This is the only deal that makes sense.\u00c2\u00a0 Because of the SYNERGIES!<\/p>\n
You remember that overused word from the eighties and nineties, right?\u00c2\u00a0 It was whipped out to explain every merger, as if 1+1 always equaled 3, when oftentimes it was less than 2…can you say Sprint\/Nextel?<\/p>\n
The old record company model is dead.\u00c2\u00a0 You know, the one where tons of money is spent to yield hits at a one in ten success ratio.\u00c2\u00a0 You know why?\u00c2\u00a0 Because there’s just not that much money left in recorded music and a star isn’t what he or she used to be, ubiquity went out the window with videos on MTV.<\/p>\n
Warner’s value is its catalog.\u00c2\u00a0 Of both recordings and songs.<\/p>\n
Live Nation doesn’t want the songs.\u00c2\u00a0 Those make a good fit with EMI’s publishing assets, but do no good for a touring\/management\/ticketing company other than income, and at the multiple publishing companies go for, the price makes no sense.\u00c2\u00a0 Let KKR-Bertelsmann buy Warner\/Chappell, they’re building a publishing business.\u00c2\u00a0 As for someone else buying the record company and reinventing it, give me a break.\u00c2\u00a0 You’re operating in a world where execs won’t even license Spotify while Amazon, a much bigger threat, launches a locker business that could forestall recorded music growth forever.\u00c2\u00a0 Yes, the only money is in subscriptions, getting everybody to pay a little for a lot. Whereas if you can listen to what you already own anywhere, why would you want a subscription?\u00c2\u00a0 Furthermore, modern subscription apps, from Spotify and its competitors, allow songs to live on the hand-held, so there are no bandwidth issues.\u00c2\u00a0 Let me make this simple.\u00c2\u00a0 Do cell phones still cost a grand and are calls a buck a minute?\u00c2\u00a0 No, the wireless companies brought down the price of phones to zero, making them disposable items, and lowered the price of calls to the point where prepubescents own hand-sets.\u00c2\u00a0 That’s smart, that’s a business.\u00c2\u00a0 Copyright holders in the music business are dumb.<\/p>\n
But the Eagles don’t own their copyrights.<\/p>\n
This is Irving Azoff’s ultimate coup.\u00c2\u00a0 To reunite Don Henley and Glenn Frey with their recordings.\u00c2\u00a0 So they can get all the revenue.\u00c2\u00a0 Especially in an era where labels withhold all royalty payments, requiring lawsuits to get the pittance you contractually deserve.<\/p>\n
So Irving buys Warner Music.\u00c2\u00a0 And he gets it cheap.\u00c2\u00a0 Because despite all the hoopla, no one wants it.\u00c2\u00a0 What’s the value of recorded music today?\u00c2\u00a0 Especially in light of the stupidity evidenced by executives above.\u00c2\u00a0 They keep driving down the value of copyrights.\u00c2\u00a0 Have been for a decade.\u00c2\u00a0 And with Doug Morris taking over Sony and Lucian Grainge emigrating from the U.K., where the business is not quite as bad, do you think this is going to change?\u00c2\u00a0 Of course not!<\/p>\n
So Warner Music, the recordings, goes for a fire sale price.\u00c2\u00a0 The cost to close it.<\/p>\n
And once Live Nation owns Warner they shut down new music production.\u00c2\u00a0 It’s a cash drain.\u00c2\u00a0 A\u00c2\u00a0 vanity project for those still employed.\u00c2\u00a0 I’m not saying they’ll never put out the music of new artists, but it won’t cost much and there won’t be a big marketing campaign.<\/p>\n
Suddenly, Front Line clients have a record company apparatus, a machine that they can sell their music through.\u00c2\u00a0 And get the lion’s share of the profits from.\u00c2\u00a0 This is attractive to anybody out of a deal.\u00c2\u00a0 And ownership of the recording rights allows you to innovate in the selling of tours.\u00c2\u00a0 Hell, you can give the music away, especially if you own your own publishing.\u00c2\u00a0 You can finally operate in the twenty first century.<\/p>\n
And Madonna and the other Live Nation 360 artists now have an avenue for release of product.<\/p>\n
It’s all about making the company lean and mean.\u00c2\u00a0 The assets are the copyrights, the recordings, NOT the employees. They’re expendable.<\/p>\n
Look at it this way.\u00c2\u00a0 If Irving could sell millions of Eagles albums in Wal-Mart with less staff than he has fingers on one hand, why does he need all those layers of b.s?<\/p>\n
Yes, it’s time to wipe the slate clean.<\/p>\n
And you do this by bridging the gap between the old and the new.\u00c2\u00a0 Terry McBride was right, you want to unify your copyrights, so you can turn on a dime, you want to be in control, but his timing was bad.\u00c2\u00a0 You evolve into the future. Buying Warner Music will allow Live Nation and its acts to evolve.\u00c2\u00a0 And will help them in pitching tours to acts.<\/p>\n
Please don’t be surprised.\u00c2\u00a0 Please don’t take all of this too seriously.\u00c2\u00a0 Getting caught up in the glamour of record companies is like getting nostalgic for the days of black and white TV, for the days of hula-hoops and no microwaves, never mind no Internet.\u00c2\u00a0 The whole model does not work.\u00c2\u00a0 Let me see, you want to overpay executives while you screw talent, tying them up for years, taking away their freedom, while odds are after spending all this money and time you’re gonna fail?<\/p>\n
Better to give the artists all the freedom.\u00c2\u00a0 And almost all of the profits.\u00c2\u00a0 But very little upfront cash.\u00c2\u00a0 Do you really need that cash when Rebecca Black is the biggest artist in the country, despite radio refusing to play "Friday", showing how out of touch broadcasters are?\u00c2\u00a0 Making it today is about innovation, creative risk.\u00c2\u00a0 Not about banking deals where you shift tons of cash to unknown quantities and pray for a hit.<\/p>\n
This is a requiem for the past.<\/p>\n
But don’t cry too much, the recordings live on, it’s only the people who sold the records who are gone, hell, only a few overpaid self-satisfied people remain.<\/p>\n
Eighteen months from now you’ll forget all about the past, just like we’ve already forgotten that Citi took ownership of EMI.\u00c2\u00a0 It’s about the future.\u00c2\u00a0 And the future is ever more about acts that can play live and earn their credibility and build their careers on the road and on YouTube as opposed to radio or TV, just like all those blue chips in the Warner catalog.\u00c2\u00a0 Neil\u00c2\u00a0 Young’s still touring.\u00c2\u00a0 So is Prince.\u00c2\u00a0 Mo did it right.\u00c2\u00a0 Irving’s just gonna skim the cream and wait for the good times to return, for these assets to be worth a ton, which they will be, when all the dead weight of the industry is gone.<\/p>\n
As for whether Live Nation has the cash…<\/p>\n
If you’re asking this question, you’ve got no idea who you’re dealing with, who’s backing Irving and Live Nation.\u00c2\u00a0 If someone bids more, they’ll get it.\u00c2\u00a0 But Live Nation should.<\/p>\n
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This is the only deal that makes sense.\u00c2\u00a0 Because of the SYNERGIES! You remember that overused word from the eighties and nineties, right?\u00c2\u00a0 It was whipped out to explain every merger, as if 1+1 always equaled 3, when oftentimes it was less than 2…can you say Sprint\/Nextel? The old record company model is dead.\u00c2\u00a0 You […]<\/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-3992","post","type-post","status-publish","format-standard","hentry","category-music-business"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/s96vPs-lnwarner","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/3992","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=3992"}],"version-history":[{"count":1,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/3992\/revisions"}],"predecessor-version":[{"id":3993,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/3992\/revisions\/3993"}],"wp:attachment":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/media?parent=3992"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/categories?post=3992"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/tags?post=3992"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}