I know, I know, you’re asking what this has to do with the music business.<\/p>\n
I’ll admit I’m fascinated by the computer industry.\u00c2\u00a0 Which is a gross appellation for a multifarious landscape which includes everything from hardware to software to services to MP3 players.\u00c2\u00a0 Hell, remember when HP licensed the iPod?<\/p>\n
And there have been so many lessons in the computer industry that the music industry has ignored.\u00c2\u00a0 Like the entrance of Compaq into the marketplace, eating IBM’s lunch, by introducing top tier computers as soon as new chips were introduced and then the ultimate demise of that company when Dell came up with its low-cost\/sell-direct model.<\/p>\n
And look where Dell is today.<\/p>\n
IBM realized Compaq was a real competitor and went into services.\u00c2\u00a0 Dell missed the retail explosion and could never diversify into new products and ended up in a commodity world with shrinking margins and a lowered stock price.<\/p>\n
Dell’s lunch was eaten by HP.\u00c2\u00a0 HP could sell computers with thin margins because they sold ancillary services.\u00c2\u00a0 They were well-poised for the future.\u00c2\u00a0 After the company blew out Carly Fiorina, who almost destroyed it.<\/p>\n
She was unqualified.\u00c2\u00a0 She had a trumped up resume and went on to purchase Compaq, dividing the company in the process and dragging the company right down.\u00c2\u00a0 But at least she was replaced, by Mr. Hurd, who turned HP into a powerhouse.<\/p>\n
But now Hurd’s gone.<\/p>\n
We could recite the sexual improprieties.\u00c2\u00a0 Hell, we could speculate further.\u00c2\u00a0 But Hurd broke the code…\u00c2\u00a0 Now what?<\/p>\n
The Board appointed the CFO as interim CEO.\u00c2\u00a0 Is she up to the job?<\/p>\n
We’ll find out.<\/p>\n
But what we learned here is no one is bigger than the company.\u00c2\u00a0 The Board functioned properly.\u00c2\u00a0 Which is astounding, since corporate oversight has been so lame for so many years…can you say GM?<\/p>\n
But the fascinating element is succession.<\/p>\n
If no one is bigger than the company, there must be someone at the company who can run it when the founder\/CEO retires.<\/p>\n
There was no one at Warner Music.\u00c2\u00a0 That’s the story.\u00c2\u00a0 Executive talent was pushed out the door.\u00c2\u00a0 Not only Jimmy Iovine, but Mo Ostin and Bob Krasnow.\u00c2\u00a0 And music impresarios are not fungible.\u00c2\u00a0 Warner has never fully recovered. The axed Doug Morris went across the street to Universal, hired his old Warner cronies and now that company is dominant….\u00c2\u00a0 In the old world.\u00c2\u00a0 Universal’s like Compaq before Dell.\u00c2\u00a0 Selling a high-priced, excessively tested product. The company is not prepared for the future.<\/p>\n
We’ll see if Lucian Grainge can replace Doug Morris.\u00c2\u00a0 But I’ll argue Lucian’s a music man, and that’s not what’s needed right now…\u00c2\u00a0 Right now, Universal needs different talents, a manager who comprehends the Internet sphere as much as the music.\u00c2\u00a0 Yes, Lucian should survive, but he should report to someone else.\u00c2\u00a0 Lucian knows music and..?<\/p>\n
Michael Dell knows computer manufacturing and..?<\/p>\n
Nothing.<\/p>\n
If you’re a believer in Lyor Cohen, I don’t see his replacement in the company.\u00c2\u00a0 Certainly not Tom Whalley, Whalley’s an artist guy, he’s not about the big picture.\u00c2\u00a0 And so is Craig Kallman.\u00c2\u00a0 As for Julie Greenwald, she’s a martinet like Lyor, but she’s always lived in his shadow, what has she done on her own?<\/p>\n
But at least she learned at Lyor’s feet.\u00c2\u00a0 Mentoring\/grooming of executives is so rare in the major label world.\u00c2\u00a0 It would be one thing if they were private companies, but they’re not!<\/p>\n
There’s no B-Team in the old music business world.\u00c2\u00a0 Who could replace Irving Azoff?\u00c2\u00a0 Terry McBride and Jeff Kwatinetz blew themselves up.<\/p>\n
There’s no upward mobility in the old music business infrastructure.\u00c2\u00a0 Which is why if you’re a newbie, you’re doing it for yourself.<\/p>\n
The old players say you can’t compete.\u00c2\u00a0 But as we saw with the demise of Warner Music, it’s ultimately about talent. Both executive and artist.\u00c2\u00a0 He who has the artistic talent wins.\u00c2\u00a0 End of story.\u00c2\u00a0 I wouldn’t say the major labels are interested in talent.\u00c2\u00a0 Truly.\u00c2\u00a0 And savvy executives know how to find talent that lasts and pays dividends.<\/p>\n
Today these are road bands, not radio acts.\u00c2\u00a0 Acts with fan bases built by word of mouth, not by marketing\/advertising\/payola.<\/p>\n
Look at it this way.\u00c2\u00a0 If Interscope were a standalone public company…and Jimmy Iovine, god forbid, was hit by a bus, who would run it?\u00c2\u00a0 Who would buy stock in it?\u00c2\u00a0 How would it survive?\u00c2\u00a0 I don’t see a single person in the wings, not within the company.<\/p>\n
Meanwhile, there are scores of original Jimmy Iovines.\u00c2\u00a0 Hustlers.\u00c2\u00a0 Finding a way by themselves.\u00c2\u00a0 And these hustlers are going to inherit the music world.\u00c2\u00a0 It’s plain to see.\u00c2\u00a0 Because the old guard won’t let the new guard in.\u00c2\u00a0 There’s no upward mobility at a label.\u00c2\u00a0 The CEO makes a fortune and everybody else makes bupkes.<\/p>\n
But if you find an act and own all 360 degrees of revenue, as a manager traditionally has, you can find your way to riches independently.\u00c2\u00a0 Look at Arcade Fire…\u00c2\u00a0 They’re not on a major label…\u00c2\u00a0 Hell, a major wouldn’t have signed them when they were available, before they got big, because the band was too outside, not good-looking enough, not making beat-driven instant hits.<\/p>\n
But Arcade Fire was King of the Net last night, broadcasting from a sold-out Madison Square Garden.\u00c2\u00a0 Meanwhile, Rihanna is canceling dates and blowing out tickets for those that remain.<\/p>\n
Notice something wrong with this picture?<\/p>\n
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