So the Mohn family dodges a bullet, they can keep the Bertelsmann empire private.  But the real story here is twofold.  The alacrity with which the deal was consummated and the ultimate purchaser.

It had to be fast.  Warner and EMI were kicking the tires.

Yes, despite what you read on hitsdailydouble.com, Edgar Bronfman, Jr. and the Thomas H. Lee guys are in it for the long haul.  Never forget that Edgar penned tunes under the name Junior Miles.  Music is in his BLOOD!  And Thomas H. Lee realizes that once P2P is legalized, the Warner catalog is going to be a GOLDMINE!  As is the BMG repertoire.  Which is why EMI is fighting so hard too.  Because you see BMG is all about the CATALOG!  In just a few years, the echo boomers are going to get married.  And they’re going to need copies of all those Backstreet Boys and ‘N Sync records to play at their weddings, never mind the future value of all those Kelly Clarkson hits.  Warner and EMI were foaming at the mouth.  Just trying to build enough market share to compete with Universal.

Alas, that’s not to be.  Because Microsoft saw the opportunity to make a preemptive move.

Microsoft doesn’t care about Warner Music, nor EMI either.  But the Redmond, Washington company cares LOTS about Sony.  Sony is its nemesis.  Can you say PLAYSTATION!

Despite all the Howard Stringer hype, Sony is in complete disarray.  Not only can it not compete with Apple in music, it’s going to miss its kickoff date with the PS3.  There’s just enough time, just a big enough window, for X-Box to put a knife in PlayStation’s heart.  And Steve Ballmer figured the way to do this was to puncture Sony’s musical aspirations.  For without BMG in-house, the Sony Connect store has no leverage, there’s no reason to buy a Sony hand-held player (that’s why people buy iPods, because they’re the only device compatible with the iTunes Music Store) and there’s no CASH!  Sony synergy dies and there’s not enough money to rescue the flailing enterprise.

But that’s another story.  Sony is already on its way to the dustbin.  Can you say SAMSUNG?  Let’s focus here on Microsoft.

BMG’s iTunes contract with Apple expires soon.  And it’s not going to be renewed.  Forget variable pricing, THIS is what’s going to break open the online music world.  For without BMG, without a COMPLETE inventory, Apple loses its dominance.  You know fans are going to want the new "American Idol" winner’s single, and without it, Apple’s KAPUT!

And Microsoft has already negotiated licenses with the other major label groups.  Including Sony, which is now double-fucked.

Suddenly, overnight, Microsoft becomes the king of online music.

But who could run such a behemoth?  Bill Gates can’t dance and most people would rather not see Ballmer’s monkey moves once again (ballmer monkeydance).  So, the reins are being turned over to Tommy Mottola.

No, don’t laugh.  This is a BRILLIANT MOVE!

Sure, Tommy took Sony down the tubes.  But he’s learned his lesson.  Don’t doubt me.  Look at Doug Morris.  His maneuvering at Warner cost him his job, and now you never hear a peep from him.  Heard a peep from Tommy recently?  Other than his TV show?  It was all PLANNED!  Tommy INTENTIONALLY didn’t hype Casablanca.  To make it look like he was finished.  But it was all a ruse, he’s been negotiating with Microsoft for a YEAR!  Boy is Doug Morris gonna be pissed.

And the stunning thing is Tommy’s not bringing his diva philosophy to MS.  No, he’s all about INDIES!  He sees a real opportunity here.  Don’t forget, Sony owned RED.  And Andy Lack neutered it.  There’s a hole in the marketplace for a nimble indie distributor, a nimble ONLINE indie distributor.  Here’s the deal: 50/50.  Microsoft puts up the money and after recoupment, the profits are split.  Now if you’re truly indie, if you’ve been living outside the major world, you’re in trouble.  You believed online distribution was a panacea, you could make some REAL money.  The LION’S SHARE!  I’m afraid those days might be through.  For just like their scorched earth policy with Windows, Microsoft’s goal is to eliminate all competition.  Either you sign with them, or you’re not on their service.  And here’s the kicker.  They’ve got EXCLUSIVE CONTRACTS WITH ALL THE HARDWARE PROVIDERS OTHER THAN SONY!  Yes, in order to use Microsoft’s Plays For Sure/Janus technology, you’ve got to agree to use the company’s jukebox software/store.  Just try to compete with that!

As for Microsoft’s Urge store with MTV, that’s finished.  No longer necessary now that they’ve got BMG and all the above-delineated contracts.  Typical Microsoft.  They’re your friend, then they fuck you.  The site is going to be renamed.  Rumor has it it will be called the Microsoft Music Media Office.  Worried about alienating the corporate customer, they’re afraid of making the site appear too hip.  Ergo, the name.  But what difference does it make, soon there will be no choice, Microsoft will have a monopoly on music.

Now this move is not without repercussions.

First of all, Andy Lack has resigned from Sony.  And no, he has not fallen on his sword, rather he’s gone back to CBS and convinced the company to fire up an online video store PRONTO!  For fear that Microsoft will own that market too.  It’s not far-fetched.  Les Moonves believes he can win through sheer will, hell, look at the Howard Stern suit.

Clive Davis is retiring.  He had no choice.  Microsoft has a policy.  Nobody who doesn’t know how to code can work there.  Knowledge of the marketplace is irrelevant.  Tech RULES!  (As for Tommy…why do you think it took so long to close a deal, he’s been taking computer classes every day, he’s even being tutored, and supposedly he’s now FLUENT in C++).  But don’t worry about Clive.  He’s taking Paula Abdul’s place as a judge on "American Idol".

Roger Ames comes up empty-handed once again.

Dennis Lavinthal and Lenny Beer have already been seen on the Microsoft campus, trying to convince Bill and Ballmer that they need them to compete.  That online is really no different from radio, and they know where the bodies are buried.

Mel Karmazin and Hugh Panero are struggling valiantly to become Microsoft’s sole satellite radio provider.  Fearing, just like with exclusive car installations, that unless they’re Microsoft’s partner from the get-go, they’re history.

Will the deal pass muster?

Certainly in the U.S.  Where there is no scrutiny.

As for the European Union…  Well, Microsoft hasn’t been in the music business previously.  And, even if the deal is blocked, they’ll probably do it anyway, since the company’s got a history of ignoring European edicts.

Apple?

Apple goes phone.  It’s the only thing left.  The lumbering giant isn’t in this sphere yet.  Although inside word is Microsoft’s looking at Sprint.  Which would fuck Apple, since that company is slated to be Apple’s mobile phone partner.  If it plays out this way, expect Steve Jobs to throw the long ball.  THAT’S why he switched Macs to Intel, in case of just this possibility.  Yup, with his back to the wall Steve’s going to go for computer market share.  He’s going to allow Windows to run on Macs and license Mac OS X to all comers, i.e. Dell, Compaq, Gateway…  It’s either win, or go down in flames.

Brilliant move by the Microsoft boys if you think about it.  With one measly purchase, they change the ENTIRE landscape.  So, they didn’t mind overpaying.  Yup, a cool five billion.  Hell, there isn’t even going to be any due diligence, they don’t really care about the money, they just want the LEVERAGE!

Why don’t we turn the clock to zero honey
I’ll sell the stock we’ll spend all the money
We’re starting up a brand new day

"Brand New Day"
Sting

THAT’S why all the Wall Street players have been dumping their Apple stock.  Jim Cramer was out of the loop (Apple Bear Raid), but a cabal of securities companies have been informed and sworn to secrecy.  Microsoft figured if they gave these guys a tip now, they could count on them in the future, to spin their company positively, despite the slippage of the Windows Vista ship date.  So, cashing in on Apple stock, the brokers are having a field day.  Proving once again that the game is rigged and the market is not for amateurs.

As for music?

It’s just a pawn in their game.