A fixture in the music industry since the mid-1990s, Bronfman led WMG during a period of profound tumult, navigating a rough transition from CD to the digital download, and grappling with a generation of younger consumers who don’t always want pay for digital music.

Onstage at D: Dive Into Media this afternoon, Bronfman reflected on the evolution of the music industry, Apple, and the fate of EMI, which is currently being pursued by Universal Music.

“It strikes me as hubris that Universal will buy EMI,” Bronfman told Peter Kafka of AllThingsD. “What it will do is create a super-major that will have far too much power. … I think when Universal goes up over 40 percent market share, I don’t see how reasonable regulators can countenance. It will impact not just labels, but artists and cultural diversity. … Warner is going to fight this tooth and nail, and I hope others will join us.”

As with today’s Neil Young session, the perceived obsolescence of the recording industry was a topic of conversation and, as you might imagine, Bronfman feels labels remain a necessity.

“Commercial success still hasn’t come to an artist that isn’t signed to a record label, he said. “There are very few artists that can succeed without the help of a record label. The role of the record label is still required, it’s still necessary.”

And not just for musicians. Consumers need labels, as well.

“I really do think consumers are busy, and trying to sort through millions and millions of artists to find the ones that they might like just requires far too much work. That’s where the labels come in.”

A few other remarks worth noting …

On mobile:
Mobile is coming. It’s still not really there. It’s on the iPhone because Apple has a content strategy, but it’s not really there on other devices. … I think the mobile platform is a massive opportunity for music. … Think about it. The iPod made music mobile, but today, how many devices do you need to walk around with? You want it on just one. And inevitably that’s going to be the phone.

On Google Music:
Google Music is an oxymoron.

On unbundling:
Any time you can give consumers more of what they want, it’s a good thing. Unbundling the album is a good thing. In the case of music — because it is content that you can slice into songs — doing that is of huge benefit to consumers.

On Apple and iTunes:
Apple from day one believed in music and content. That was the good news. The bad news is that they decided all songs where created equal, and I fought Steve on that. Ultimately, Apple got the better part of that deal. Ultimately, I wish we’d gotten more pricing flexibility.

On Spotify:
We see Spotify as incrementally positive. It’s not slowing down music sales or downloads. We would all love to make more money from Spotify, but Spotify needs to make money, too. But artists should know that it is a real and growing revenue stream.

If you’re reading this site, you know who all of these folks are. But just for formality’s sake:

Jason Kilar is CEO of Hulu, the video joint venture co-owned by Comcast, Disney and News Corp.’s broadcast TV units. The site has been a huge hit with viewers and subscribers, who have put it on pace to generate $500 million in revenue this year. But its owners aren’t quite sure what to do with it: They put it up for sale this summer, then decided to hang on to it after all. This will be Kilar’s first major public appearance since that tumult, so we’ll have plenty of questions.

Dick Costolo is CEO of Twitter, which has moved from Web oddity to a service used by more than 100 million people a month. Twitter’s founders didn’t like the notion of turning their baby into a media company, but that’s exactly what Costolo is trying to do now; he is ramping up efforts to attract more eyeballs and sell more ads. And he’s leaning heavily on big media companies — especially TV networks and movie distributors — to make that happen.

Martha Stewart is the founder of Martha Stewart Living, the multimedia empire she built from scratch, which now includes magazines, TV shows, a Web site and multiple lines of branded goods; her newest coup is a big-dollar deal with J.C. Penney. She’ll be joined onstage by Lisa Gersh, the president and chief operating officer Stewart brought in from NBC Universal nearly a year ago. At NBC U, Gersh had overseen the acquisition of the Weather Channel, among other duties; she had previously been chief operating officer at Oxygen Media.

They’ll join a lineup that includes ESPN President John Skipper, YouTube CEO Salar Kamangar, Viacom CEO Philippe Dauman, New Yorker editor David Remnick, Warner Music Chairman Edgar Bronfman Jr., News Corp. Chief Operating Officer Chase Carey, Clear Channel CEO Bob Pittman, Legendary Pictures head Thomas Tull and Vevo CEO Rio Caraeff. And we may still have a surprise or two between now and the end of January.

All Things Digital’s first-ever media conference runs Jan. 30 and 31 at the Ritz-Carlton in Laguna Niguel, an hour south of Los Angeles. See you there.

A replacement hasn’t been named, but one is expected before the end of January, according to a person familiar with the matter. Since May, Warner has been owned by Access Industries Inc., controlled by Russian-born billionaire Len Blavatnik. Stephen Cooper, a corporate turnaround specialist, replaced Mr. Bronfman in August as Warner Music’s chief executive.

Read the rest of this post on the original site »

Disney CEO Bob Iger tapped Skipper to take over his company’s most important asset just a week ago. But Skipper, who had been ESPN’s content boss, has been a rising star there for years, hopping from print (!) to the Web to TV programming. We’ll have his first onstage interview in his new role.

At a time when the value of Big Media’s content is in flux, ESPN’s lock on sports — DVR-proof, pirate-resistant programming that draws mass eyeballs in a niche age — is more valuable than ever. Can Skipper keep it that way?

We’ll ask him in January, as he joins a lineup that includes: YouTube CEO Salar Kamangar, Viacom CEO Philippe Dauman, New Yorker editor David Remnick, Warner Music Chairman Edgar Bronfman Jr., News Corp. Chief Operating Officer Chase Carey, Clear Channel CEO Bob Pittman, Legendary Pictures head Thomas Tull and Vevo CEO Rio Caraeff.

All Things Digital’s first-ever media conference runs Jan. 30 and 31 at the Ritz-Carlton in Laguna Niguel, an hour south of Los Angeles. See you there.

Hollywood and Google have been circling each other for years, as each side tries to figure out what to make of the other. Now they’re finally starting to link up in a serious way, via YouTube’s new “channels” strategy.

Which means it’s a perfect time to hear from YouTube CEO Salar Kamangar. And if you’re at D: Dive into Media in January, that’s what you’ll be able to do, as one of the world’s most important Googlers joins us onstage.

Getting Kamangar out of Mountain View and into the public eye would be a big deal under any circumstances, because — while he keeps a very low profile — he has enormous clout: He’s one of Larry Page’s most trusted lieutenants, a position he has earned by joining the company as hire No. 9 in 1999, then helping to build the AdWords product that has generated a vast majority of Google’s revenue.

Kamangar has been formally running YouTube for the past year, but in reality he had been overseeing the world’s largest video site for some time. Kamangar is also in charge of Google’s broader video plans, including Google TV, which is now making a second stab at inserting itself into the world’s living rooms.

So there’s going to be plenty to talk about when Kamangar joins a lineup of media heavyweights Jan. 30 and 31 at the Ritz-Carlton in Laguna Niguel, an hour south of Los Angeles. Previously announced speakers include Viacom CEO Philippe Dauman, New Yorker editor David Remnick, Warner Music Chairman Edgar Bronfman Jr., News Corp. Chief Operating Officer Chase Carey, Clear Channel CEO Bob Pittman, Legendary Pictures head Thomas Tull, and VEVO CEO Rio Caraeff.

We’ll announce more in the weeks to come. If you want to make sure you get a seat, you should sign up now.

For our first-ever media conference, we’re trying to cast a wide net, so you’ll hear from movers and shakers from a range of companies. The common theme: All of them are making and distributing content during a time of unprecedented technological change. How do they adapt?

So far, we’ve announced that Viacom CEO Philippe Dauman, New York editor David Remnick, Warner Music chairman Edgar Bronfman Jr. and News Corp. chief operating officer Chase Carey will be joining us on Jan. 30 and 31 at the Ritz-Carlton in Laguna Nigel, just south of Los Angeles.

Let’s add three more to that list:

Bob Pittman helped build MTV, then AOL. And after spending several years as a full-time investor in everything from Zynga to a high-end tequila, he’s running a media company once again — this time overseeing radio and billboard giant Clear Channel. Why would you want to run a radio company when everyone’s consumed with the likes of iTunes, Pandora and Spotify? Because it’s still a growth industry, Pittman argues. And the fact that it’s the industry that gave him his start, at age 15, makes the story even more interesting.

Thomas Tull is a relative newcomer to Hollywood, but he’s moving fast. After founding Legendary Pictures in 2004, he’s produced a string of hits, including “The Hangover,” “The Dark Knight” and “300.” And if you accuse him of making dude-centric movies that appeal to “fanboys,” he won’t flinch — they’re the ones who still come out to the theaters, if you know how to get them there. Last spring, his track record helped him secure an investment from Silicon Valley heavyweight Accel Partners, which gives you a hint about where Tull thinks all of this is going.

Joint ventures formed by big media companies are a tricky proposition, but Rio Caraeff seems to be making his work. Vevo, the “Hulu for music videos,” is co-owned by Universal Music Group and Sony Music, and helped in large part by Google’s YouTube. And as of last month it was the second-biggest video site on the Web — a title that used to be held by Hulu.

Just like our flagship D: All Things Digital conference, D: Dive into Media will give you rare access to deep, smart talks with the people who matter. And we’ll be announcing more of them in the weeks to come. For now: You can find registration information here.

So is this a good time to be in media? Or a terrifying one? Both? Yes!

AllThingsD covers the media business and the way it responds to technology, every day. But in January we’re going to go really deep into this stuff, at our first D: Dive Into Media event, where we’ll focus on the people who create, finance and distribute what we listen to, read and watch. (Facebook is on to something!)

We’ll gather the most powerful, interesting and innovative leaders from a wide range of media and entertainment companies, and sit down with them for one-on-one interviews.

And just like our flagship D: All Things Digital event, we’ll also be able to give you peeks at the future, by focusing on new voices and new technology you’ll be hearing from in the months and years to come. You won’t see panel discussions with middling players here: Just deep, smart talks with the people who matter.

We’ll be announcing our speakers throughout the fall, but here’s a starter list to give you a sense of what we’ve got planned:

Philippe Dauman is CEO of Viacom, which runs one of the world’s dominant cable networks. We’ll talk to him about what that means in a universe where cord-cutting could become a reality — if it’s not already. We’ll also pick his brain about the future of his Paramount studio, and Hollywood in general.

New Yorker editor David Remnick runs one of the world’s best, most storied magazines. Coincidentally or not, it also happens to be a rarity in the iPad world — a successful magazine app. We’ll talk to the Pulitzer Prize winner about the challenge of making long, immersive content in a fast-twitch world.

Edgar Bronfman Jr. ran Warner Music Group from 2004 until earlier this summer; he’s now the company’s chairman at a pivotal time in its history. Since his resume also includes a stint running what’s now called NBCUniversal, he’ll also be able to give us an interesting perspective on the evolution of the TV and movie business.

News Corp. COO Chase Carey can talk to us about his company’s take on the movie business, the TV business, the cable business, the newspaper business and the Internet. News Corp. also owns this Web site, but that won’t prevent us from having a frank discussion about the company’s challenges and opportunities.

D: Dive Into Media will be held at the stunning Ritz-Carlton in Laguna Niguel, a little more than an hour south of Los Angeles. On behalf of Walt Mossberg, Kara Swisher and the rest of the AllThingsD staff, I’d like to invite you to join us Jan. 30 and 31.

He replaces Edgar Bronfman Jr., who has run Warner Music Group since 2004, but will remain with the company as chairman of its board.

The company also announced that it is bringing Thomas Lee back to the company’s board. Lee had previously served as a board member from 2004 through this year, when his private equity company held a large stake in the music label. His reappointment does not mean he’ll be reinvesting in the company, I’m told.

People inside the company hold out the possibility that Bronfman could return to day-to-day leadership of the company if it succeeds in buying EMI Music, a longtime would-be merger partner currently owned by Citigroup. But even if Warner wins that bidding round, regulatory approval could take a year or more, so it’s not realistic to expect him back sooner than that, if ever.

Here’s Bronfman’s internal note to his employees, followed by the press release announcing the moves.

Dear Colleagues:

As Warner Music Group begins its next chapter, well-positioned for some truly exciting and unprecedented opportunities, I am pleased to announce we are adding a new member to our management team: Steve Cooper. Effective today, Steve will be serving as WMG’s Chief Executive Officer, working out of our New York office and I will serve as Chairman of the Board of WMG, continuing to work out of both our New York and London offices. Lyor and Cameron will remain in their positions, heading up Recorded Music and Music Publishing respectively, reporting directly to Steve.

I’d like to take a moment to explain to you the rationale behind this change:

Capitalizing on the opportunities before us will require an intensive and all-consuming effort from a broad and deep management team. For this reason, following the close of the sale and the transition of WMG from a public company to a subsidiary of Access Industries, in several discussions with Len and the Access team, I conveyed my strong conviction that my energies on behalf of the company would best be directed toward transformative transactions and long-term strategy. Len was supportive of my wishes provided we could identify the executive to whom I could hand off day-to-day management responsibilities. Fortunately, in Steve Cooper we have that executive.

Steve has a long and distinguished career of service to many companies. Having worked very closely with him over the past several months, I can tell you that he is a highly effective operator who brings a wide range of skills and experience to WMG, most recently, of course, as WMG’s Chairman. And, as a longtime partner to Len, Steve knows the Access team well and will be an effective liaison between them and WMG. More information about Steve’s background can be found in the press release we are issuing today.

Now, a few thank yous are in order. First of all, I want to thank Len and Access for being amenable to my kicking myself upstairs and understanding that I came to WMG as both an investor and operator—a dual role in which I have served throughout my career. After leading the acquisition from Time Warner, transforming the company, and selling it to Access, I believe I can add greater value by addressing the challenges WMG faces on a macro scale, while handing over the day-to-day reins to Steve.

Second, I want to thank Steve for being willing to swap roles with me. After collaborating so well with him, and sensing the energy and enthusiasm he brings to operating a company, I had no doubt that Steve was serving in the role that was more natural for me at this stage in my WMG tenure, while I was in the role in which Steve could bring to bear his many talents.

But the biggest thank you I’ve saved for last. And that’s to all our amazing employees around the world. Thank you. In transforming WMG, together we’ve performed something of a miracle. Despite the industry’s complex transition and the global economic downturn, we have grown profitability, improved our competitive position, and developed new business models, all while continuing to focus intensely on our core mission: artist development. A company’s true value is the quality of its employees, and you are the finest group of employees with whom I have ever worked. None of what we have accomplished could have happened without the extraordinary talent that is the WMG team.

I’m excited for what the next chapter holds. And I look forward to writing that chapter with all of you.

Please join me in welcoming Steve to the team. As always, please email me any questions or comments you may have.

Edgar

WARNER MUSIC GROUP’S BOARD OF DIRECTORS ELECTS
EDGAR BRONFMAN, JR. AS CHAIRMAN TO FOCUS ON STRATEGY AND GROWTH OPPORTUNITIES
NEW YORK, August 19, 2011 – Warner Music Group Corp. (WMG) today announced that Edgar Bronfman, Jr., who had been serving as the company’s Chief Executive Officer, has been appointed to the position of Chairman of the company’s Board of Directors and Stephen F. Cooper, who had been serving as Chairman, has been elected to serve as WMG’s Chief Executive Officer. Bronfman will focus on the company’s strategy and growth opportunities while Cooper will be responsible for the company’s day-to-day operations. Cooper will continue to serve on the company’s Board of Directors.
Lyor Cohen, Chairman and CEO, Recorded Music and Cameron Strang, Chairman and CEO of Warner/Chappell Music, will remain in their positions, reporting directly to Cooper.
Thomas H. Lee, the Chairman and CEO of Thomas H. Lee Capital, LLC, who served as a member of WMG’s Board from March 2004 through July 2011, has been elected as a new Director of WMG. With the appointment of Lee, the size of WMG’s Board has increased from nine to 10 members.
Bronfman said, “With the Access Industries transaction closed and WMG well-positioned for its next exciting chapter, it was clear that in order to best seize the strategic opportunities before us, we needed to deploy our team in the most effective and imaginative manner possible. Given my desire to focus on growth opportunities and Steve’s extensive background in management across a wide array of companies and industries, I am grateful that Steve accepted the offer to change roles and to serve as our CEO. I look forward to continuing our successful partnership.”
Bronfman added, “I’m pleased to welcome Tom Lee to our Board. Tom and I previously served together on WMG’s Board, and his contributions were invaluable. We’re fortunate that going forward we’ll be able to benefit from his insight and his history with the company.”
In addition to his role with WMG, Cooper is a member of the Supervisory Board for LyondellBasell Industries N.V., one of the world’s largest olefins, polyolefins, chemicals and refining companies. Cooper is an advisor at Zolfo Cooper, a leading financial advisory and interim management firm, of which he was a co-founder and former Chairman. Cooper is also Managing Partner of Cooper Investment Partners, a private equity firm. He has more than 30 years of experience as a financial advisor, and has served as chairman or chief executive officer of various businesses, including Vice Chairman and member of the office of Chief Executive Officer of Metro-Goldwyn-Mayer, Inc. and Chief Executive Officer of Hawaiian Telcom. Cooper received a B.A. from Occidental College and an M.B.A. from the University of Pennsylvania Wharton School of Business.

Next question: Will Blavatnik keep his new purchase, carve it up, or try to double down on his music bet?

Reuters says Blavatnik’s Access Group has won the auction for Warner with an offer of $8.25, which will give the company an enterprise value of $3.3 billion. The Warner auction has dragged on for months, but reports for the last few days have put Blavatnik in the lead.

[UPDATE: Warner has confirmed the deal via press release. It's all-cash, as expected, and will be financed in part by Credit Suisse and UBS. It's expected to close in Q3.]

The deal will be a victory for the consortium of private equity groups that bought the company from Time Warner in 2004; they’ve already recouped their initial $2.6 billion investment via dividend payouts, so the purchase will be pure profit.

And it’s also supposed to be good news for Warner CEO Edgar Bronfman Jr., who supposedly would like to keep running the music company; he has had a long relationship with Blavatnik, who had previously served on Warner’s board. (“They know that our people are the best in the business,” Bronfman told his employees via an internal memo this morning.)

But Blavatnik’s win may not be the last move for Warner. Speculation will immediately move on to the status of EMI Music Group, which is currently owned by Citigroup but won’t be for long. Warner and EMI have been trying to merge for more than a decade, so it’s possible that Blavatnik will try to make that happen with another deal.

In a related scenario, he may try to sell off part of Warner–most likely its Warner/Chappell publishing arm. A logical buyer for that asset would be the Sony/ATV music publishing company, which was also bidding for Warner this week.

Side note: Blavatnik’s win, for now, also means that Internet star Sean Parker won’t own a piece of the music business; Parker was aligned with supermarket magnate Ron Burkle‘s bid for Warner, and Burkle dropped out last week.

Here’s Bronfman’s companywide memo announcing the deal:

Dear Colleagues:

Today marks a milestone in our evolution as a company.

We have just announced that Warner Music Group is being acquired by Access Industries. This is strong validation that WMG is today one of the most progressive forces in music and recognition that we are well-positioned to succeed through the industry transition.

Access is deeply committed to helping us achieve our fullest potential in the years to come. They value our rich history and understand that success relies on a relentless commitment to artist development and A&R. They know that our people are the best in the business. And they recognize the excellence in both our recorded music and music publishing divisions and our incredible family of recording artists and songwriters. Further, Access has an established and successful track record of supporting entrepreneurs in various fields including media. They understand our business and our culture, and we will no doubt benefit from their global business expertise and strategic wisdom.

We have achieved so much in the past seven years in the transformation of our company and, in addition to these achievements, we have continued to invest strongly in A&R and artist development while also fundamentally revamping our approach to artist relationships. Now, we are true partners with artists in almost every aspect of their careers. This disciplined, thoughtful and creative approach sets the stage for our future growth.

I would also like to thank our original investors, who remained steadfast in their support of our company even during a very challenging industry transition. We are grateful for their thoughtful guidance and wise counsel. Today’s announcement is also a validation of their vision for the prospects of a progressive music company.

I have no doubt that our new owners will serve as fantastic new stewards for our company, our artists and songwriters, for music fans and for our employees.

The transaction is expected to close in the third quarter of this calendar year, subject to stockholder approval and the customary closing conditions and regulatory reviews. After the closing, WMG will become a private company and our stock will no longer trade on the New York Stock Exchange.

Until that time, it is business in the normal course. Again, it’s very important that we keep our eye on the ball and continue to serve artists, songwriters, customers, partners and music fans at the same high levels they have come to expect of us.

Finally, let me once again thank you for everything you’ve done to help bring us to this moment. Today’s news is tangible evidence of how far we’ve come as a company and how much WMG can accomplish in the years ahead. You remain, quite simply, the best in the entire industry and I can’t wait to see what the future brings.

If you do have further questions or comments, I hope that you will email me directly at edgar@wmg.com. You can read the full press release at www.wmg.com.

Sincerely,

Edgar

We do see Spotify, and services like Spotify, as ever-more meaningful for our results.

Warner Music Group CEO Edgar Bronfman Jr. during this morning’s earnings call, making his most encouraging noises yet about the streaming music service. But while Warner works with Spotify in Europe, it has yet to ink a deal with the company for the U.S. As of this week, Sony is the only major label to do so.

And while Warner, and the rest of the industry, had been hoping that Google might launch a music service that would give sales a boost this year, that doesn’t look likely. The new hope: Google arrives sometime next year.

That’s the line from Warner CEO Edgar Bronfman Jr. during his company’s earnings call this morning. Bronfman said he’s hoping that Google and other services “will come online in calendar 2011,” and that they’ll create “very significant opportunity both for consumers and the music industry.”

Any more detail than that? Nope.

But Bronfman did have a few nice things to say about Spotify, the much-hyped music service that has yet to launch in the U.S. Warner has renewed its European licensing deal with the service, which offers both free and subscription options, and Bronfman murmured some hopeful things about getting something done in America.

In Europe, the new Spotify deal “was a long time coming, [and] was not easy for us, and not easy for them,” Bronfman said, and says he’s “hopeful” the two companies can reach an agreement.

As I’ve previously reported, music sources say that Spotify and Sony have essentially reached an agreement for a U.S. launch. And the consensus seems to be that the service is close to getting something done with Universal Music Group, the world’s largest label.

So the question for Spotify is whether it needs to get Warner on board before it can launch in the U.S., something it continues to insist it wants to do this year.

Spotify officials have previously said that they’d only go forward with three of the big four labels on board, which makes sense–no point in launching a service that doesn’t have lots of the music people want to hear.

On the other hand, if the Spotify guys wait to get Warner–or EMI Music Group, the other major label–on board before launching, they could get held up for quite some time.

Speaking of EMI Music, what does Bronfman think of the label’s deal with Apple that brought the Beatles to iTunes? He thinks what most of you think: “I don’t know how impactful, after 10 or 12 years of digital business, their coming to iTunes will be,” he said.

But it does give Apple the ability to run a very cool marketing campaign, and that will get more people into iTunes. And that’s good for Warner–and everyone else who sells stuff there.

*You really can’t stress this point enough: We’re a decade past Napster, but the music industry still runs on CD sales. In Warner’s case, digital now accounts for 25 percent of overall revenue.

Warner (WMG) has the same problem that the rest of the business has: For now, digital music is pretty much owned by Apple’s (AAPL) iTunes, and that business has been flattening out for some time, at least in the U.S.

What’s going to change that? Google (GOOG), says CEO Edgar Bronfman Jr. More specifically, Google getting into the mobile music business, where the market is still open.

Bronfman, speaking to analysts during Warner’s earnings call this morning, chose his words carefully: “Google has yet to make any announcements about its music plans, and I certainly don’t want to preempt those.” And for the record, I don’t believe Google has a deal yet with Warner or any other big music label yet.

But Bronfman and the rest of the industry certainly expect Google to get into music–most likely some kind of download store tethered to Android, perhaps coupled with some kind of cloud-based “locker” service. And the hope is that when Google does that, it will accomplish two things:

• Provide the industry with a new revenue source and
• Even more important, provide competition for Apple, and give the industry real bargaining power when it comes to setting terms with Steve Jobs.

It might even happen! Then again, it might not–the industry had similar hopes for Amazon (AMZN) when it got into digital music a couple of years ago. But while Jeff Bezos clawed a few share points, the market hasn’t fundamentally changed.

The result? Music sales are slowing.

Warner Music Group (WMG) said this morning that it has seen unit sales growth at Apple’s (AAPL) iTunes decelerate since the price increase: Industrywide, year-over-year “digital track equivalent album unit growth” was at five percent in the December quarter, down sequentially from 10 percent in the September quarter and 11 percent in the June quarter.

And since iTunes sales make up the majority of Warner’s digital revenue, growth is contracting there, too. In the last quarter, digital revenue at the label was up eight percent compared with a year earlier, when that number was 20 percent.

The positive spin here is that music downloads are a “mature” business anyway. So by raising prices, the labels are simply extracting whatever value they can.

And indeed, Warner CEO Edgar Bronfman Jr. argued that the pricing change has been a “net positive” for Warner. But he also suggested that in hindsight, perhaps it wasn’t a great idea to raise prices 30 percent during a recession.

So here’s the question for the book industry, which has been working very hard to boost the price for its digital goods: Which lesson do you learn from this?

My gut is that the industry will see this parable the way Bronfman apparently does: If you can move prices up early in the digital adoption cycle, you’re much better off.

During the earnings call, Bronfman sounded a bit wistful as he noted the book industry’s apparent success, with the help of Apple, at raising prices above the $9.99 floor Amazon (AMZN) had set. “It’s interesting that the book publishing industry, on the iPad, has much more flexibility than the music industry had,” he noted.

The counter here is the one that seems obvious to everyone else: Lower prices and you can sell more stuff. Looks like we’ll be getting another real-world test of this economics lesson soon.

Parsons will be a part-time adviser says the New York Times and will keep his current job as Citigroup (C) chairman as well. Providence’s media bets include MGM and Univision, which haven’t worked out, and Hulu, which has.

Providence and Parsons have worked together at least once before: In 2004, Parsons sold Warner Music Group (WMG) to a consortium that included Providence, Thomas H. Lee Partners and Edgar Bronfman Jr.

Perhaps Providence will tap Parsons’s knowledge of his former employer for another deal: Time Warner executives keep murmuring about the need for magazine publisher Time Inc. to shed some of the 115 titles it operates.

That’s part of the pitch that Evercore Partners has been making to investors on behalf of McGraw-Hill (MHP), which wants to dump BusinessWeek.

The New York Times’s Stephanie Clifford gott her hands on the offering memo Evercore has been circulating to potential bidders, who are supposed to submit offers by today. Reportedly in the mix: Bloomberg; ZelnickMedia; New York Magazine owner Bruce Wasserstein; OpenGate Capital, which bought TV Guide last year for $1 plus debt; and Platinum Equity, which is bidding for the New York Times’s (NYT) Boston Globe.

In a story published yesterday, Clifford reviewed the magazine’s financials, which are miserable. Ditto for the magazine’s Web site. Today she points out Evercore’s plan to entice buyers: A ready-made layoff plan that would lop off 20 percent of the magazine’s staff.

The Evercore memo says the layoffs are actually “in process,” an assertion that seems to surprise BusinessWeek’s staff, which has seen no sign of layoffs. So best to interpret these numbers as suggestions, not plans. That said, here are Evercore’s suggestions:

In editorial, 55 of 217 positions are supposed to be eliminated. Of sales, 9 of 69. Of marketing, 6 of 26. Of technology, 8 of 33. Of circulation, just one of 19. And in the “other” category, 6 of 57. That’s a total of 85 eliminations among 421 jobs – about 20 percent – leaving 336 BusinessWeek employees.

“BusinessWeek will establish a leaner, entrepreneurial staff without affecting the brand, positioning of the franchise or revenue outlook. The eliminations of editorial staff are primarily in editorial support operations (makeup and copy desk), but also include a reduction in the number of journalists to reflect the smaller folio size of the publication. The positions eliminated in sales are primarily for sales support, but also include some consolidation of integrated sales account managers. The remaining positions eliminated are in other business support functions.”

A logical question: If these cuts are so easy to make, why hasn’t McGraw-Hill made them? I know that this strategy isn’t uncommon in auctions: Many moons ago, Time Warner (TWX) held off making cuts at its music unit so that a new buyer could do it itself, and that’s exactly what Edgar Bronfman Jr. and crew did once they got their hands on Warner Music Group (WMG). But the practice still baffles me. Anyone?

A couple of years ago, MySpace was the hottest thing on the Web. But that was a couple of years ago. Now the social network has gone cold: It is losing audience to Facebook and other sites and may well lose a very lucrative search deal from Google (GOOG). Fixing MySpace is the chief priority of Jon Miller, the former AOL boss who was brought on as News Corp.’s (NWS) chief digital officer in March. About a month after that, Miller brought on former Facebook executive Owen Van Natta and a new management team to run MySpace, displacing the site’s founders. Time for Van Natta to tell us just how he intends to save what was once one of the most important sites on the Web. And time for Miller to explain the digital future for the rest of News Corp.–which happens to own the All Things Digital Web site and conference.

Video Highlights

Live Blog

• Walt whips out his poll data again. Points out that Facebook and MySpace are neck-and-neck in overall use. But 61 percent of people say they are using MySpace less often than they used to. “Less usage would be bad,” notes Owen. Back to the poll: Why did people use MySpace less? Nearly one third–30 percent–replied: “I got bored.” Owen thanks Walt for the free market research.
• Kara: What happened at MySpace? How did it come to this? Owen: “If you don’t continue to innovate and give people what they want next…people are going to shift interests elsewhere. They’re going to continue to evolve their usage of the Web. The thing about MySpace is, there’s a lot that’s unique about MySpace. We need to seize on that.”
• Walt: Gimme some examples of how MySpace is different/unique. Owen: It’s more open, people share more information more freely, a bigger canvas, the ability to create pages that I don’t like the look of but people do.
• Kara: Jon Miller, tell me about the parking story at AOL. Jon: Did I tell you about this? Ok. A month after I go to AOL, following the merger with Time Warner, I went to visit people. Visited a division of Time Warner and senior staff. Hostile vibe. I tried to defuse it with parable about what happens when your car gets towed in New York, and how the people who work in the car lot didn’t actually tow your car, so please don’t yell at them.
• Kara: You were at Velocity, investing with Ross Levinsohn [who helped News Corp. with the original MySpace deal]. Why did you leave? Jon: I thought there was a big opportunity. Owen: “Jon told me it was so he could get comped at D.”
• Walt: Can you make this work with just advertising? Jon: It’s the central question of our time in the media right now. Free vs. paid. Obviously consumers want everything to be free. Kara: “You’re a Communist.” Jon: Obviously that doesn’t work. “It’s pretty clear that there has to be some recognition of value.” And we’re starting to see that take shape. And there has to be recognition that different things have different value. If it’s all free or all ad-supported, it won’t work. Ask Jeff Zucker about that–he loves the cable business. The real question is how much, and who’s going to pay, and is it going to be bundled?
• The gang draws parallels between the cable business (content plus access) and the old AOL (content plus access). Could that work somewhere else?
• Jon: The $10 wholesale price for a CD isn’t coming back. Maybe it’s $6. Maybe it’s $8. Those changes put big pressure on that business. We’re not just going to come out of the recession and see everyone spend the same money they used to spend.

• Kara: Back to MySpace. What happened? You both were up for Jon’s job, correct? [Pause]. Jon: “I just interviewed by myself.”
• Owen: MySpace is a really big site. Of course I’d want that job. I like building things. I built houses in high school in Palo Alto. At MySpace, there’s such opportunity to build.
• Kara: You were at Facebook, left Facebook, went surfing, then Playlist, then this. Is there a connection?
• Owen: I’ve always liked social networking. Was at a start-up that got bought by Amazon (AMZN). Facebook vs. MySpace: Fundamentally different. MySpace focused on a platform that allows people to be super-creative. Music is a big thing on MySpace. 550,000 people are friends with Green Day. Consuming their albums. We sponsored a secret show. Jon went and scared the band.
• Walt: My kids are musicians and have pages on MySpace. I asked them, and they say they never go there, except to promote the band. They’re both on Facebook and they both Twitter. Is MySpace too closely linked to music, too narrowly branded? Or is that a big advantage?
• Music’s a huge advantage. We have joint ventures with the major labels. But video is a big advantage, too. My job is to bring teams together to figure out what people are doing, and give them the right tools, and if they’re not using it, figure out why or stop doing it.
• Jon: People only change their behavior for a few reasons. One is music. I also think what’s interesting about the Web is you can nail something for a single group, and it can broaden out. For MySpace that was music, and for Facebook that was college.
• Walt: People think all these social networks are for kids. But do you want to aim at a single age group?
• Owen: We have 130 million uniques. But we need to core down and heavy up where you have traction. And we need to focus on younger demographic.
• Is Facebook a competitor? Jon: Yes. But so is everything else. So is Twitter. Walt: Seems like these things naturally evolve from one site to another. How can you recapture that excitement from a few years ago? Owen: We already have 130 million people coming to the site every day. If we can excite them with new products, that can happen.

• Owen refuses to disclose super-secret disruption plan? Not saying, even though Kara threatens to touch Owen’s knee, Bartz-style.
• Jon sings the praises of innovation and liberating employees to let them be more entrepreneurial so they can iterate. There are some recurring buzzwords here.
• Walt wants to know if there are ways to monetize MySpace that haven’t been tried. Jon: In advertising, it means a lot of things. Premium, performance, search, etc. We’ll have things like targeting, and micropayments, and we’ll be able to introduce subscriptions for some products.
• Kara: What’s up with the Google (GOOG) deal? Owen: It’s important, but it’s not the majority of our revenue. Also, it’s half over. So we need to be heads-down focused on our own site. With these long-term deals, you need to figure out how to make them work. This is no different. The most important thing is how is Google going to feel at the end of this partnership?
• Jon: When it comes time to negotiate, one thing to think about is whether we could do an overall deal with Google that wraps in more News Corp. properties.
• Q&A: Sorry, missed the first question. The second question is yet another one from Mark Glaser, who is popping off at every one of these. He wants to know why MySpace is so loud and garish.

• Owen: I don’t like a lot of the loud stuff either, so we need to work on personalization.
• Kara: What about Facebook’s fascist approach, where it works the same for everyone?
• Owen: We are going to look different and feel different than everyone else, and that’s good.
• Jon: The tendency when you fall behind in product areas is to think that you have to catch up by checking boxes. I think that’s wrong. You should leapfrog and focus on emerging behaviors, and go for the big moves. Question: Lessons from AOL? Jon: Yes. Everything I did I should have done faster and sooner.
• Ethan Smith from The Wall Street Journal wants to know about music and MySpace. I don’t quite follow it. Oh, it’s about labels complaining about that they’re not making enough money from MySpace. Edgar Bronfman Jr. is the most vocal here. Owen: I’ve talked to Edgar and it’s a complex partnership, and we’re figuring things out together, just like Google.
• Quentin Hardy from Forbes wants to know about organizational behavior theory. Jon: Keep market-facing. That’s the No. 1 thing. It must also be metrics-driven. You have to know how your stuff is being consumed, by whom and how they’re doing it. Once you start doing that, you’ve got a shot. You also have to make sure you’re looking at the right metrics. Page views, for instance, may be the wrong metric, if generating page views upsets your customers.

A note about our coverage: This liveblog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations written and posted to the Web as quickly as we were able. It was not intended as a transcript and should not be interpreted as one.

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]]> http://allthingsd.com/20090527/jon-miller-and-owen-van-natta/feed/ 1 http://allthingsd.com/20090527/irving-azoff/ http://allthingsd.com/20090527/irving-azoff/#comments Wed, 27 May 2009 16:31:16 +0000 Peter Kafka http://d7.allthingsd.com/?p=178

As a longtime music executive and talent manager, Irving Azoff has had to find a way to work with everyone from inebriated rock stars to David Geffen. But he’s never had to placate Washington, D.C., before. But that’s what Azoff needs to do in order to pull off the deal of a lifetime: A merger between his Ticketmaster (TKTM) Entertainment, which dominates the ticketing business, and Live Nation, (LYV), which dominates the live concert business.

When Azoff isn’t busy trying to convince people that the merger doesn’t violate antitrust regulations, or running his ticketing company, he manages the careers of everyone from the Eagles to Christina Aguilera. Note the one thing in the music business he doesn’t spend time on: selling recorded music.

Session Highlights

Live Blog

• Introduction: Legendary Eagles survivor Joe Walsh, looking very much worse for wear, shows up via video to talk about his longtime manager. “Irving is the only manager that I ever knew that said to David Geffen ‘pffft,’ and he’s still here.” Also: “He’s a friend of mine….All the guys in the Eagles love him. He has a beautiful house that we bought him.”
• Irving notes that Joe is now sober.
• Irving rattles off his management empire: 16 management companies, handling everyone from Miley Cyrus to Willie Nelson. Country, classic rock “where the tour money is.”
• Kara: Where’s the music business going? Irving: Obviously, with the “demonetization of recorded music,” everyone got into a woe-is-me attitude, but I’m enthusiastic. “Narrowcasting” of the industry has created new stars, and live business is good.

• Irving: Music labels have always been slow to react to technology, and a lot of people in this room profited from that. Basically the record industry sat around and tried to protect an old model.
• Kara: Could the business have reacted differently? Irving: Yeah, suing your customer is a bad idea.
• Kara: Will there be record companies in the future? Irving: Yes. They have 100 years of content. They’ll be more like publishing companies, where they are a repository of rights.
• Kara: How do you feel the technology business has treated the music business? [Apologies for gap, technical issues]. Eagles have generated about $400,000 in Apple (AAPL) iTunes royalties. Which is about what they get for a couple live shows.
• Irving: Overall, the state of music industry is promising. Was fallow for a bit, but there’s a whole new generation of singers, songwriters, performers. “You never know where it comes from.” In terms of the business, there will be more companies than the four big labels that dominate today. “It will be a great time for entrepreneurs….It’s not over, but it’s warping into 2.0, 3.0.”
• Kara: What does a music executive have to do to survive? Irving: You have to take chances. They can’t complain about the iTunes deal. They have to embrace new technology, and I think they are, and it’s easier to get deals done now.
• Kara: What about these little digital companies like Playlist and iLike, which Ticketmaster owns  a piece of? They can survive, and they’re excellent marketing opportunities. But they’ll have to find other ways of making money. Can they? “I don’t know.” Advertising? “I don’t know.”

• Onto the merger. Irving lays out the case. Everything revolves around live music, and they’re the biggest player in live music. It’s really the promotion piece, and the marketing piece, added to Ticketmaster. Without that, Ticketmaster wouldn’t survive. “Any of you guys can write a program that does what Ticketmaster does….I’ve been there a couple of months and I have gripes myself.”
• People’s gripe with Ticketmaster isn’t with what we do, it’s demand issues: People want tickets to attend sold-out shows, so we have unhappy customers. Plus we’ve been the “collection agency” for a whole bunch of fees. “But the decision is ultimately made by the act.”
• What about criticism to the merger from the likes of Bruce Springsteen? “Everything we do revolves around what’s good for the artist and what’s good for the fan. That’s our new model.”
• Not really an answer, Kara points out. Irving: “I would say that Bruce is uninformed about the potential of what this could be.” [Maybe someone could tell Jon Landau.] For instance, we could be bundling new songs along with tickets. “The business traditionally resists change,” so complaints about the merger are nothing news. And there’s plenty of competition: Phil Anschutz competes with us and he’s worth more than the combined market cap of both of these companies. Warner Music Group’s (WMG) Edgar Bronfman Jr. says he’s in the ticketing business, etc.
• Discussion of TicketsNow, a StubHub-like  “secondary market”/scalping business owned by Ticketmaster. Irving has said that in the past that he wouldn’t have bought it. Would he sell it now? Maybe.
• What are the prospects for the merger? “Very optimistic” that it will get done between now and end of the year.
• Back to griping about prices and availability: “People in the music industry, we’ve had a horrible record of shooting ourselves in the head.” We haven’t done enough dynamic pricing for tickets, and we should, and that will help make people happy. But these issues are fundamentally the artists’ responsibility. They decide what tickets we sell, and at what price.

• Where is the music business going, overall? Who’s your favorite? “It’s like asking what’s your favorite kid.” Internet makes things very exciting, distribution is opening up. What about the industry suing customers? I think that’s a “very small issue.” We do need to protect intellectual property, and the people who make it.
• Q&A: Esther Dyson wants to know what Ticketmaster/Live Nation will  do with all the data they collect about customers, etc. “Any artist that calls up and says I’d like the email list of the people who came to my show, we’ll make that available.” But with regard to pricing, etc., artists and their management are not being sophisticated about how they use data. And we have to keep the press from chastising artists that use dynamic pricing.”
• Q: Not clear what the question is. But seems to be about using an auction model from the get-go. “Auctions are falling into real disfavor at the moment….We’re finding that people don’t want to spend the time to participate in them.” They just want to know that this VIP package costs this much.
• Q: What do you think about subscription services? “I’ve always thought subscription was an incredible model.” But tricky to pull off with labels, publishers, unions, mobile guys all trying to figure out how to split the money.
• Q: Do you have specific advice for classical music artists? The great thing about the Internet is that you no longer have to be popular with everybody to have a career. Classical should flourish in this era. Build a base, get in front of people, have people like you live. “That’s been true in 1966, and that will be true as long as there is music.”
• Do your artists like Twitter? Some do. “Very useful” but other artists “refuse to get a mobile phone.”

A note about our coverage: This liveblog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations written and posted to the Web as quickly as we were able. It was not intended as a transcript and should not be interpreted as one.

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]]> http://allthingsd.com/20090527/irving-azoff/feed/ 4 http://allthingsd.com/20090310/will-britney-get-a-bailout/ http://allthingsd.com/20090310/will-britney-get-a-bailout/#comments Tue, 10 Mar 2009 20:31:47 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=5100 Call me a crusty skeptic, but I think it’d be hard for entertainers–some of whom are already ostentatiously wealthy–to get Washington to help them out in the best of times.

So my gut is that there’s little chance that Congress will pass something called “The Performance Rights Act,” which would force radio stations to pay musicians–or at least, music labels–whenever they play one of their recordings.

Mind you, I think the musicians and their labels have a good argument here. Radio stations already pay songwriters whenever their songs are played on the radio–it’s one of the reasons that the music publishing business hasn’t fallen off a cliff even though CD sales have. But the people who actually recorded the song (or who own the recordings) don’t get anything.

The radio stations argue that this is OK because they’re providing free promotion for the industry. But U.S. terrestrial radio stations are just about the only ones who get away with this.

All of the of Internet Webcasters have to pay performers something, and so does Sirius XM Satellite (SIRI). And as Warner Music Group (WMG) boss Edgar Bronfman Jr. likes to point out, there’s only a handful of other countries that give radio a free ride as the U.S. does, and those include North Korea and Iran. Meanwhile, the industry needs the dough more than ever since its primary revenue source keeps falling away.

But… while there are less sympathetic lobbies than the music business, it sure would be easy for the radio stations, which have a pretty good handle on Washington, to knock this one down, no?

Slap up an ad with that shows Britney Spears driving with her kid on her lap or staggering around an MTV stage or cavorting with K-Fed, and run a simple tag line: “Britney wants more money. Tell Congress not to give her any.”

All that said, there are plenty of optimists who think the music industry is going to end up with some kind of extra dough in the end. Industry watcher Glenn Peoples is a smart guy, and he thinks that’s the case. From his Coolfer blog:

“One of two outcomes will come from todays’ three-and-a-half hour hearing on the Performance Rights Act: Either the committee will approve the Performance Rights Act or the National Association of Broadcasters and labels will reach their own agreement. It is very clear the committee members understand the promotional value of radio but think it is unfair that only radio stations get to decide what the amount of that value. The issue of whether there should or should not be a performance right is all but decided. The issue to now be resolved is the value of the right and the timing of its introduction.”

Glenn has comprehensive coverage of the House’s hearing about the issue today. Note the industry’s designated musician: Billy Corgan, best known as the angry bald dude who sang for the Smashing Pumpkins. By all accounts, he turned in an excellent performance today.

[Image credit: Britneyspears.com]

]]> http://allthingsd.com/20090310/will-britney-get-a-bailout/feed/ 0 http://allthingsd.com/20090302/emis-owners-suffer-a-16-billion-case-of-buyers-remorse/ http://allthingsd.com/20090302/emis-owners-suffer-a-16-billion-case-of-buyers-remorse/#comments Tue, 03 Mar 2009 01:04:16 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=4780 A lot of people couldn’t understand why Guy Hands, the private equity guy who bought EMI Music Group in the summer of 2007, was willing to pay so much for the music company. Now he says he agrees with them. His Terra Firma buyout firm has written off half the $3.2 billion he paid for the company.

He’s probably being too conservative.

At least if you use Warner Music Group (WMG) as a comp. Edgar Bronfman Jr.’s music company is (very) roughly the size of Hands’s music company and was forever slated to buy, sell to, or merge with EMI. (In May 2006, EMI was willing to pay $26 a share in cash for Warner, but Bronfman rejected the deal; a year later, EMI rejected a Warner offer.)

Take a look: WMG, currently trading at $1.86 a share, is down 86 percent since Terra Firma bought EMI in August 2007. At what point will Hands have to fess up and take another write-down? (Click chart to enlarge).

Here’s an EMI employee with no complaints about the music business–Norah Jones, whose 2002 debut album was really EMI’s last super-huge success. Those days are gone, but she’s managed to hang on to her money–or at least enough to pay $5 million for a Brooklyn townhouse a couple months ago. Check out this excellent duet with Dolly Parton (yup, that Dolly Parton).

]]> http://allthingsd.com/20090302/emis-owners-suffer-a-16-billion-case-of-buyers-remorse/feed/ 0 http://allthingsd.com/20081223/warner-music-boss-edgar-bronfman-wins-one-publishing-exec-dick-snyder-loses-100-million-suit/ http://allthingsd.com/20081223/warner-music-boss-edgar-bronfman-wins-one-publishing-exec-dick-snyder-loses-100-million-suit/#comments Tue, 23 Dec 2008 21:25:46 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=2404 Edgar Bronfman Jr. is both a music company CEO and in a fight against Google (GOOG). So he needs good news wherever he can find it. Today a New York Court is helping out: It has ruled against former publishing executive Dick Snyder, who claimed that Bronfman owed him $100 million because he helped him hatch a plan to buy Time Warner’s (TWX) record label.

Snyder, who ran publishing giant Simon & Schuster for a couple decades, had a an exciting and juicy story to tell: He basically claims that Bronfman hired him as consigliere as he figured out how to buy Warner Music (WMG) for $2.6 billion in 2003, but never paid him. The tale is nicely told in this Portfolio piece from 2007, which includes plenty of character assassination and mud-slinging, if you’re in to that sort of thing.

Today’s news is compelling only if you’re one of the two men involved in the case. But it does look good for Bronfman: In April, the New York State Supreme Court had ruled against Snyder on four of the six claims he filed in 2007; today, an appellate court shot down the final two.

Here’s the statement from Bronfman’s attorney, Orin Snyder; the court’s decision is embedded below (click on button on top right to enlarge):

This unanimous decision is a complete victory for Mr. Bronfman–so much so that the Court imposed court costs on Dick Snyder. We are gratified that the appellate court vindicated Mr. Bronfman and repudiated Dick Snyder’s bogus claims. Today’s decision confirmed what we have said all along–that Dick Snyder’s claims were nothing more than a work of fiction. This opportunistic lawsuit was a lame attempt to extract money from Mr. Bronfman, whose hard work, vision and creativity helped bring about the successful acquisition of Warner Music. From the outset, Mr. Bronfman refused to settle because he believed that, as a matter of principle, it was important to fight this frivolous lawsuit to the end.”

Bronfman v. Snyder

Publish at Scribd or explore others:

]]> http://allthingsd.com/20081223/warner-music-boss-edgar-bronfman-wins-one-publishing-exec-dick-snyder-loses-100-million-suit/feed/ 0 http://allthingsd.com/20080807/bronfman-2/ http://allthingsd.com/20080807/bronfman-2/#comments Thu, 07 Aug 2008 22:40:42 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=3053 It wasn’t very long ago that Warner Music Group boss Edgar Bronfman Jr. was demanding a share of Apple’s iPod revenue and calling for mandatory peer-to-peer filtering and taxes on recordable media and MP3 players. So to hear him calling for higher royalties from video games like Guitar Hero and Rock Star isn’t all that surprising. Because, according to Bronfman, the success of those games is predicated entirely on Warner’s music.

“The amount being paid to the music industry, even though their games are entirely dependent on the content we own and control, is far too small,” Bronfman said during an earnings call today. “There is what I would call a very paltry licensing fee per song. … I think the industry as a whole needs to take a very different look at this business and participate more fully and in a much more partnership way. And if that does not become the case, as far as Warner Music is concerned, we will not license to those games.”

Leaving aside, for a moment, the question of why Warner (WMG) agreed to a royalty scheme it apparently finds unappealing, you’ve got to wonder why the company persists in lambasting these new media that so obviously invigorate the industry and promote its music. And beyond that, you’ve got to wonder why Warner is doing it at a time when games like Guitar Hero and Rock Star are clearly becoming viable distribution outlets.

Of course, we already know the answer. Bronfman himself gave it to us in a speech last year. “We used to fool ourselves,” he said. “We used to think our content was perfect just exactly as it was. We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding. And of course we were wrong. How were we wrong? By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find, and as a result, of course, consumers won.”

]]> http://allthingsd.com/20080807/bronfman-2/feed/ 0 http://allthingsd.com/20080807/bronfman-2-2/ http://allthingsd.com/20080807/bronfman-2-2/#comments Thu, 07 Aug 2008 22:40:42 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=3053 It wasn’t very long ago that Warner Music Group boss Edgar Bronfman Jr. was demanding a share of Apple’s iPod revenue and calling for mandatory peer-to-peer filtering and taxes on recordable media and MP3 players. So to hear him calling for higher royalties from video games like Guitar Hero and Rock Star isn’t all that surprising. Because, according to Bronfman, the success of those games is predicated entirely on Warner’s music.

“The amount being paid to the music industry, even though their games are entirely dependent on the content we own and control, is far too small,” Bronfman said during an earnings call today. “There is what I would call a very paltry licensing fee per song. … I think the industry as a whole needs to take a very different look at this business and participate more fully and in a much more partnership way. And if that does not become the case, as far as Warner Music is concerned, we will not license to those games.”

Leaving aside, for a moment, the question of why Warner (WMG) agreed to a royalty scheme it apparently finds unappealing, you’ve got to wonder why the company persists in lambasting these new media that so obviously invigorate the industry and promote its music. And beyond that, you’ve got to wonder why Warner is doing it at a time when games like Guitar Hero and Rock Star are clearly becoming viable distribution outlets.

Of course, we already know the answer. Bronfman himself gave it to us in a speech last year. “We used to fool ourselves,” he said. “We used to think our content was perfect just exactly as it was. We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding. And of course we were wrong. How were we wrong? By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find, and as a result, of course, consumers won.”

]]> http://allthingsd.com/20080807/bronfman-2-2/feed/ 0 http://allthingsd.com/20080328/filesharing-tax/ http://allthingsd.com/20080328/filesharing-tax/#comments Fri, 28 Mar 2008 12:39:32 +0000 John Paczkowski http://digitaldaily.allthingsd.com/20080328/filesharing-tax/ Back in 2000-2001, when the Recording Industry Association of America was still trying to recover from its CD price-fixing scheme with poorly reasoned justifications for CD price inflation (“Listen, if CD prices were governed by the Consumer Price Index, you’d be paying $33.86 for them instead of $12.75!”), a little company called Napster came calling. Napster had pioneered a new Internet distribution model for digital media that was revolutionizing the music industry, and it hoped to partner with RIAA member labels to create a subscription-based service.

At the time, Napster had some 20 million users worldwide and was essentially the de-facto file-sharing standard. Had the RIAA labels agreed to the alliance, they might have turned peer-to-peer distribution into a new and powerful business model, one with low distribution and marketing costs and a fast developing user base. But they didn’t. They chose another route.

Big mistake. Along came Gnutella. And increased broadband penetration and cheaper storage. Along came Kazaa. And then came BitTorrent. And, well, look at the industry now.

Given such history, it’s difficult to look at the recording industry’s plan to have a monthly fee added to consumers’ internet-service bills and not shake your head in wonderment.

Portfolio.com reports that Edgar Bronfman Jr.’s Warner Music Group (TWX) has indeed hired veteran industry consultant Jim Griffin (no relation to Peter, right?) to quarterback a plan under which consumers pay an Internet-access surcharge of $5 a month for the collective right to freely share music. Those fees would be pooled and divvied up among artists and their labels.

“Ideally, music will feel free,” says Griffin. “Even if you pay a flat fee for it, at the moment you use it there are no financial considerations. It’s already been paid for.”

Ah- charge everyone for all music. So it is Monetization Without Representation. OK. But what gives the music industry the right to tax all broadband users because it suspects some of them might illegally share its content? And if the music industry deserves that right, then doesn’t the film industry deserve it as well? And the publishing industry? And any other industry that might benefit from such a tax?

As David Barrett, engineering manager for peer-to-peer networks at Web content-delivery giant Akamai (AKAM), notes Griffin’s plan is problematic. And desperate.

Said Barrett:, “It’s too late to charge people for what they’re already getting for free. This is just taxation of a basic, universal service that already exists, for the benefit a distant power that actively harasses the people being taxed without offering them any meaningful representation.”

]]> http://allthingsd.com/20080328/filesharing-tax/feed/ 0 http://allthingsd.com/20080328/filesharing-tax-2/ http://allthingsd.com/20080328/filesharing-tax-2/#comments Fri, 28 Mar 2008 12:39:32 +0000 John Paczkowski http://digitaldaily.allthingsd.com/20080328/filesharing-tax/ Back in 2000-2001, when the Recording Industry Association of America was still trying to recover from its CD price-fixing scheme with poorly reasoned justifications for CD price inflation (“Listen, if CD prices were governed by the Consumer Price Index, you’d be paying $33.86 for them instead of $12.75!”), a little company called Napster came calling. Napster had pioneered a new Internet distribution model for digital media that was revolutionizing the music industry, and it hoped to partner with RIAA member labels to create a subscription-based service.

At the time, Napster had some 20 million users worldwide and was essentially the de-facto file-sharing standard. Had the RIAA labels agreed to the alliance, they might have turned peer-to-peer distribution into a new and powerful business model, one with low distribution and marketing costs and a fast developing user base. But they didn’t. They chose another route.

Big mistake. Along came Gnutella. And increased broadband penetration and cheaper storage. Along came Kazaa. And then came BitTorrent. And, well, look at the industry now.

Given such history, it’s difficult to look at the recording industry’s plan to have a monthly fee added to consumers’ internet-service bills and not shake your head in wonderment.

Portfolio.com reports that Edgar Bronfman Jr.’s Warner Music Group (TWX) has indeed hired veteran industry consultant Jim Griffin (no relation to Peter, right?) to quarterback a plan under which consumers pay an Internet-access surcharge of $5 a month for the collective right to freely share music. Those fees would be pooled and divvied up among artists and their labels.

“Ideally, music will feel free,” says Griffin. “Even if you pay a flat fee for it, at the moment you use it there are no financial considerations. It’s already been paid for.”

Ah- charge everyone for all music. So it is Monetization Without Representation. OK. But what gives the music industry the right to tax all broadband users because it suspects some of them might illegally share its content? And if the music industry deserves that right, then doesn’t the film industry deserve it as well? And the publishing industry? And any other industry that might benefit from such a tax?

As David Barrett, engineering manager for peer-to-peer networks at Web content-delivery giant Akamai (AKAM), notes Griffin’s plan is problematic. And desperate.

Said Barrett:, “It’s too late to charge people for what they’re already getting for free. This is just taxation of a basic, universal service that already exists, for the benefit a distant power that actively harasses the people being taxed without offering them any meaningful representation.”

]]> http://allthingsd.com/20080328/filesharing-tax-2/feed/ 0 http://allthingsd.com/20071114/bronfman/ http://allthingsd.com/20071114/bronfman/#comments Wed, 14 Nov 2007 21:50:09 +0000 John Paczkowski http://digitaldaily.allthingsd.com/20071114/bronfman/

World War II was won by the Allied forces, not only because we were right, but also because we had more men and women, more weaponry and more money, and that money in turn would train more men and women and build more weaponry.

“But being fair, and being just, is what allowed our civilized society to survive and prosper, while that of our conquering ally, the Soviet Union, cracked, crumbled and collapsed because it attempted to perpetuate a society that was fundamentally unjust and unfair.

“And if the Internet should require an unjust and unfair paradigm in order to perpetuate itself, then it too will crack, crumble and collapse, and it won’t take five decades of Cold War politics for it happen.

“That is why it is in your interest to join our fight to protect and defend the property rights of creators everywhere. And that is why we are bringing our fight to the court of justice and to the court of public opinion.”

–Warner Music Group boss Edgar Bronfman Jr., May 26, 2000

Edgar Bronfman Jr.’s abusive relationship with Steve Jobs has apparently resulted in a Stockholm Syndrome-esque emotional attachment between the Warner Music CEO and Apple. Speaking at the GSMA Mobile Asia Congress in Macau, Bronfman–who’s long been critical of the company that arguably legitimized the digital music business–turned tack and lauded iTunes as a prime example of digital music done right.

“For years now, Warner Music has been offering a choice to consumers at Apple’s iTunes store the option to purchase something more than just single tracks, which constitute the mainstay of that store’s sales,” Bronfman said. “By packaging a full album into a bundle of music with ringtones, videos and other combinations and variations, we found products that consumers demonstrably valued and were willing to purchase at premium prices. And guess what? We’ve sold tons of them. And with Apple’s cooperation to make discovering, accessing and purchasing these products even more seamless and intuitive, we’ll be offering many, many more of these products going forward.”

And so began a paean to Apple which, by the time Bronfman concluded, had heaped adulation on everything from the company’s design chops to its billing-platform savvy. “You need to look no further than Apple’s iPhone to see how fast brilliantly written software presented on a beautifully designed device with a spectacular user interface will throw all the accepted notions about pricing, billing platforms and brand loyalty right out the window,” Bronfman continued. “And let me remind you, the genesis of the iPhone is the iPod and iTunes–a music device and music service that consumers love.”

Clearly, Bronfman’s had quite an epiphany since his war-against-the-consumer days, when he was calling for mandatory peer-to-peer filtering and taxes on recordable media and MP3 players and demanding a share of Apple’s iPod revenue. “We used to fool ourselves,” he said. “We used to think our content was perfect just exactly as it was. We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file-sharing was exploding. And of course we were wrong. How were we wrong? By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find and, as a result of course, consumers won.”

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