{"id":378,"date":"2006-04-01T10:26:10","date_gmt":"2006-04-01T18:26:10","guid":{"rendered":"http:\/\/lefsetz.com\/wordpress\/index.php\/archives\/2006\/04\/01\/bmg-to-microsoft\/"},"modified":"2006-04-01T10:35:06","modified_gmt":"2006-04-01T18:35:06","slug":"bmg-to-microsoft","status":"publish","type":"post","link":"https:\/\/lefsetz.com\/wordpress\/2006\/04\/01\/bmg-to-microsoft\/","title":{"rendered":"BMG To Microsoft"},"content":{"rendered":"<p>So the Mohn family dodges a bullet, they can keep the Bertelsmann empire private.\u00c2\u00a0 But the real story here is twofold.\u00c2\u00a0 The alacrity with which the deal was consummated and the ultimate purchaser.<\/p>\n<p>It had to be fast.\u00c2\u00a0 Warner and EMI were kicking the tires.<\/p>\n<p>Yes, despite what you read on hitsdailydouble.com, Edgar Bronfman, Jr. and the Thomas H. Lee guys are in it for the long haul.\u00c2\u00a0 Never forget that Edgar penned tunes under the name Junior Miles.\u00c2\u00a0 Music is in his BLOOD!\u00c2\u00a0 And Thomas H. Lee realizes that once P2P is legalized, the Warner catalog is going to be a GOLDMINE!\u00c2\u00a0 As is the BMG repertoire.\u00c2\u00a0 Which is why EMI is fighting so hard too.\u00c2\u00a0 Because you see BMG is all about the CATALOG!\u00c2\u00a0 In just a few years, the echo boomers are going to get married.\u00c2\u00a0 And they&#8217;re going to need copies of all those Backstreet Boys and &#8216;N Sync records to play at their weddings, never mind the future value of all those Kelly Clarkson hits.\u00c2\u00a0 Warner and EMI were foaming at the mouth.\u00c2\u00a0 Just trying to build enough market share to compete with Universal.<\/p>\n<p>Alas, that&#8217;s not to be.\u00c2\u00a0 Because Microsoft saw the opportunity to make a preemptive move.<\/p>\n<p>Microsoft doesn&#8217;t care about Warner Music, nor EMI either.\u00c2\u00a0 But the Redmond, Washington company cares LOTS about Sony.\u00c2\u00a0 Sony is its nemesis.\u00c2\u00a0 Can you say PLAYSTATION!<\/p>\n<p>Despite all the Howard Stringer hype, Sony is in complete disarray.\u00c2\u00a0 Not only can it not compete with Apple in music, it&#8217;s going to miss its kickoff date with the PS3.\u00c2\u00a0 There&#8217;s just enough time, just a big enough window, for X-Box to put a knife in PlayStation&#8217;s heart.\u00c2\u00a0 And Steve Ballmer figured the way to do this was to puncture Sony&#8217;s musical aspirations.\u00c2\u00a0 For without BMG in-house, the Sony Connect store has no leverage, there&#8217;s no reason to buy a Sony hand-held player (that&#8217;s why people buy iPods, because they&#8217;re the only device compatible with the iTunes Music Store) and there&#8217;s no CASH!\u00c2\u00a0 Sony synergy dies and there&#8217;s not enough money to rescue the flailing enterprise.<\/p>\n<p>But that&#8217;s another story.\u00c2\u00a0 Sony is already on its way to the dustbin.\u00c2\u00a0 Can you say SAMSUNG?\u00c2\u00a0 Let&#8217;s focus here on Microsoft.<\/p>\n<p>BMG&#8217;s iTunes contract with Apple expires soon.\u00c2\u00a0 And it&#8217;s not going to be renewed.\u00c2\u00a0 Forget variable pricing, THIS is what&#8217;s going to break open the online music world.\u00c2\u00a0 For without BMG, without a COMPLETE inventory, Apple loses its dominance.\u00c2\u00a0 You know fans are going to want the new &quot;American Idol&quot; winner&#8217;s single, and without it, Apple&#8217;s KAPUT!<\/p>\n<p>And Microsoft has already negotiated licenses with the other major label groups.\u00c2\u00a0 Including Sony, which is now double-fucked.<\/p>\n<p>Suddenly, overnight, Microsoft becomes the king of online music.<\/p>\n<p>But who could run such a behemoth?\u00c2\u00a0 Bill Gates can&#8217;t dance and most people would rather not see Ballmer&#8217;s monkey moves once again (<a title=\"ballmer monkeydance\" href=\"http:\/\/www.youtube.com\/watch?v=0MuZDlVWh8I&#038;search=ballmer%20monkey\" target=\"_blank\">ballmer monkeydance<\/a>).\u00c2\u00a0 So, the reins are being turned over to Tommy Mottola.<\/p>\n<p>No, don&#8217;t laugh.\u00c2\u00a0 This is a BRILLIANT MOVE!<\/p>\n<p>Sure, Tommy took Sony down the tubes.\u00c2\u00a0 But he&#8217;s learned his lesson.\u00c2\u00a0 Don&#8217;t doubt me.\u00c2\u00a0 Look at Doug Morris.\u00c2\u00a0 His maneuvering at Warner cost him his job, and now you never hear a peep from him.\u00c2\u00a0 Heard a peep from Tommy recently?\u00c2\u00a0 Other than his TV show?\u00c2\u00a0 It was all PLANNED!\u00c2\u00a0 Tommy INTENTIONALLY didn&#8217;t hype Casablanca.\u00c2\u00a0 To make it look like he was finished.\u00c2\u00a0 But it was all a ruse, he&#8217;s been negotiating with Microsoft for a YEAR!\u00c2\u00a0 Boy is Doug Morris gonna be pissed.<\/p>\n<p>And the stunning thing is Tommy&#8217;s not bringing his diva philosophy to MS.\u00c2\u00a0 No, he&#8217;s all about INDIES!\u00c2\u00a0 He sees a real opportunity here.\u00c2\u00a0 Don&#8217;t forget, Sony owned RED.\u00c2\u00a0 And Andy Lack neutered it.\u00c2\u00a0 There&#8217;s a hole in the marketplace for a nimble indie distributor, a nimble ONLINE indie distributor.\u00c2\u00a0 Here&#8217;s the deal: 50\/50.\u00c2\u00a0 Microsoft puts up the money and after recoupment, the profits are split.\u00c2\u00a0 Now if you&#8217;re truly indie, if you&#8217;ve been living outside the major world, you&#8217;re in trouble.\u00c2\u00a0 You believed online distribution was a panacea, you could make some REAL money.\u00c2\u00a0 The LION&#8217;S SHARE!\u00c2\u00a0 I&#8217;m afraid those days might be through.\u00c2\u00a0 For just like their scorched earth policy with Windows, Microsoft&#8217;s goal is to eliminate all competition.\u00c2\u00a0 Either you sign with them, or you&#8217;re not on their service.\u00c2\u00a0 And here&#8217;s the kicker.\u00c2\u00a0 They&#8217;ve got EXCLUSIVE CONTRACTS WITH ALL THE HARDWARE PROVIDERS OTHER THAN SONY!\u00c2\u00a0 Yes, in order to use Microsoft&#8217;s Plays For Sure\/Janus technology, you&#8217;ve got to agree to use the company&#8217;s jukebox software\/store.\u00c2\u00a0 Just try to compete with that!<\/p>\n<p>As for Microsoft&#8217;s Urge store with MTV, that&#8217;s finished.\u00c2\u00a0 No longer necessary now that they&#8217;ve got BMG and all the above-delineated contracts.\u00c2\u00a0 Typical Microsoft.\u00c2\u00a0 They&#8217;re your friend, then they fuck you.\u00c2\u00a0 The site is going to be renamed.\u00c2\u00a0 Rumor has it it will be called the Microsoft Music Media Office.\u00c2\u00a0 Worried about alienating the corporate customer, they&#8217;re afraid of making the site appear too hip.\u00c2\u00a0 Ergo, the name.\u00c2\u00a0 But what difference does it make, soon there will be no choice, Microsoft will have a monopoly on music.<\/p>\n<p>Now this move is not without repercussions.<\/p>\n<p>First of all, Andy Lack has resigned from Sony.\u00c2\u00a0 And no, he has not fallen on his sword, rather he&#8217;s gone back to CBS and convinced the company to fire up an online video store PRONTO!\u00c2\u00a0 For fear that Microsoft will own that market too.\u00c2\u00a0 It&#8217;s not far-fetched.\u00c2\u00a0 Les Moonves believes he can win through sheer will, hell, look at the Howard Stern suit.<\/p>\n<p>Clive Davis is retiring.\u00c2\u00a0 He had no choice.\u00c2\u00a0 Microsoft has a policy.\u00c2\u00a0 Nobody who doesn&#8217;t know how to code can work there.\u00c2\u00a0 Knowledge of the marketplace is irrelevant.\u00c2\u00a0 Tech RULES!\u00c2\u00a0 (As for Tommy&#8230;why do you think it took so long to close a deal, he&#8217;s been taking computer classes every day, he&#8217;s even being tutored, and supposedly he&#8217;s now FLUENT in C++).\u00c2\u00a0 But don&#8217;t worry about Clive.\u00c2\u00a0 He&#8217;s taking Paula Abdul&#8217;s place as a judge on &quot;American Idol&quot;.<\/p>\n<p>Roger Ames comes up empty-handed once again.<\/p>\n<p>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.\u00c2\u00a0 That online is really no different from radio, and they know where the bodies are buried.<\/p>\n<p>Mel Karmazin and Hugh Panero are struggling valiantly to become Microsoft&#8217;s sole satellite radio provider.\u00c2\u00a0 Fearing, just like with exclusive car installations, that unless they&#8217;re Microsoft&#8217;s partner from the get-go, they&#8217;re history.<\/p>\n<p>Will the deal pass muster?<\/p>\n<p>Certainly in the U.S.\u00c2\u00a0 Where there is no scrutiny.<\/p>\n<p>As for the European Union&#8230;\u00c2\u00a0 Well, Microsoft hasn&#8217;t been in the music business previously.\u00c2\u00a0 And, even if the deal is blocked, they&#8217;ll probably do it anyway, since the company&#8217;s got a history of ignoring European edicts.<\/p>\n<p>Apple?<\/p>\n<p>Apple goes phone.\u00c2\u00a0 It&#8217;s the only thing left.\u00c2\u00a0 The lumbering giant isn&#8217;t in this sphere yet.\u00c2\u00a0 Although inside word is Microsoft&#8217;s looking at Sprint.\u00c2\u00a0 Which would fuck Apple, since that company is slated to be Apple&#8217;s mobile phone partner.\u00c2\u00a0 If it plays out this way, expect Steve Jobs to throw the long ball.\u00c2\u00a0 THAT&#8217;S why he switched Macs to Intel, in case of just this possibility.\u00c2\u00a0 Yup, with his back to the wall Steve&#8217;s going to go for computer market share.\u00c2\u00a0 He&#8217;s going to allow Windows to run on Macs and license Mac OS X to all comers, i.e. Dell, Compaq, Gateway&#8230;\u00c2\u00a0 It&#8217;s either win, or go down in flames.<\/p>\n<p>Brilliant move by the Microsoft boys if you think about it.\u00c2\u00a0 With one measly purchase, they change the ENTIRE landscape.\u00c2\u00a0 So, they didn&#8217;t mind overpaying.\u00c2\u00a0 Yup, a cool five billion.\u00c2\u00a0 Hell, there isn&#8217;t even going to be any due diligence, they don&#8217;t really care about the money, they just want the LEVERAGE!<\/p>\n<p><em>Why don&#8217;t we turn the clock to zero honey<br \/>I&#8217;ll sell the stock we&#8217;ll spend all the money<br \/>We&#8217;re starting up a brand new day<\/em><\/p>\n<p>&quot;Brand New Day&quot;<br \/>Sting<\/p>\n<p>THAT&#8217;S why all the Wall Street players have been dumping their Apple stock.\u00c2\u00a0 Jim Cramer was out of the loop (<a title=\"Apple Bear Raid\" href=\"http:\/\/www.thestreet.com\/_googlen\/funds\/stoptrading\/10275882.html\" target=\"_blank\">Apple Bear Raid<\/a>), but a cabal of securities companies have been informed and sworn to secrecy.\u00c2\u00a0 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.\u00c2\u00a0 So, cashing in on Apple stock, the brokers are having a field day.\u00c2\u00a0 Proving once again that the game is rigged and the market is not for amateurs.<\/p>\n<p>As for music?<\/p>\n<p>It&#8217;s just a pawn in their game.<\/p>\n<p><\/p>","protected":false},"excerpt":{"rendered":"<p>So the Mohn family dodges a bullet, they can keep the Bertelsmann empire private.\u00c2\u00a0 But the real story here is twofold.\u00c2\u00a0 The alacrity with which the deal was consummated and the ultimate purchaser. It had to be fast.\u00c2\u00a0 Warner and EMI were kicking the tires. Yes, despite what you read on hitsdailydouble.com, Edgar Bronfman, Jr. [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","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-378","post","type-post","status-publish","format-standard","hentry","category-music-business"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p96vPs-66","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/378","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\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/comments?post=378"}],"version-history":[{"count":0,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/378\/revisions"}],"wp:attachment":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/media?parent=378"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/categories?post=378"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/tags?post=378"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}