The Big Payback: How Pharrell Williams Is Breaking the Chains of the Music Industry’s Troubled Past

Back in 2015, songwriter, producer and artist Pharrell Williams had all the reasons in the world to be smiling. His infectious hit song “Happy” was the previous year’s top seller in the U.S., an international smash and soon to be a major Grammy moment. But backstage during the rehearsals that February at Staples Center, Williams was bothered.

He had signed with Columbia Records just over a year prior, negotiating a deal in which he leveraged better terms for himself through what he describes as “a Rubik’s Cube” of contractual language. Most important, the contract gave him ownership of his master recordings.

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Williams, whose track record has made him one of the most in-demand collaborators of the past two decades, had painstakingly negotiated with Sony’s recorded and publishing arms for control of his intellectual property. It was an acknowledgment of equity that questioned the very makeup of an industry built on a shameful history of exploitation: namely, on the backs of Black talent from whom all modern genres — rock ’n’ roll, pop, hip-hop and even country — derive. To quote another of Williams’ hits, he felt lucky.

At the time Williams set his deal, Columbia Records was headed by Rob Stringer (the two are pictured above). In 2017, the British executive would ascend to CEO of parent company Sony Music.

“I shouldn’t be the only one with this preferred deal,” Williams recalls telling Stringer. “All artists should own their intellectual property — otherwise you’re just working for someone else. It’s really weird: They own the fields where you and God have laid the seeds; you do the harvesting, but they have the ownership.”

Following that thread, Williams suggested that the company “get ahead of this and do the right thing. Start with the terminology — like ‘master’ and ‘slave.’ Master being the main recording and the slave being all the copies made.”

“Master” and “slave” are terms that have long been commonly linked to indicate a dominant/subservient relationship in electrical engineering and in many a recording studio. In the pre-digital era, in the context of recorded music, the terminology referred to the duplication process; it was a way of distinguishing between source recordings and the physical copies that were pressed from them and distributed for retail sale. Columbia, the oldest label in America, was founded in 1889 and credited with the “invention of the flat disc record,” per the company’s own boilerplate.

The advocacy by Williams and others for eliminating such charged words in music contracts comes at a time of heightened activism across the industry. Artists are demanding better profit terms and more control, if not outright ownership, of their masters. Meanwhile, a new generation of consumers and industry executives are scrutinizing the diversity in a business that remains significantly dominated at the senior executive level by white men. While the major label groups have responded to the movement for racial justice with pledges of money and resources, insiders question whether that is lip service in a period of great transition for the nature of artist-label contractual relationships.

“In 2020, Black people do not need the music industry; the music industry needs Black people,” says Isaac Hayes III, son of the late soul star, who was the first Black artist to win the original song Oscar (for 1971’s “Theme From ‘Shaft’”).

The younger Hayes has had to navigate such tricky terrain managing his father’s estate. The bankruptcies of Stax and his dad’s Hot Buttered Soul label soured the family’s perception of the business. His father’s music made up 70% of Stax’s profits, money that was used to release a slew of less successful records that would eventually cause the Memphis company to go under, and its masters to wind up at Atlantic Records. “‘Y’all really screwed me,’” Hayes III says of his father’s view of what transpired.

That experience is not uncommon among veteran artists.

“It takes a while for you to even realize, ‘They own my masters, and wait a minute, I’m not getting paid as much as somebody else,’” says Valerie Simpson, who, along with her late husband, Nick Ashford — the two went by Ashford & Simpson — was signed to a songwriting and production deal with Motown Records in the ’60s; they switched to Warner Bros. and later Capitol Records as performers in the ’70s and ’80s. Lack of ownership of their songs followed them.

* * *

Williams recalls hearing the loaded words “master” and “slave” paired in such a manner as a teen, when learning the ropes of the music business from R&B star Teddy Riley in Virginia Beach, Va. As his career took off, Williams spotted the terms woven into many of his contracts.

“The ownership of my intellectual property wasn’t mine, and I didn’t even realize the deal I was in or what it really meant,” he recalls of his pre-Sony agreements — whose unfavorable terms found Williams under-compensated despite a string of hit singles both on his own and with such stars as Britney Spears and Gwen Stefani.

Williams’ conversation with Stringer wouldn’t be the last time he confronted record company brass about the topic. Six months later, he participated in a “conversation” at Google Camp in Sicily in front of an invite-only crowd that included Universal Music Group chairman Lucian Grainge, filmmaker George Lucas, producer Brian Grazer, Spotify CEO Daniel Ek, Twitter chief Jack Dorsey and actor Charlize Theron. When he said the word “slave,” a gasp was heard in the room, according to an attendee. It was not unlike the reaction at a Sony executive leadership meeting held in March 2018 in New York City, where Williams spoke before some 20 label presidents, including the heads of Epic, RCA and Columbia.

“I understood once Pharrell mentioned the sensitivity of it, as did the rest of the group, and the changes were made immediately,” says Sylvia Rhone, chairwoman and CEO of Epic, home to Travis Scott and Camila Cabello. Sony general counsel and exec VP Julie Swidler affirms that action was taken promptly. “We never realized [the words] could be offensive, but if it bothers even one person, we’re taking it out,” she says of the directive from above concerning contracts going forward. “We put an action plan into effect very quickly.” And they’re also looking at past deals: “We have hundreds of thousands of contracts, some going back 100 years.”

Therein lies the crux of the language problem: its roots. “The history of enslavement has always haunted the music industry and always structured it,” says Josh Kun, chair in cross-cultural communication at USC Annenberg School for Communication and Journalism. “If you go back to the first Black artist to ever make a commercial musical recording in [the 1890s] — George W. Johnson, was a former slave who began his life not owning his own body, being owned by a master, then [went on] to record a master that he did not own. This also gets at the long-standing belief and conviction of so many Black artists, throughout the 20th century and into this one, that they have been treated like slaves by the masters who they signed contracts with. That’s been true since the early 1900s, and it is certainly true now.”

Sony so far is the only one of the three majors to alter its contracts. Such wording presumably remains filed away at UMG (Kendrick Lamar, Kanye West, Lady Gaga, Billie Eilish) and Warner Music Group (Bruno Mars, Ed Sheeran, Cardi B). (Variety reached out to both label groups for comment.)

As recently as the ninth edition of Donald Passman’s industry bible “All You Need to Know About the Music Business,” released in 2015, the veteran attorney wrote that a master is the “controlling entity from which all copies are made — the machines making the copies are slaves. master/slave; get it?” The passage was removed from the current edition, released in 2019. “In updating my book, I realized this long-used industry term was inappropriate in the 21st century,” Passman tells Variety. “I felt bad that I had previously been tone deaf to the issue and wish I had thought more seriously about it earlier.”

He’s not alone. Many Black artists don’t make the connection. Passman’s longtime client Ray Parker Jr. hadn’t until interviewed for this story. “It was said so much that I didn’t notice,” marvels Parker, who wrote and performed the 1984 No. 1 hit “Ghostbusters.” “It’s an underlying thing. It’s not only the racism above the ground. I never really thought about the master-and-the-slave thing, but that’s exactly what it’s called. It’s really dating you back a couple hundred years.”

While the verbiage of machines “slaving” for a “master” is common — and also debated — in tech and other fields, Williams connects the normalization of such language to the very founding of America: “Men who felt superior and that they were the civilizers of the planet, by way of colonizing, they set up every business and organization in this way. They built this country like a corporation.”

In essence: the definition of capitalism. Says USC’s Kun, who has titled his research project on musical reparations “The Big Payback”: “All industries under contemporary capitalism are meant to be exploitative just by design. A small group of people control the largest amount of money and profit based upon the labor of the underclass.”

Black artists are also cognizant of the reprehensible exploitation of their predecessors in the not-too-distant past. Consider Memphis’ Stax Records, for instance. Home to Otis Redding, Booker T. & the M.G.’s, and Isaac Hayes, its catalog was essentially snatched up by Atlantic Records from under its owners’ noses. The messenger: label president Jerry Wexler, a former journalist who coined the term “rhythm and blues” in 1949 as a less offensive alternative to “race records.” Stax was unusually inclusive for the 1960s in employing Black executives and signing integrated bands. The bait and switch surprised the label’s white staff.

“The term ‘carpetbagger’? I heard that used once or twice around the studio,” says Terry Manning, a Stax engineer from 1963 until it shut its Memphis doors in 1975. “It was devastating what Atlantic did to Stax. I’m sure there’s another side to it out of New York, but it felt very sneaky, like they tricked [owner] Jimmy Stewart — who at the time was probably naive to a point in the business world — and ended up with the master rights to everything. The lifeblood of a record company is its catalog.”

* * *

How are companies like Universal Music Group, Sony Music and Warner Music Group, with annual revenues of $8 billion, $4 billion and $4.5 billion, respectively, supposed to reassess the very nature of their business: the commodification of master recordings that typically direct some 80% of the profits to the label?

Ask seasoned label executives why the business is structured this way, and they’ll defend their place in the industry food chain as being key investors in developing talent and bringing art to the world, for which it costs hundreds of thousands, if not millions, of dollars to market and promote. Record companies are an equity partner because it’s a high-risk investment, with very few able to crack the code to reach gold or platinum status. Such veterans also contend that deals have evolved significantly and that artists are receiving more favorable royalty rates and terms.

“Things have changed over the last two or three years,” says Rhone. “All the contracts are much more pro-ownership than they’ve ever been before. It’s the fair thing to do.”

A high-ranking A&R executive backs this up, noting that in addition to the frequency of joint ventures, where an artist and company both participate in master rights, royalty rates have gone up. “We used to never hear about anything in the 20s,” says the exec of the percentage artists earn on each sale and aggregate streams, a significant uptick from the 15% to 18% that top stars earned in the 1990s and into the 2000s. “Contracts now are significantly better for artists than they were five years ago, a hundred times better than 10 years ago — and 20 years ago, it’s night and day.”

Where the industry lags, however, is in diversity in the executive ranks. The problem reared its head this year with the public awakening to systemic racism throughout the country, prompted by the deaths, in quick succession, of George Floyd, Ahmaud Arbery and Breonna Taylor. That’s when UMG’s Republic Records, which counts Taylor Swift, Ariana Grande and Post Malone on its roster — and via a distribution deal with Cash Money Records, Drake, Nicki Minaj and Lil Wayne — called for ending the use of “Urban.” Republic cited the word as an “antiquated term” whose connotations “have shifted, and it developed into a generalization of Black people in many sectors of the music industry, including employees and music by Black artists.”

The reaction from Black music executives? Divided.

“Short memory? Let me remind you: Removing the word ‘Black’ [and] replacing it with ‘Urban’ led to the dismantling of Black Music divisions in a so-called effort to have one harmonious company,” wrote promotion veteran David Linton in an open letter published in radio trade All Access. “Black executives fell for it, too,” he added of a gradual diluting of the word “Urban” which, perhaps unintentionally — though some might argue it’s a result of unconscious bias — allowed for white executives to essentially be in charge of Black culture. “As a [radio] program director, it made sense, but [as] a label executive, it didn’t.”

First categorized as “race records,” then rechristened “soul” and “R&B” in the ’70s, by mid-decade, music by Black artists was being lumped under the descendant term “Urban” which Frankie Crocker, a DJ at WBLS in New York, coined in 1974 — ironically as a neutral way to make white executives (and audiences) more comfortable with Black music, and station advertisers more at ease with buying time. “Urban was really a radio format that didn’t suggest a race but suggested a lifestyle,” says one label head.

Instead, some suggest it further segregated music, both on the charts and in the boardroom. Jim Crow laws had been declared null and void by the Civil Rights Act of 1964, but the music industry was, in a sense, still operating according to that old tradition. A white artist could automatically get added at the all-important pop radio stations, but Black artists had to prove themselves at “Urban” radio before pop programmers would even consider giving them a spin.

“That category is really hard to get around,” says Simpson, whose credits include producing the classics “Ain’t No Mountain High Enough,” “You’re All I Need to Get By” and “I’m Every Woman.” “The industry is very happy to keep you in your area because that way they don’t have to give you the big bucks and the broader money.” That’s still true today, where “Urban” budgets can be 30% smaller than those for a pop artist. Although a label vet counters, “That’s unfair to say since, for radio, for example, there are twice as many pop stations, and on Spotify, pop acts can’t get arrested.”

Illustrating the complexity of the discussion is that there are those who view “Urban” as a point of pride. After all, the term was derived from “urbane,” meaning “sophisticated,” and not necessarily meant to connote the density of city life — or blight — as is so often the association. Republic even received blowback for what it thought was a bold and forward-thinking move (the label also committed $25 million to social justice organizations). As Columbia co-head of Urban Shawn Holiday shared in a panel discussion on the subject: “I embrace the word. I come from ‘Urban.’ Now that it’s the most lit genre in music, I don’t want it to get erased.”

Drew Dixon, the former Def Jam and Arista Records A&R executive, who’s featured in the HBO Max documentary “On the Record” — her job was to “take the slave tapes by cab from one mastering session to another,” as she did while overseeing the 1995 Mary J. Blige-Method Man duet “I’ll Be There for You”/”You’re All I Need to Get By” — expresses skepticism about such performative gestures. “I hope that in this unprecedented moment of racial reckoning, we aren’t just rearranging the deck chairs and feeling like our work is done because we have updated the nomenclature and the symbolism,” she says. “I hope the massive cultural impact of the music created and amplified by Black artists, executives and radio stations is acknowledged and reflected in the way Black people are hired, empowered and paid.”

Indeed, sometimes the function of being Black at a label can feel like it’s for show. As one executive relays to Variety: “I can’t count the number of times the label [head] called me into a meeting just so there would be a Black face in the room.” Several more describe having to constantly come up with “workarounds” in order to maneuver obstacles at every turn.

Offers Hayes: “Changing the language is cool, but empowering people to create their own opportunity for their communities — allowing Black record companies to have Black staff, Black A&Rs, Black engineers and executives and art departments — that’s what it’s about.”

But despite wielding the creative upper hand, Black artists historically have been treated as second-class musicians. In the 1950s, talents like Chuck Berry, Little Richard, Big Mama Thornton and Fats Domino had to watch as record labels took songs they had written and/or recorded and cut watered-down versions with white artists like Elvis Presley and Pat Boone to sell to white America. The implication was that the ungrammatical title of Fats Domino’s classic “Ain’t That a Shame,” which Boone is said to have initially wanted to change to “Isn’t That a Shame,” would be more acceptable coming from a white singer than a Black one. Domino’s original reached No. 10 on the pop chart, while Boone’s cover became his first big hit, going to reaching No. 1 for two weeks.

“Little Richard would always be upset about stuff like that,” Ray Parker Jr. says, referring to another Black legend who watched his songs become bigger hits sung by Pat Boone. “They wouldn’t play his song on the stations, and then later you’d hear it from somebody who was white.”

In some instances, it would take foreign acts to introduce white America to Black music. Homegrown blues music as performed for decades by Black artists like Robert Johnson, John Lee Hooker and Muddy Waters didn’t really enter America’s consciousness until British bands like The Rolling Stones and The Animals put on an Anglo spin on Black blues music that made it more palatable to white audiences. Suddenly songs that had been ignored when performed by Black artists became hits. “Don’t Let Me Be Misunderstood,” which was written for Nina Simone and was ignored when she originally recorded it in 1964, became a Top 20 smash for The Animals the following year.

Motown’s Berry Gordy overcame racial resistance by presenting a version of Blackness that was more acceptable to white audiences. His gamble paid off: Motown flourished. During the ‘60s, only The Beatles scored more number one hits than The Supremes, and the label logged a steady stream of chart toppers with their other artists. For all the success, though, there seemed to be a glass ceiling for many Motown artists, if not in the consistency of their sales, in how they were marketed.

“Marvin Gaye definitely wanted to be mainstream,” Ray Parker Jr. says of Motown’s top solo male singer. “He felt his voice was silky smooth like Nat King Cole or Frank Sinatra, and he was always considered an R&B artist — I mean, a great one, but still an R&B artist.”

One of the biggest stars to emerge from the Black talent-fueled disco boom of the ’70s was Nile Rodgers, whose band Chic recorded the seminal club cuts “Le Freak” and “Good Times.” Despite the group’s success of Chic and hits Rodgers wrote and produced for Diana Ross and Sister Sledge, he still found himself at the bottom of the label ladder at the label because of his race. “I had the biggest selling single in the history of Atlantic Records [“Le Freak’], but my budget was $35,000 to make my album,” says Rodgers, whose We Are Family Foundation has created the Youth to the Front Fund to help young people of color forge an easier path in business. “I knew four other bands that when they got signed — and they’re unknown now, never had a hit — they had budgets that were three times our budget. They were white.”

Even in 2020, after producing hit albums for David Bowie, Madonna and Duran Duran and co-writing Daft Punk’s 2014 record of the year Grammy winner “Get Lucky” — with Pharrell Williams — Rodgers feels the effects of being under-appreciated because of his race. He now works almost exclusively at Abbey Road Studios in London because the racial pressure in the U.S. can feel insurmountable. “My entire career, to this day, has been overcoming challenges because of race,” he says. “Have you noticed that a lot of white producers will get records all their lives, and it’s not even a problem? But a black producer seems to have to be trending. It’s almost like you’re only as good as your last record.”

* * *

As the Black Lives Matter movement gained momentum in the spring, it culminated for the music industry with June 2’s Blackout Tuesday. The initiative was launched by Atlantic Records execs Brianna Agyemang and Jamila Thomas (worth noting: Atlantic, whose deep catalog includes Aretha Franklin, Ray Charles and Dinah Washington, has a Black Music division). Music companies of every stratum posted messages of support. Many were financial pledges, with Sony committing and Warner Music Group, owned by Russian-born billionaire Len Blavatnik, pledging $100 million each and UMG setting up a $25 million fund — as well as vows of action, albeit sometimes nebulous in their description.

At UMG, this included $25 million in earmarked funds and the creation of a Task Force for Meaningful Change led by Ethiopia Habtemariam, president of Motown (whose founders made it a condition of its 1988 sale to MCA Records — later UMG — that the company always be run by a Black executive) and general counsel Jeffrey Harleston (currently serving as interim CEO at Def Jam Records). Its mission statement: “Reviewing the company’s commitment to addressing and promoting tolerance, equality, and elimination of bias, within UMG, the music community and the world at large.”

At Warner, which fought so contentiously with Prince over control of his catalog in the 1990s that the artist wrote “SLAVE” on his cheek in public appearances, employees all over the world were encouraged to protest alongside Black Lives Matter advocates. At Sony, a full day of education — including an appearance by attorney Ben Crump, who is representing the families of Arbery, Floyd and Taylor in a federal civil rights lawsuit — and open discussion was held at individual labels, publishing division Sony/ATV and across the company, with Stringer sitting in on various town halls. “Rob was very active in each one,” says Rhone.

At Sony in particular, it was important to show progress, which it did in promoting Rhone to chairwoman and CEO of Epic in 2019 and bringing Jon Platt into Sony/ATV last year to succeed publishing veteran Martin Bandier. The move made Platt the highest-ranking Black executive of a global music company and represented a significant changing of the guard. Look no further than a much-circulated photo from Bandier’s March 2019 goodbye dinner at 21 in Manhattan, which counted 20 white men, two women (one Bandier’s wife, the other his assistant) and a single executive of color: ‘Urban’ vet Holiday.

“They listened,” says Williams, speaking just weeks after personally calling Virginia Governor Ralph Northam and advocating that Juneteenth be designated a state holiday. “Sony being a Japanese company, you are greeted with respect and humility. They all hold themselves to a standard. When we had that conversation, it felt like the company just got in line because they knew it was disrespectful of others. And that’s not to say that every ‘t’ has been crossed and every ‘i’ dotted, but they were cognizant and first to wake up and really look at it like ‘We can do better. In fact, we will.’”

The Black Music Action Coalition is holding the rest of the industry to that standard. Co-founded in June by Binta Brown, a lawyer, startup vet and musician who helps oversee Chance the Rapper’s career, and seven other managers and execs, its primary mission is to shake up the biz’s white status quo. It has signed on hundreds of performers, including Williams, Billie Eilish and Lady Gaga, as official artist allies, and secured legends like Clarence Avant, Quincy Jones and Irving Azoff as advisers and advocates.

“We want to address pay parity between Black executives and white executives at the labels, advancement, promotion and hiring,” Brown explains. “We want to make sure that the Black executives who are within labels have the discretion and autonomy that their white counterparts have, that Black folks who have a command of the culture also have control over balance sheets and P&L statements.”

Still, doubters abound. “[The major labels] don’t have the appetite for these conversations, nor do they care,” says a top manager. “They know what they signed up for — the most artist-unfriendly, exploitative job.”

Williams uses his own colorful language to describe the lopsided agreements he had in place prior to his manager Ron Lafitte and then-lawyer Peter Paterno’s successful reorganization of his business interests. He jokes that he’s still suffering from PTSD, but he also hails the progress made in the runup to 2020’s great racial reckoning.

“There are some amazing leaders, advocates and allies that work in these companies,” he says. “It’s the system that needs to be rebuilt. These are old buildings. There’s asbestos and faulty wiring.”

Indeed, the “smart buildings” of today house labels like New Orleans’ Cash Money and Atlanta’s Quality Control — owned and operated, respectively, by entrepreneurial duos Bryan “Birdman” Williams and Ronald “Slim” Williams and Kevin “Coach K” Lee and Pierre “P” Thomas — both aligned with UMG, whose business is based on equity stakes that put imprint and parent entity on equal footing. “Record companies have had to prove themselves over the last few years as being necessary for the artist,” says Pharrell Williams. “They have to show the value they bring to the table. It’s no longer a given that to do a deal, you are relinquishing power.”

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