A Prominent Atlanta Music Executive Explains the Value of Verzuz

Orlando McGhee says it’s all about ownership.

Remember when Verzuz started? It was 10 p.m. EST, on March 24, 2020.

Swizz Beatz and Timbaland put their catalogs up against each other on Instagram Live, and fans of hip-hop and R&B were given an unexpectedly awesome showdown between two of the greatest musical producers in modern history. And it was all for the culture.

Seems like a lifetime ago, right? Well, for the music business and for how recording acts thought things worked, that may be true.

Today, even though Verzuz was created by two wealthy and famous musical creators, it still feels like these 20-song “battles” are made specifically for and by fans. And that includes the two people who started the concept.

But 20 music catalog competitions later, things are starting to hit different, especially for those who understand what Verzuz means for the music business of yesterday, today and tomorrow.

Verzuz has gone from something that seemed intended only to quell quarantine boredom to a phenomenon that has drawn millions of viewers, an Apple partnership, and a great deal of media attention.

There have been 20 competitive song playoffs since late-March. Some have been weird.

Included in this group are the unexpectedly hilarious failings of Teddy Riley while competing with Babyface, the unnecessarily salty face-off between Sean Garrett and The-Dream, and the “who asked for this” mixtape contest between Jadakiss and Fabolous.

Others, however, have been exceptional. This includes the dancehall vibes of Bounty Killer vs. Beenie Man, the forgivably vulgar spiritual brotherhood of DMX vs. Snoop Dogg, and three blessed exercises in queendom that could be fairly argued as the best battles produced thus far: Jill Scott vs. Erykah Badu, Monica vs. Brandy, and Gladys Knight vs. Patti LaBelle. We still aren’t worthy.

Verzuz has, in many ways, defied the rules of what can be done with music on social media, at least in the U.S. It’s been a boon for beautiful, bountiful, genre-specific Black music, digitally delivered in a way that almost nobody saw coming.

And it’s worth noting that 10 of the acts featured in Verzuz battles are from Atlanta, not counting Babyface, Ne-Yo and Swizz Beatz, all of whom have notable ties to the city.

Orlando McGhee is one of those people you might see in Publix and never know just how important he is to the music business. But if you’re going to talk to someone about what the Instagram-based event Verzuz means for the past, present and future of the industry, and you don’t happen to have Swizz Beatz, Timbaland, or any other Instagram employees on speed dial, he’s a great person to ask.

He says it goes back to a very simple concept in recording contracts: who owns the masters.

“Unfortunately, I’d say 95 [percent] of those artists that have appeared on Verzuz don’t own any of the master recordings of any of the music that was played. So yeah, it definitely drove the streams, which all those artists got a piece of, you know, the royalties and so on and so forth. But the majority of the money was all made by the major record labels, the main major publishing companies,” McGhee says.

As longtime manager of legendary music production crews Organized Noize Productions and the J.U.S.T.I.C.E. League (who had two songs played during the 2 Chainz vs. Rick Ross Verzuz battle), McGhee knows a lot about taking care of the long-term interests of music business creators who have impressive musical catalogs. Songs his clients have made for acts like Goodie Mob, Rick Ross and OutKast are just scratching the surface.

McGhee has been around to see several Atlanta acts become international stars. He went from working in Atlanta City Hall in the mid-’90s to being hired by “King of Crunk” Lil’ Jon as VP of marketing at BME Recordings, and has been quietly growing in influence and stature ever since.

He’s also held executive positions at Warner Brothers and Roc Nation, and is now head of urban music at ONErpm, a digital music distribution platform.

Atlanta on Top

As an Atlanta native, seeing so many Atlanta artists featured on Verzuz is something McGhee clearly enjoys. And he says one particular artist seems to have been the most savvy about the opportunity provided by the live event.

“I think Monica probably accomplished it and worked it out the best,” he says. “I think, right after her Verzuz, she put a record out called ‘Trenches.’ And she owns that master [recording], from what it looks like.

“Trenches” recently peaked at #32 on Billboard magazine’s Digital Song Sales chart.

Verzuz isn’t just some live concert where an artist gets paid for their performance, although it’s not unfathomable that some artists were just happy enough to be present that they didn’t stop to wonder how much of a benefit the platform provides. But behind the curtains in the music biz, there are some pretty serious negotiations happening when it comes to musical catalogs.

If you’re still paying attention to Atlanta native Kanye West, you may have seen his recent rants about the contract he signed years ago with Universal Records. His fans are certainly not in agreement about his current political positions, but it seems that his points on fairness in record deals were, no pun intended, universally accepted as righteous, even by people who admit they don’t really rock with Yeezy anymore.

“I’m in agreement with him to a certain degree,” McGhee says about Kanye, “but you know, opposing him to a certain degree too, because it’s like, if you had the money, you know… If I hire you — which a recording contract is an employment agreement — and I finance your work, I’m going to own it nine times out of 10.

“Kanye can probably opt out of his agreement and go finance his own recordings if he so chooses, but he’s been ingrained and trained in the system of music. ‘I need these big, huge budgets to go market myself. I need the financing because it’s a risk.’

“Ownership of intellectual property is a return on investment for any company,” McGhee says.

“You never know whether or not you’re going to get your return, hence the record labels come into effect.”

More Music, More Money

Recently there’s been a spree of urban music catalog acquisitions, including Timbaland, RZA and others, at Hipgnosis Songs Fund, the musical investment and management company co-founded by Chic bassist Nile Rogers. Hipgnosis is currently valued at over $1 billion.

McGhee says companies are buying the writers’ shares of songs because the publishing companies are not trying to let them go. “Because what they do,” he says, “is use that income to finance new deals. They know they’ve got hit records over here. [Just in] film and TV, the catalog is going to make a certain amount every year, no matter what. So we know we have this amount of money to risk.

“It all boils back down to the business of it. Yes, it drives catalog sales right now. The pandemic has affected catalog sales tremendously. New releases are cool, but the majority of people are going back and listening to records they’re familiar with. I think catalog sales may be up 36 to 46 percent over the last couple of quarters.”

McGhee salutes artists who’ve been able to survive through the transitions from cassettes to CDs, digital downloads, and now streaming. He says those who’ve had music in all of those areas and platforms, and are able to go back and look at their statements and see where more money was made, have enjoyed an enlightening lesson on IP entrepreneurship.

“It opens your eyes to the business and ownership of it, and where everyone is.”

It’s yours

Ultimately, McGhee says it’s not only important that recording acts who perform their 20 songs in Verzuz battles own their masters, but that Timbaland and Swizz Beatz retain some ownership of the platform they somewhat accidentally created.

He says Black executives must ensure that they’re not selling the business of music too short for the creators, ultimately devaluing the culture for those who make it and enriching those who manipulate the value.

“I like to put everything in a business term, especially when it comes to entertainment. And I love that it’s Swizz and Timberland doing Verzuz. Obviously they went to an outside company, you know, to do the business of it. But hopefully, in the long scheme of it, they retain ownership and are able to build it out, not sell it off to the highest bidder.

“Hopefully, between Kanye and Verzuz, it opens a lot of people’s eyes businesswise because, you know, Verzuz has made a point to make people pay attention to catalogs. Now, I guess the next step is to hold accountable.”