June 2 was Blackout Tuesday, when organizations, brands and individuals went silent on social media in response to the death of George Floyd at the hands of Minneapolis police. The effort was an outgrowth of #TheShowMustBePaused, whose organizers called on music companies to join “an urgent step of action to provoke accountability and change.”
The music industry responded. Apple and Live Nation made donations to the Equal Justice Initiative. Atlantic Records announced it would contribute to Black Lives Matter. And Spotify pledged to match donations by employees to “organizations focused on the fight against racism.”
But few would have anticipated the commitment that hit the wires just hours after Blackout Tuesday concluded: a new $100 million fund, in part, courtesy of a Ukraine-born billionaire known mainly for large gifts to elite universities and research, the controversy that has followed his philanthropy and political contributions, and the record label he acquired almost a decade ago.
The billionaire in question is American-British dual citizen Len Blavatnik, whose Blavatnik Family Foundation partnered with Warner Music Group (WMG) to create the new fund, which is focused on supporting “charitable causes related to the music industry, social justice and campaigns against violence and racism.” Blavatnik is the founder, chairman and president of Access Industries, the New York-based international conglomerate that purchased WMG in 2011 for $3.3 billion.
According to WMG, an advisory panel will identify and support individuals and organizations in the music community “promoting equality, opportunity, diversity and inclusion,” and determine the amount of the financial gifts and timing. “We’re determined to contribute, on a sustained, long-term basis, to the effort to bring about real change,” said WMG CEO Steve Cooper in a statement announcing the fund.
Here are some takeaways from this announcement.
Blavatnik Just Got a Lot Richer
Back in 2016, when Blavatnik’s net worth hovered around $16 billion, IP’s Ade Adeniji encouraged readers to pay attention to the industrialist’s growing philanthropy, which had previously focused on science research, higher education, arts and culture, and support for Israel.
In 2018 alone, Blavatnik made some major gifts to Harvard Medical School ($200 million), Stanford ($10 million for biomedical research) and the Mount Sinai Health System ($10 million in support of research focused on women’s health). He told Forbes’ Angel Au-Yeung that he favors donating to top academic institutions because these kinds of gifts generate a “bigger bang for the buck… They’ve already selected the best people, so the impact on my money is probably multiplied.”
Blavatnik knows about getting the most bang for the buck, having just orchestrated what Music Business Worldwide’s Tim Ingham said might be “the shrewdest deal in the history of the record business.”
Access Industries purchased a small stake in WMG in 2004. Its outright acquisition of the flagging media company seven years later left some experts perplexed. “He is risking a third of his fortune on a No. 3 business in an industry that is headed for a precipice,” said analyst Alice Enders. “It shows entrepreneurial spirit. He may know something we don’t.”
It turns out he did. On June 3, WMG announced the $100 million fund minutes after pricing shares in its initial public offering. Shares rose 20%, giving WMG a market value of $15.6 billion after its first day of trading. Blavatnik boosted his net worth by $7.5 billion to $31.2 billion and rose from No. 41 to No. 28 on the ranking of the world’s 500 richest people. Not bad for a day’s work.
A spokesman for Access and Blavatnik said the new fund “will not be directly funded from proceeds received from the IPO,” but by WMG and the Blavatnik Foundation.
Musicians Set the Agenda
The new fund is a testament to the lightning speed at which viral protest can translate into a massive gift in a sector with a historically light philanthropic footprint. Looking ahead, the big question will be the extent to which the fund aligns with some of social justice philanthropy’s more urgent demands, like providing support for frontline grassroots groups and taking a hands-off management approach.
But, as is the case with most major gifts, context is critical. Outrage over George Floyd’s death and the surging fortunes in the music industry collided with what the New York Times’ Ben Coscarelli called “longstanding issues that critics within the industry have identified as systemic problems, like the lack of diversity among employees and at executive levels.”
“The music industry is a multi-billion-dollar industry,” reads #TheShowMustBePaused website. “An industry that has profited predominantly from Black art. Our mission is to hold the industry at large, including major corporations and their partners who benefit from the efforts, struggles and successes of Black people accountable.”
“Old Town Road” star Lil Nas X tweeted, “What if we posted donation and petitions links on Instagram all at the same time instead of pitch black images,” while Canadian singer and producer The Weeknd, who said he would donate $500,000 to black-empowerment organizations, wrote on Instagram, “To my fellow respected industry partners and execs—no one profits off of black music more than the labels and streaming services. I gave yesterday, and I urge you to go big and public with yours this week.”
Other Funders Have Since Stepped Up
These individuals, wrote the New York Times’ Ben Sisario, are pushing the industry to “support justice with money, not hashtags.” This call to action may sound familiar, as it comes at a time when critics say the mega-rich haven’t provided sufficient COVID-19 relief and generally remain too protective of their wealth.
Did these concerns give Blavatnik that extra push to “go big?” We can’t know for sure, but some see a connection. Regarding the WMG/Blavatnik announcement, Variety’s Jem Answar wrote, “It appears ‘Blackout Tuesday’ has begun to show tangible results.”
The results didn’t end there. The day after WMG made its fund public, Amazon announced a $10 million commitment in support of efforts to advance racial justice and equity for African Americans.
That same day, Google and its parent company, Alphabet, announced initial commitments totaling $14.5 million to address racial injustice, inequity and violence. “The events of the past few weeks reflect deep structural challenges. We’ll work closely with our black community to develop initiatives and product ideas that support long-term solutions,” wrote Google and Alphabet CEO Sundar Pichai on Google’s blog.
A day after that, Michael Jordan and Nike’s Jordan Brand announced a $100 million pledge to organizations dedicated to promoting racial equality and social justice.
A Trail of Controversy
At a time when organizations are grappling with how to handle funding from philanthropists who are mired in controversy, Blavatnik has a track record worth noting. Multiple institutions have had to defend their acceptance of his donations in the face of complaints about his business connections and past giving.
His $1 million gift to Trump’s inauguration committee led a professor at Oxford’s Blavatnik School of Government to quit. Oxford had previously come under fire for accepting Blavatnik’s cash over alleged corporate abuses and connections to the Putin regime (Blavatnik has adamantly denied any connections to Putin or the Russian government). According to news accounts, the origins of his fortune are in the privatization of the aluminum and oil industries after the fall of the Soviet Union. And while Blavatnik has given money to politicians in both parties, his support for Republicans spiked starting in 2015—Senate Majority Leader Mitch McConnell received $3.5 million between 2015 and 2017. This drew scrutiny amid reports of his Russian business connections.
In September, 55 international relations scholars wrote a letter to the Council on Foreign Relations President Richard Haass to protest the think tank’s acceptance of a $12 million Blavatnik gift to fund an internship program.
“It is our considered view that Blavatnik uses his ‘philanthropy’—funds obtained by and with the consent of the Kremlin, at the expense of the state budget and the Russian people—at leading western academic and cultural institutions to advance his access to political circles,” the letter stated. “We regard this as another step in the longstanding effort of Mr. Blavatnik—who…has close ties to the Kremlin and its kleptocratic network—to launder his image in the West.”
Since the WMG/Blavatnik fund went public, I have been unable to find any critics calling new attention to concerns about Blavatnik’s wealth and business dealings. That may change. In the meantime, organizations will want to keep an eye on this new fund and the man behind it, who, with a fresh $7.5 billion in the bank, has suddenly become one of social justice philanthropy’s wealthiest (and perhaps unlikeliest) patrons.