Lucian Grainge: Banging the drum for the UK in LA

The Universal Music head got the PM involved in the US Innovation Forum and sees a bright future for his industry

Lucian Grainge still likes to watch his beloved Arsenal play at the weekend, even though he lives in Los Angeles and there is an eight-hour time difference. "I get up early and go to Nate 'n Al's in Beverly Hills and get lox and bagels," he says, with a grin, explaining how he likes to make a trip to the delicatessen before a big game on TV.

But North London-born Mr Grainge won't have time to watch much football in the next 48 hours because Sunday is the Grammy Awards, the biggest night of the year for the music industry.

As the chairman and chief executive of Universal Music, the world's biggest record company, Mr Grainge will be busy all weekend long, entertaining and schmoozing. His roster of stars includes Rihanna, Lady Gaga, will.i.am, Emeli Sandé and Psy, the South Korean behind Gangnam Style.

However, when we meet at Soho House West Hollywood, an offshoot of the London members' club and the hottest spot in LA, it isn't to discuss the Grammys. Mr Grainge has taken a break from the day job to co-host the Innovation Forum, a summit to promote the UK's creative and tech industries in America, which took place earlier this week.

Lastminute.com founder Brent Hoberman and media banker Jonnie Goodwin, the British duo behind Founders Forum, which supports entrepreneurs, came up with the idea of the Innovation Forum and the Government, in the form of UK Trade & Investment, backed it.

But it was Mr Grainge, a British Business Ambassador, who was able to use his status as a Hollywood heavyweight to give the summit some clout. Speakers included Dreamworks movie studio boss Jeffrey Katzenberg, Sony Pictures chief Michael Lynton, William Morris Endeavour talent supremo Ari Emanuel, Spotify's founder Daniel Ek and Wikipedia founder Jimmy Wales.

The British sent a big contingent: the founders of almost 50 tech start-ups flew in, along with UKTI's Lord Marland and Joanna Shields, the chief executive of Tech City, the Government initiative to promote east London as a technology hub. Russian supermodel and philanthropist Natalia Vodianova and Lord Frederick Windsor, the financier son of Prince and Princess Michael of Kent, added a touch of glamour.

Mr Grainge also managed to persuade David Cameron to take part in a live question-and-answer session, via TV link from Downing Street. The Prime Minister spared nearly a quarter of an hour, explaining to the audience that he had to go to vote on gay marriage in the Commons just minutes later. That won him a loud round of applause from the Hollywood executives.

The Universal boss underlined his personal involvement by throwing a party at his home for the Innovation Forum that evening. Appropriately, Ms Sandé, the best-selling British artist of last year and a new recruit to Universal, following his £1.1bn acquisition of EMI, sang an acoustic set to 150 guests in a marquee in the garden.

Mr Grainge, who has a CBE, says he wanted to support the summit because "I'm very proud to be a Brit."

There is a special relationship between Britain and America as creators of "English-speaking content in all its forms", he says, and he feels a sense of "responsibility" to promote it, because of "the impact it has on culture". He adds: "I've got this quite unusual and yet unique opportunity as a global CEO in an industry, and at a time where content is completely transforming itself, to do something about it." Mr Grainge admits these remain difficult times for "legacy" media owners like record labels and film studios because digital has undermined their traditional business models.

However, he believes things are looking up for his company. "For the first time, I feel the opportunities outweigh the disadvantages and problems we have faced over the last five to 10 years," he says, referring to new revenue streams and the rise of mobile platforms, where users are more willing to pay.

The Universal boss, who moved from London after being promoted to the top job three years ago, can't give details about trading ahead of financial results but hints that digital growth is accelerating, saying: "We're in a pivot period."

He reckons his decision to move Universal's headquarters from New York to LA is paying off, because he company is now closer to the rest of the entertainment business as record labels increasingly look for partnerships with the TV, movie and computer games industries. The United States business is now profitable again.

Despite Mr Grainge's optimism, new technology keeps raising problems. During the Innovation Forum, one speaker pointed out that Gangnam Style got over one billion video views on YouTube but the record label made relatively little out of it – "25 cents", as someone joked.

Mr Grainge is keen to reject the suggestion that Universal missed out on Psy's success. "We've sold 10 million individual downloads. Think what we've done for Korean culture. Everyone's talking about how we've monetised on YouTube [through advertising]. Let's rejoice in what we've achieved and what it did.

"Part of the transformation and the future of our business is we are deriving income in all sorts of different ways, from all sorts of different parts of the copyright and content chain. Do not underestimate the contribution that an event, a record, a creation like Psy has to everyone around it."

Mr Grainge's biggest concern is to ensure the EMI takeover works, with Universal's French parent company, Vivendi, watching closely. Some think it has come at a high price as regulators have forced Universal, which had a 30 per cent market share, to sell some key assets, including the Parlophone label, home to Coldplay and Iron Maiden. The sell-off is "more than we would have hoped for" but he insists it is worth it. "We have approximately 70 per cent of EMI and it is untouched and unscathed in the three biggest markets in the world – the US, Japan and Germany."

Mr Grainge can also claim that he got a pretty good price for Parlophone after its sale to Warner Music for £487m, ahead of most analysts' expectations. The deal, announced on Thursday, means he has recouped more than one third of the money he paid for EMI and it ends a period of uncertainty that has lasted for well over a year.

No wonder he looked so relaxed as he stood alongside his wife and daughter, watching Ms Sandé sing at the party at his home, when news of the Parlophone deal had yet to be revealed.

When we talk, Mr Grainge comes across as warm and down to earth but he also speaks carefully at times – and pauses at length before answering one or two awkward questions.

Yesterday he became the first Brit in a generation to top Billboard's ranking of music industry power players yet this former talent scout, who is on friendly terms with prime ministers and newspaper editors, knows how difficult it is to get to the top and stay there, especially in Hollywood. "Believe me, no one does any favours for anyone out here," he says.

The CV: Lucian Grainge

Born: 1960

First job: Talent scout

Key moves: 1986 Joins Polydor, part of Universal, 2001 Chairman and chief executive of UK business, 2005 Chairman and chief executive of international (outside North America); 2011 Chairman and chief executive worldwide

Management style: He turned off the lights in a meeting, telling executives: "That's what it's like when you don't have any hit records."

Family: Married with a son and daughter

On hosting industry parties at his home: "It's fairly unique to Hollywood. I like it. I think it's fun. It is very unusual to see an event at a CEO's home on the East Coast and it's far less usual in Europe."

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