Upwards of twenty people lost their jobs at Rhino Records last week.\u00c2\u00a0 Were they doing a bad job?\u00c2\u00a0 Were they suddenly superfluous?\u00c2\u00a0 No, Warner Music had to make its numbers work.\u00c2\u00a0 And in order to do this, the company had to reduce its head count.\u00c2\u00a0 So losses would decline.\u00c2\u00a0 On paper.\u00c2\u00a0 Hell, you don’t need a mastering engineer, you don’t need an art department, just a really sharp accountant.<\/p>\n
What?<\/p>\n
Warner Music is not A&M Records, the OLD A&M Records, owned by Herb Alpert and Jerry Moss, grown into a powerhouse over twenty five years.\u00c2\u00a0 From the single to the album, from "The Lonely Bull" to "Frampton Comes Alive".\u00c2\u00a0 Warner isn’t in it for the long haul, to develop artists, it’s in it for the money.<\/p>\n
You see you buy a supposedly undervalued, mismanaged asset.\u00c2\u00a0 Then you cut overhead, get your investment back, and sell stock in the resulting enterprise to the public.\u00c2\u00a0 That’s the private equity game.\u00c2\u00a0 Now we’ve got TWO major labels in the private equity game.<\/p>\n
Believe me, EMI’s value isn’t as an ongoing record company releasing new albums by unknown acts.\u00c2\u00a0 God, that’s a tough business.\u00c2\u00a0 It’s not much better if you ARE known.\u00c2\u00a0 That Linkin Park album…it’s going to be a disaster.\u00c2\u00a0 No, the value of EMI is in its copyrights, what it already owns, what has already been established.\u00c2\u00a0 The Beatles and the Beach Boys.\u00c2\u00a0 Along with all those tunes in the EMI Publishing Catalog.\u00c2\u00a0 At some point in the future, when they figure out how to monetize online music, those assets are going to be worth a fortune.\u00c2\u00a0 Will Terra Firma still own the company then?\u00c2\u00a0 Maybe not!<\/p>\n
Terra Firma’s purchase is not about the new act business, it’s not about waiting for the marketplace to stabilize, it’s purely about money.\u00c2\u00a0 About making the books look good, so that financially the company looks robust, so investors will want to own its stock.<\/p>\n
This movie is not only already being played out at Warner, a variation is transpiring\u00c2\u00a0 over at Live Nation.\u00c2\u00a0 There are fewer arena acts, people aren’t going to many shows, but these problems are not the ones being addressed, rather it’s how can we maximize revenue on what we’ve already got in order to please Wall Street, so we can all make a lot of money.<\/p>\n
The apocalypse is finally here.\u00c2\u00a0 The major labels are going to merge, whether internally or externally, and cut overhead until all you’ve got left are the bean counters and the deal makers.\u00c2\u00a0 These companies are going to become giant licensing operations.\u00c2\u00a0 New music?\u00c2\u00a0 That will be developed by somebody else, someone who doesn’t need the same return on investment.<\/p>\n
You’re watching the movie now.\u00c2\u00a0 Show time isn’t off in the future, the first few reels have already unspooled.\u00c2\u00a0 There was Napster and MySpace, not only a fumbling of the ball by the major labels, but a sea change in exposure and consumption that their model was not prepared for.\u00c2\u00a0 One within which the old modes of exhibition, MTV and radio, are calcified, and replaced with pull models, within which no one hears what they don’t want to.\u00c2\u00a0 If you can’t reach people, if you can’t expose your wares, how are you going to get them to buy your products?<\/p>\n
You aren’t.\u00c2\u00a0 That’s why sales are off so dramatically.\u00c2\u00a0 Not because people are stealing so much as the fact that everybody wants something different, the mainstream is for wusses, casual buyers.\u00c2\u00a0 Today’s music has about as much soul as Beanie Babies.<\/p>\n
Not only will Linkin Park stiff, but so will Paul McCartney.\u00c2\u00a0 There are no longer dominant acts that people believe in, only minor ones with relatively small colonies of believers.\u00c2\u00a0 And if you don’t have believers, you’re fucked.\u00c2\u00a0 Better off to manage a jam band than to own the masters of a pop group.<\/p>\n
Oh, someone will figure it out, someone will give the people what they want, more music for a lower aliquot per track price.\u00c2\u00a0 But it won’t be the investors running Warner or EMI.\u00c2\u00a0 They’re not freethinkers, they’re not growers, they’re managers.\u00c2\u00a0 And the Universal brass is so out of touch, when you go into their offices you see calendars from the ’90s.\u00c2\u00a0 Sure, they resuscitated this Gwen Stefani record, but they won’t be able to sell the next one, not enough people will care, not enough to justify the cost.\u00c2\u00a0 And there will be no infrastructure left, no one to do the grunt work, no one to push the button.<\/p>\n
And Sony BMG is a joke.\u00c2\u00a0 Marriages of convenience never work.\u00c2\u00a0 Lack’s folly will benefit neither.\u00c2\u00a0 Sony is Chrysler to BMG’s Daimler-Benz.\u00c2\u00a0 Then again, Sony has got the catalog.\u00c2\u00a0 Why don’t they just go straight to the finish line, unwind the merger, stop putting out new records and manage the assets, the great tracks of the past.\u00c2\u00a0 Since this is what they’re going to do in the future anyway.\u00c2\u00a0 To do otherwise, to try and right the ship, is positively futile.\u00c2\u00a0 Even Rick Rubin can’t come up with a diamond seller.<\/p>\n
Ten years from now, the music business landscape will look completely different.\u00c2\u00a0 FIVE years from now.\u00c2\u00a0 Lyor Cohen and Jimmy Iovine will long be gone.\u00c2\u00a0 They will have retired, not wanting to work so hard for meager returns, superseded by young hungry bucks willing to focus on the music and man to man as opposed to top down marketing.\u00c2\u00a0 As for the live sphere?\u00c2\u00a0 A lot more bands playing to fewer people.<\/p>\n
We’ve got to grow new stars.<\/p>\n
But a star won’t be Kid Rock, certainly not J. Lo or Jessica Simpson, built on mainstream overhype, but something more akin to Peter Frampton.\u00c2\u00a0 A journeyman who gets lucky when suddenly his hard work pays off, when he releases great product just when enough people have heard of him.<\/p>\n
The future doesn’t lie with Thomas H. Lee\/Bain, and it’s not with Terra Firma either.\u00c2\u00a0 They don’t care what’s in the grooves, they just care about the stock price.<\/p>\n
It’s a free-for-all, it’s every man for himself.\u00c2\u00a0 Welcome to the future.\u00c2\u00a0 It’s happening right now.<\/p>\n
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Upwards of twenty people lost their jobs at Rhino Records last week.\u00c2\u00a0 Were they doing a bad job?\u00c2\u00a0 Were they suddenly superfluous?\u00c2\u00a0 No, Warner Music had to make its numbers work.\u00c2\u00a0 And in order to do this, the company had to reduce its head count.\u00c2\u00a0 So losses would decline.\u00c2\u00a0 On paper.\u00c2\u00a0 Hell, you don’t need […]<\/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-801","post","type-post","status-publish","format-standard","hentry","category-music-business"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p96vPs-cV","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/801","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=801"}],"version-history":[{"count":0,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/801\/revisions"}],"wp:attachment":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/media?parent=801"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/categories?post=801"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/tags?post=801"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}