{"id":1792,"date":"2009-03-18T13:36:08","date_gmt":"2009-03-18T21:36:08","guid":{"rendered":"http:\/\/lefsetz.com\/wordpress\/?p=1792"},"modified":"2009-03-18T13:36:08","modified_gmt":"2009-03-18T21:36:08","slug":"guy-hands-resigns","status":"publish","type":"post","link":"https:\/\/lefsetz.com\/wordpress\/2009\/03\/18\/guy-hands-resigns\/","title":{"rendered":"Guy Hands Resigns"},"content":{"rendered":"

And sooner or later<\/span>
Everybody’s kingdom must end<\/span>
And I’m so afraid your courtiers<\/span>
Cannot be called best friends<\/span><\/p>\n

"The King Must Die"
Elton John<\/p>\n

Financiers believe they’re indomitable.\u00c2\u00a0 They’re a strange mix of world class athlete and professional poker player. They’re all in.\u00c2\u00a0 They live large lives.\u00c2\u00a0 They believe they’re entitled to all the money they make.<\/p>\n

Guy Hands famously resuscitated a string of roadside service stations in Northern Europe by cleaning up the rest rooms. A fascinating insight that delivered handsome rewards.\u00c2\u00a0 But what insightful thinking is going to save a major label?\u00c2\u00a0 Sign more hit acts?\u00c2\u00a0 Stop piracy?\u00c2\u00a0 Bring back the power of terrestrial radio?\u00c2\u00a0 Put music videos back on MTV?<\/p>\n

In case you missed it, Edgar Bronfman, Jr. made the Huffington Post’s walk of shame today <\/p>\n

\n
CEO Bonus Pay Rises Despite Poor Performances (SLIDESHOW)<\/a><\/div>\n<\/blockquote>\n

It’s hard to rationalize a $3 million bonus when your company lost $56 million and its already anemic stock price dropped 25%.\u00c2\u00a0 Maybe all these CEOs got away with their high pay because the hoi polloi believed one day they too could be rich.\u00c2\u00a0 But now Joe Sixpack is worried about his job, if he still has one, and is scrambling to preserve the meager lifestyle he’s still got.<\/p>\n

But it’s not only the executives.\u00c2\u00a0 Jon Bon Jovi is excising the "Wall Street Journal" article from his band’s boards, the one that stated that he scalped his own tickets.\u00c2\u00a0 And with the "New York Daily News" breaking the story that the PNC Bank Arts Centre is charging a $6 parking fee for EVERY TICKET, whether you arrive by car or not, whether you carpool or not <\/p>\n

\n
PNC Bank Arts Center charges all music fans a parking fee of $6, even if you don’t have a car<\/a><\/div>\n<\/blockquote>\n

the stink might presently be on Live Nation, but we know it’s the acts once again.\u00c2\u00a0 Because this is the only way the promoter can make a profit, by adding on additional charges.\u00c2\u00a0 If they’re part of the basic ticket price, the act commissions them.\u00c2\u00a0 There’s a war between the promoters and the acts and not only is the customer getting screwed, soon the business will be too, when no one has the money to afford these exorbitantly-priced tickets and there are no new acts that have created enough demand to fill these buildings.<\/p>\n

Everybody’s trying to bring the old model into the new world, preserving margins and profits.\u00c2\u00a0 But the old model’s never going to work in the Internet era.\u00c2\u00a0 When people have a lot of music which they probably haven’t even paid for.<\/p>\n

Guy Hands thought the men running EMI were idiots.\u00c2\u00a0 They might not have run a tight ship, but the problem wasn’t the executives, it was systemic.\u00c2\u00a0 The major label model just doesn’t work anymore.\u00c2\u00a0 One in which you sign a bunch of talent, hoping one act breaks and pays for all your losses.\u00c2\u00a0 In an era where the dinosaurs don’t even go platinum, there aren’t enough profits to support the house of cards.\u00c2\u00a0 It’s every band for itself.<\/p>\n

Yes, the acts have abandoned the labels.\u00c2\u00a0 Radiohead most famously, but Counting Crows just announced they were going it alone yesterday <\/p>\n

\n
Counting Crows<\/a><\/div>\n<\/blockquote>\n

And Counting Crows may not have had prodigious album sales recently, but they do a good live business and believe…they can’t do it any worse than the label, and working alone they can keep all the profits.<\/p>\n

You can’t fix a record label by hiring an Italian from Procter & Gamble.\u00c2\u00a0 That would be like hiring Bill Gates to run the Yankees.<\/p>\n

You can’t run a label when no one knows who to call.\u00c2\u00a0 EMI is so decentralized, there are so few employees, that people who WANT to sign with the label are unsure who’s in charge.<\/p>\n

You can’t run a successful record label when more people steal your main offering than pay for it and you’ve got such tiny market share that you can’t affect industry policy enough to try and rescue your bottom line.<\/p>\n

It’s not only Warner and EMI.\u00c2\u00a0 Hell, Bertelsmann sacrificed BMG for almost nothing to Sony, exculpating the conglomerate from a dying business.\u00c2\u00a0 We’re left with Universal, which believes its market share will insure its survival.<\/p>\n

But Smith-Corona’s dominance in dorm rooms did not prevent the typewriter company’s slide into oblivion.<\/p>\n

Universal is akin to a king, raising taxes on his subjects in order to pay his bills.\u00c2\u00a0 Doug Morris keeps trying to extract humongous license fees from tech entrepreneurs, all in an effort to preserve his bottom line.\u00c2\u00a0 But even those companies that have paid have not yet figured out how to make money.\u00c2\u00a0 And you can’t profit if your partners are bankrupt, or close to it.<\/p>\n

Guy Hands had to step down because his investors were pissed off.\u00c2\u00a0 Not only had they lost a fortune already, not only had Terra Firma written down $1.7 billion on its EMI investment, they’d had to pony up cash in September to avoid defaulting on the Citigroup loan, and chances are they’ll have to do so again in the near future.<\/p>\n

No man’s a jester playing Shakespeare<\/span>
Round your throne room floor<\/span>
While the juggler’s act is danced upon<\/span>
The crown that you once wore<\/span><\/p>\n

The public has been dancing on the record industry’s crown for a decade now.\u00c2\u00a0 The lunatics have taken over the asylum. We’re entering a new era, calling for a new model.\u00c2\u00a0 One that requires the CEO of the company to relinquish the lion’s share of the profits to the act and be compensated commensurate with his performance.\u00c2\u00a0 It was a good run.\u00c2\u00a0 But all good things come to an end.<\/p>\n

True, Guy Hands knew little of the music industry.\u00c2\u00a0 But we shouldn’t be laughing as he’s run out of town.\u00c2\u00a0 For he was the record industry’s best hope.\u00c2\u00a0 If someone with a ton of cash who’s not beholden to the past can’t make it work, who can?<\/p>\n

No one.<\/p>\n

Major labels are now just repositories of copyrights, to be traded at cents on the dollar, their upside to be revealed as smoke and mirrors.\u00c2\u00a0 The new music business is fraught with holes, it’s damn near impossible to make money when you can’t break an act, and when you do everybody steals the product and forgets about your charges moments after their peak, which is akin to a mountain in Minnesota than a Teton.<\/p>\n

Music will not die.\u00c2\u00a0 People will not stop listening.\u00c2\u00a0 But who is able to earn a living making it and who is able to earn a living selling it will be different.\u00c2\u00a0 We’re experiencing a changing of the guard.\u00c2\u00a0 Just like George W. Bush broke our country and the populace did the heretofore unthinkable, elected a black man to the Presidency, the savior of the music business won’t be a usual suspect, not a financier but an outsider, not burdened by decades of baggage, one who specializes in saying yes rather than no.\u00c2\u00a0 The darkness will lift.\u00c2\u00a0 But the old era must end first.\u00c2\u00a0 Guy Hands relinquishing his duties, being punished for poor performance, is a good first step.<\/p>\n

\n
Terra Firma’s Guy Hands Resigns Over EMI Deal<\/a><\/div>\n<\/blockquote>\n

<\/p>\n

<\/p>","protected":false},"excerpt":{"rendered":"

And sooner or laterEverybody’s kingdom must endAnd I’m so afraid your courtiersCannot be called best friends "The King Must Die"Elton John Financiers believe they’re indomitable.\u00c2\u00a0 They’re a strange mix of world class athlete and professional poker player. They’re all in.\u00c2\u00a0 They live large lives.\u00c2\u00a0 They believe they’re entitled to all the money they make. Guy […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[2],"tags":[],"class_list":["post-1792","post","type-post","status-publish","format-standard","hentry","category-music-business"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p96vPs-sU","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/1792","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/comments?post=1792"}],"version-history":[{"count":1,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/1792\/revisions"}],"predecessor-version":[{"id":1793,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/1792\/revisions\/1793"}],"wp:attachment":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/media?parent=1792"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/categories?post=1792"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/tags?post=1792"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}