized,” without putting a number on it. Drake himself apparently referenced such a chord in the lyrics to “Lemon Pepper Freestyle” (off his EP “Scary Hours 2”), which includes the lyrics, “Three-sixty upfront, it all comes full circle” – or $360 million. He also alludes to “possessing masters” on “The Remorse,” the final track from “Certified Lover Boy.” And in Migos’ “Having Our Way,” Drake raps, “Billionaires talk to me differently when they see my Lucian Grainge pay stub,” checking the name of UMG’s CEO.

Since 2014, Drake has moved over 37 million album project units. He is also the first artist to exceed 50 billion combined streams on Spotify. Estimating that Drake’s music makes $50 million a year isn’t a stretch, the sources say, and that the deal could be around $400 million or more isn’t either.

For UMG, which is listed on the Euronext stock exchange, the operation helps to solidify its catalog. The company owns 3 million sound recordings and has 4 of the top 5 most-streamed artists of the past decade on Spotify, according to an investor report released by UBS Research in the summer of 2021. That report listed Drake among the “re- signings” from UMG in 2021 and noted 1.52 billion euros spent on catalog acquisitions and artist advances in 2020 (Drake is listed alongside Bob Dylan and Cash Money; his songs were also ingested in the UMPG system).

It was just under three years ago when Drake released “Scorpion”, breaking streaming records and, as reported Variety at the time, making the rapper a free agent. In the meantime, Drake’s stature – and influence – has only grown as the Canadian artist continued to release hit songs on his own in 2020 (“Laugh Now Cry Later” f. Lil Durk) and as a guest star (Future’s “Life Is Bon”, DJ Khaled’s “Popstar”) and through 2021 (“What’s Next”, “Wants and Needs” f. Lil Baby, “Way 2 Sexy”, ” You’re Mines Still” by Yung Bleu), and now 2022 (Future’s Wait For U with Tems).

“Drake has a well-functioning comprehensive catalog,” says an industry veteran. “Plus, he became a free agent at a young age.”

In June 2018, Variety assessed the type of contract Drake could order once his obligations to UMG are fulfilled and outlined several possibilities, including a rich touring contract. But with the coronavirus pandemic wiping out gigs for most of 2020 and 2021, and the frenetic buying and selling of artist catalogs – at multiples north of 20x in some cases – the environment is ripe for UMG is locking up its most successful artist by “renegotiating and paying him a lot of money,” offers an industry watcher with knowledge of similar deals.

In July 2020, entrepreneur Steve Stoute and rapper Russ discussed the possibility of Drake going freelance and predicted a big payday on the horizon. “Drake is on the verge of getting the biggest sack in music industry history by far,” United Masters chief executive Stoute said following comments from Russ, who said: “You think if Drake right now completely independent… if Drake posts a photo on the ‘Gram of his new album, link in bio – f-ka link in bio, ‘new album out’ – and he was totally independent, Drake will earn $10 million a week for 60 weeks.”

Stoute added, “If Drake goes independent, the music business is over.”

Says a leading music lawyer: “Drake has the bargaining power to negotiate a net profit split with the best terms and a huge upfront payment.”

The Toronto native’s bargains aren’t just limited to his own recording career. His OVO label, hosted under Warner Records, is home to several artists including PARTYNEXTDOOR and Dvsn, and the OVO streetwear line reportedly brought in $50 million in revenue by the end of 2018. Elsewhere in his apparel portfolio, a deal and a line Nike, “Nocta” is related to “Certified Lover Boy”. He also recently launched “Better World Fragrance”, a luxury candle company.

Rumor has it that Drake has ended his contractual obligations to the Young Money/Cash Money label – “As soon as this album comes out, I won’t be okay with it anymore,” he rapped on the song “Is There More – which is distributed by Republic Records.

The multiple Grammy winner has sometimes criticized his and others’ relationships with the companies. On Lil Wayne’s “Family Feud” remix, Drake raps, “Ayy, tell me if TD Bank approves the loans / I’m thinking of paying Wayne what Universal owes / My na spent his life going platinum and gold / He should own half the label, shit out of hand. In the next line, the rapper yells at Apple’s head of original content. “Someone call Larry Jackson on the phone, I need some ownership if we rush to go / ‘Cause business is booming in my name / I need a bite of Apple like Adam and Eve.”

On “BB King Freestyle,” Drake jabs, “Classics I keep scribblin’, the lights in the Universal building keep flashing.

And on 2019’s “Omerta,” Drake bragged, “I wish I played in a sport where we got rings / I wouldn’t have space on either side for anything.”

“LeBron’s size” might be a more apt description of Drake’s deal wealth. Besides the oft-heard claim that rappers want to be basketball players and vice versa, the way NBA and hip-hop superstars garner attention – and big bucks – in the respective free markets of their industry is no different. LeBron James signed a four-year, $154 million deal to join the Lakers in 2018 and added another $85 million to extend for two more years, but he also boasts deals with Nike, McDonald’s and ABC Studios. At home, James helped boost Cleveland’s economy by returning to his hometown of the Cavaliers, bringing millions of dollars to the city through new business ventures. When it comes to music, Drake has the same market power — and also enjoys a lucrative partnership with Nike, among other brands — but on a global terrain.

UMG’s earnings for the first quarter of 2022 saw revenue rise 21.6% (16.5% in constant currency) to 2.199 billion euros ($2.31 billion). Music publishing revenue increased 32.5%, recorded music revenue 11.3%, and merchandising and other revenue increased 69.8% year-over-year in currency constant.

Variety has reached out to representatives for Drake, UMG and Republic Records for comment.

With reporting by Jem Aswad and Jordan Rose

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