WARNER

Blame Dick Parsons.

That’s what’s wrong with these corporations. The people who run them have no sense of HISTORY, there’s no element of STEWARDSHIP!

The greatest rock music of all time is owned by Warner Music. Imagine the Museum Of Modern Art making a deal to sell its collection to Robert Sillerman.
That would be the equivalent. Steve Ross never would have sold to these carpetbaggers. Dick Parsons was so worried about stock price, was listening so closely to the street, that he made a quantum MISTAKE! If only someone had locked him in a room and made him listen to "Kashmir", then he might have gotten it. Money comes and goes, great art is elusive, you can’t make it in a factory, you can only create the conditions within which it might flourish. That’s
what Steve Ross did. That’s the opposite of what Thomas H. Lee and Edgar Bronfman, Jr. are doing.

When the investment group purchased Warner Music it had $132 million in debt.
Today, barely over a year later, the company has $2.26 BILLION in debt.
Hell, based on today’s valuation, as a result of the IPO, that’s only a few hundred million less than the value of the ENTIRE COMPANY!

Not that that’s truly the value. That’s the PERCEIVED value. The one Wall Street puts on it. But what do Wall Streeters know. You can run the numbers all day long, but numbers can’t give you the value of listening to "After The Gold Rush".

Record sales went down because the economy tanked and boy band mania ended. One can argue that P2P piracy is a factor, but I’ll posit that the UPSIDE of new tech technology far outweighs the downside. And, sitting on these incredible assets Warner and its brethren will EVENTUALLY figure out how to monetize their catalogs and make money year after year after year, the same way the movie companies have made billions selling their old flicks on DVD. Just because the model hasn’t been figured out, that doesn’t mean it WON’T BE!

Not that the model is the iTunes Music Store, nor ringtones. Only an
ignorant prick like Edgar Bronfman, Jr. could come up with shit like this. You see
the iTMS doesn’t take advantage of the MEDIUM! If Edgar had told Wall Street
that the future involved selling boatloads of product to EVERYBODY, albeit at a
reduced per unit price, THEN they would have gotten it, THEN the IPO might
have gone out at a higher price.

But that would involve the future. The owners of Warner Music aren’t
concerned about the future. How COULD you be when you encumber a debt free company up to almost its ENTIRE valuation.

Someday you’ve got to pay this debt back. A reasonable businessman would be
freaking out, figuring out a way to make MORE MONEY! But Edgar and his
cronies have figured out a way to make LESS! Oh, they worked the books to say they made a profit, on less volume, THIS is a recipe for success? TOYOTA just
announced an increase in capital spending. And they DOMINATE! How can an
ALSO-RAN like Warner Music cut inventory, dropping thirty percent of its acts, cheap out on investment and expect the numbers to work?

But the secret is Thomas H. Lee and Edgar Bronfman, Jr. don’t. They just
want to lay the company off on somebody else and take their money.

The only irony is at the end of the day Warner Music is STILL worth
something, so they won’t get fucked in the ass like they deserve to.

But its worth is as a catalog company, not as an ongoing business.
Theoretically, someone could come in and try to turn it into an ongoing business, but nobody’s gonna do it with THAT debt.

YAHOO MUSIC UNLIMITED

Some analysts say that Yahoo’s taking a hit. That with the amount of money
the company has to pay record labels, they can’t POSSIBLY eke out a profit.

But the above point is SECONDARY to what’s in the fine print. You see
they’re not charging extra for the To Go feature, because they’re not sure it WORKS!

Believe me, I find Yahoo’s price enticing. I think there is a market here.
But an Apple killer it’s not. Because first and foremost the iTunes/iPod
combination WORKS! THAT’S its main selling feature, not its sleekness, not the
marketing, not the iTunes Music Store itself. Hell, there were MP3 players
before the iPod, even hard drive-based ones. But they stumbled in the marketplace because loading them was too slow and cumbersome. THAT’S the problem Apple solved. The USABILITY problem. The fact that the iPod looks cool, well, that’s just a BONUS!

Now Microsoft has done quite well by releasing shitty software in the past.
What’s the aphorism, wait till version 3.0 till they get it right? Hell, it
wasn’t until Windows 95, version 4.0, that they got the graphical user
interface right. How long will it be until they get the To Go feature to work
properly? And, isn’t it funny that Apple can get their technology to work the FIRST TIME??

If Apple stays where it is, and does not have a subscription offering, the
company could lose hardware market share. But, if they come up with an
alternative solution, they’re still gonna rule. Because the Cupertino company knows how to EXECUTE!

I still don’t believe portable, tethered subscriptions is the answer. I
believe, in the foreseeable future, flat fee ownership is the solution. Does
Apple wait for this future, which the major labels hate, or does it take an
interim step into the portable subscription sphere just to maintain its market
share…I don’t know. All I do know is seemingly anyplace Apple wants to play,
they rule. Sure, Apple fucked up by not licensing its OS in the eighties, but
Jobs has learned, he’s more nimble now. AND, if there were to be a do-over, I’m
sure Apple would win. Infer all you want about the iPod halo effect, all I
know is I’m constantly getting e-mail and phone calls from people switching.
Hell, it’s kind of like at dinner the other night. Matt had been contemplating
it. Really, there were no viruses or spyware? But what clinched him was
when I told him I NEVER turn off my computer. Maybe when I go out of town, but other than that I NEVER reboot. He told me he reboots four or five times A DAY!

Yes, I’m evangelizing. I used to evangelize about records. But now Apple is
cooler than the records. Steve Jobs understands credibility, image, he won’t
do anything to fuck with the brand, anything to hurt the company’s long term
prospects. Can you say the same about the honchos at Warner Music??