Outgoing Warner Music Chairman maligns Universal acquiring EMI
Edgar Bronfman Jr. speaks with AllThingsD's Peter Kafka
Speaking at the Dive Into Media conference yesterday in California, on what was his last day as Chairman of Warner Music Group, Edgar Bronfman Jr. didn’t mince any words when it came to the topic of Universal Music Group’s planned acquisition of the EMI recorded music division. “It does strike me as hubris particularly for Universal to think it’s going to be easy to buy EMI, and frankly to think they can buy EMI at all,” said Bronfman, also saying that the merger would create a “super-major” that would not only control the future of recorded music, but “the future of all digital media.” He also confirmed that Warner Music would indeed be fighting the deal, as was expected with the recent news of WMG’s hiring of an anti-trust lobbyist firm. Bronfman also denied that the failure to successfully acquire EMI was the impetus for his departure as chairman, and that his biggest regret looking back was his misjudgment in the mobile space, saying that the platform “took longer to mature than I thought at the time.”
01.20.12Digital Round Up: Grooveshark legal spat takes interesting turns; Will Vevo swap YouTube for Facebook?; Megaupload action & more
If you’ve been following the story of Grooveshark’s most recent legal fray with major labels, spearheaded by Universal Music Group, you know that the federal lawsuit charges that executives at the digital music company personally uploaded illegal content. In an odd twist to the case, an incriminating anonymous post on Digital Music News from a supposed employee, lead to Grooveshark’s parent company serving the industry blog with a subpoena last weekend, which DMN responded to today. And in the midst of all the activity surrounding the lawsuits, Grooveshark released a new iPhone app this week, and also pulled the plug on its service in Germany citing too high of licensing costs from GEMA… Elsewhere this week, Ticketmaster launched its new robust Facbook app, which allows fans to see what shows or events their friends are attending as well as buy tickets within the Facebook platform, among a number of other social aspects, and it also features an integration with Spotify… Other Facebook news includes reports that major label-backed video site Vevo has been in talks with Facebook about moving the service over to the social network’s platform upon the conclusion of its current deal with Google-owned Youtube. Such a deal would be a considerable boon for Facebook’s music component, and while Vevo has grown to the second largest online video destination, its quick rise to popularity did come on the back of Youtube’s dominant position as the #1 online video destination… The bizarre saga of Megaupload (remember the song and promotional video featuring Will.i.am and other celebrities that was pulled offline recently?) may be coming to a close with major federal action being taken against the internet ‘locker’ service and its executives yesterday. The arrests and seizures were followed by retaliations from Anonymous hackers who targeted multiple websites including those of the DOJ, MPAA, Universal Music Group and others… Meanwhile, an interview this week on Fast Company tries to pin-down Slacker Radio’s CEO Jim Cady on the hotly-debated issue of whether or not streaming-music rates create a sustainable source of income for artists.
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News Bytes: BigChampagne acquired by Live Nation, Rara-who?, Sony & Warner join Grooveshark fray & more
Yesterday evening our Twitter feed was filling up with congratulations for BigChampagne, and founders Eric Garland and Joe Fleischer, following the announcement that Live Nation had acquired the pioneering media measurement operation. While not well known outside of entertainment biz circles, the company is anything but a flash-in-the-pan tech start up – having celebrated its 10th anniversary this year and launching the Ultimate Chart last year, not to mention having their analysis frequently cited and quoted by The New York Times, The Wall Street Journal, USA Today and many other publications. Tip of the cap indeed. For more information about how BigChampagne began and an overall interesting read, check our Q&A with Eric Garland from 2009, here… A new streaming music service surfaced this week from the founder of Omnifone. The service is called Rara and it appears to be targeting the segment of online music consumers who want to use a streaming service, but find Spotify, Rdio, MOG and others… too complicated? The service is launching with the help of some built-in links on select HP computers and a discounted 3-month trial price of $0.99 per month… Meanwhile, Sony and Warner Music are reportedly joining Universal Music Group in taking legal action against online music service Grooveshark… The bizarre story of the Megaupload song and video that featured Will.I.Am and a number of other celebrities and artists lauding the file-transfering service, takes another strange turn, Hollywood Esq. has the details… Check marked in the ‘plus’ column for Spotify this week, it was revealed that Arcade Fire’s catalog would now be available on the service in all its current territories. This follows headlines that the new Black Keys album is not being made available on any streaming music services, for now… And for an streaming availability scorecard, Wired published a side-by-side comparison of content exclusive to either Spotify or Rdio.
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Post EMI Auction Round Up
WMG CEO downplays EMI loss
As was expected by many observers, Edgar Bronfman Jr. announced early last week that he was going to be stepping down as chairman of Warner Music Group, presumably as part of the aftereffects of a failed EMI acquisition. Last week also saw the disclosure of WMG’s recent quarterly report, which showed sizable losses even with continuing growth in digital revenues, along with comments from new CEO Stephen Cooper that the major was not willing to pay a price “that would not have provided an adequate return on our investment,” in addressing the failed attempt to purchase EMI’s recorded music business. Cooper also denied that Warner-Chappell Music, among other assets, are being primed for a sale, contrary to rumors that the new owners of the Bunny are having buyers remorse. Ironically, some are now drawing comparisons between the current situation and position of WMG with that of EMI when it was purchased by Guy Hands and Terra Firma back in 2007. Assuming the regulatory process allows Universal Music Group and Sony Music to take their respective parts of EMI, Warner Music will be significantly smaller than its rivals, and facing increased pressure as both UMG and Sony stockpile executive and artist talent. Others are recalling the mid-90’s action at Warner, when “non-music” executives were brought into the company, amid ongoing changes and power struggles among top executives, though new CEO Cooper is known as a corporate ‘turn around specialist’… The other losing bidder in the EMI sale, BMG Rights Management, continues to put together its creative executive force in the U.S., while chatter persists that co-backer KKR might soon be getting out of the JV with Bertelsmann, whose new CEO Thomas Rabe will take the reins on January 1st… Meanwhile, on the winning side, Sony/ATV head Marty Bandier revealed last week that EMI’s pubco would retain its name, and that it would be controlled as a separate company owned by the investment group that Sony Corp. was a part of. Further details about the new structure haven’t been revealed, but Sony CFO Rob Wiesenthal acknowledged at a global media conference that he sees a focus on music publishing as the real future for record companies, saying the publishing business is “immunized from piracy” – though it should be noted that the company does not wholly own either of its music pubcos. Lots more action is expected, including the fate of current EMI and Sony publishing executives – Bandier and Sony/ATV co-prexy Jody Gerson are both very familiar with the company, having previously held long executive stints at EMI Music Publishing.
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Round Up: Grooveshark bites itself, Spotify announces apps, major label moves & more…
Grooveshark emails have bite
Catching up after a turkey hangover, some of what’s happening around the biz… Things are looking messy for Grooveshark, who is facing aggressive legal action from Universal Music Group, with the surfacing of some incriminating internal emails… After teasing a big announcement and “new direction” for Spotify, the streaming-music service unveiled the news in New York City yesterday of a new platform with integrated apps from a variety of third party developers including Rolling Stone, Songkick, Pitchfork and others… According to CNET, it seems the rift between Vevo and MTV may soon be ending, with word that the two parties are negotiating a deal which would give MTV’s online properties access to Vevo’s music videos… Prior to the holiday weekend, Warner Bros. Records announced a three-year global partnership with Vice Music. Those keeping score note that the deal was originally spear-headed by now departed Warner Bros. A&R executive Steve McDonald, who also currently plays in OFF!, one of the bands on Vice’s roster… Dizzee Rascal is taking his label Dirtee Stank to Universal in a deal that will see the major distributing and marketing releases from the UK indie… Elsewhere, more changes within the ranks of Sony Music emerged this week, with further reporting of Sony’s top digital executive Thomas Hesse departing for Bertelsmann, while Tricky Stewart and Mark Shimmel are expected to be announced as part of the continuing executive selections at Epic Records under L.A. Reid… Meanwhile, the New York Posts‘ Page Six reports today that Drake has parted ways with both his management firm, Hip Hop Since 1978 and his agency, ICM, in favor of William Morris Endeavor… And top-notch writer/producer and former member of Whiskeytown, Mike Daly, has taken a new position doing A&R at Walt Disney Records.
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Digital Round Up: Spotify teases with press event invite ala Apple + Universal Music vs. Grooveshark again
Taking some cues from the Apple playbook, Spotify sent out media invitations yesterday for a global press conference next week in New York on November 30th, with plenty of intrigue including phrases like “major development” and “new direction for the company.” What the announcements will include is of course being heavily speculated upon. An MP3 store is one possibility, while other guesses range from the more mundane, like an iPad app, to more significant prospects like a major ISP or mobile carrier tie-up or even an acquisition. Evolver.fm has an interesting theory that the news will include a commercial API that would allow developers to create and SELL music apps that would pull from Spotify’s large catalog of songs… Elsewhere, Universal Music Group has filed a copyright infringement lawsuit against online music service Grooveshark parent company Escape Media Group Inc. along with executives from the company for allegedly illegally uploading songs to the service. The Wall Street Journal has more details on the action here… Stay tuned.
11.15.11And then there were 3… EMI split, where does it lead?
Universal Music Group and Sony Music continue to dominate the music biz storylines this year with the unpredictable conclusion of the EMI auction, which saw the two industry leaders beating out the long-expected winning bidders in Warner Music and BMG Rights Management. It might be too soon to call it the era of the ‘big three,’ with the regulatory process expected to last well into 2012 after Citigroup’s auction split EMI into two – the recorded music going to UMG while EMI Music Publishing is set to fall under the ownership of an investment consortium including Sony Music, the estate of Michael Jackson, music mogul David Geffen and others – but however you slice it, the trend of contraction continues. And for all the growth and ‘turning point’ talk, including from the CEO of UMG parent company Vivendi, in the wake of an increase in music sales over last year, the revenue from those sales is still in decline due to the lowering of prices, as pointed out in a Bloomberg article this week… So where do things go from here?
Independent music company coalition IMPALA began saber rattling prior to the announcement of the EMI auction winners, and were quick to make public their intentions to block the acquisitions by both groups following the announcements on Friday. Industry insiders however are questioning the association’s ability to ultimately triumph in stopping the completion of either deal. Universal Music is expected to dispose of a certain amount of assets, particularly in European territories where they would now hold a market share well over 50%, and their key argument for approval will be that the music industry is in a much different place even from just a few years ago, and that they like others are at the mercy of technology companies like Apple in this new digital age. How well that justification will fare remains to be seen, as there are seemingly plenty of holes. One could easily look to how long it took Spotify to launch in the U.S. due to the process of acquiring licenses from the four major label groups, and further, that they negotiated equity stakes in the service in order to allow a launch in America… It will also be interesting to see how well Google does with the launch of a new music store, expected to be this week, with only two major labels onboard, Universal and EMI (coincidence?)… And while iTunes Match is expected to succeed, it’s clear that Apple feels comfortable with their current position and power in the music space, as they continue to expand their sites in new areas of media and content domination… And as far as the EMI publishing spoils go, many see the creation of the investment entity, of which Sony only holds a minority stake, as making the approval process easier.
Some of the other big questions being asked by observers this week include, what is the fate of EMI Group CEO Roger Faxon? A role within Universal Music on the recording side seems unlikely, and while EMI’s pubco is expected to remain its own entity with Sony/ATV in a management and administration role, will there be room for Faxon to reunite with his former EMI publishing co-CEO Marty Bandier, and more importantly would he take a reduced-role? How does this play for current Sony Pub players Jody Gerson and Danny Strick? Will Warner Music be first in line to snatch up EMI recorded assets in European territories from Universal, particularly in light of their recognized weakness abroad and the shake-up among its international management structure announced by Lyor Cohen just last week? Will Edgar Bronfman Jr. now exit WMG completely as expected? Contrary to public comments from BMG Rights Management CEO Hartwig Masuch today that the EMI publishing purchase was not “necessary” for the company, those in the know believe that it was indeed a crucial acquisition for the KKR and Bertelsmann backed venture, and having failed to secure it, are wondering if KKR will now get out? Insiders share that the Germans are considering buying out KKR’s stake. And having purchased most of the mid-level music publishing business over the last couple years, including Bug Music during the EMI auction, will BMG now shift focus to unifying its management structure and operation?
Plenty more action to come…
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Round Up: Dr. Luke Sony Label Deal (Finally) Announced, EMI Auction Drags On & more…
Doug Morris' "new Jimmy"
In a New York Times feature on Doug Morris yesterday, included among the expected platitudes from the new CEO of Sony Music, like describing his plan for the company as simply “to help create the pre-eminent record company in the world,” was the clever and first official disclosure of a new label deal with producer Dr. Luke, which will see the expansion of his current imprint with Sony, Kemosabe Records. The news, which we exclusively revealed back over the summer (with the New York Post picking up the item shortly after), comes with similar overtones as we initially reported, which is Morris is attempting to recreate his successful investment and development of Interscope Records with Jimmy Iovine at Universal Music Group. The new deal, which has been in negotiation for many months, will put the label on equivalent footing as Epic, Columbia and RCA, and also includes exclusivity at Sony for Dr. Luke’s producer services for five years – a component that smacks of Sony’s soon-to-lapse agreement with Rick Rubin, whose production work outside of their label system has been noted by many as part of the arrangements overall failure. Also central to the Kemosabe deal is the purchase of a significant stake in Dr. Luke’s publishing by Sony/ATV, a move that will give the pubco an interest in what has been Luke’s highly-successful songwriting operation, which includes a stable of of up-and-coming pop composers with numerous chart-topping credits. Observers are drawing similarities to previous high-dollar publishing investments in hitmakers at their pinnacle, like Kara Dioguardi’s Arthouse Entertainment deal… Meanwhile, Citigroup’s auction of EMI is dragging on longer than the bank would like, with plenty of spin and speculation surrounding the action for the recorded music division. Last week saw the twist of Warner Music Group owner Len Blavatnik, pulling his bid from the table after Citi wanted him to increase the offer, though many see it simply as a negotiating tactic from the Access Industries owner. In turn, Universal Music Group, who previously was thought to be out of the running, is being touted as potentially back in, with the New York Post reporting the two sides are scheduled to meet today, though UMG’s last offer fell below Blavatnik’s. On the EMI Music Publishing side, the deal is still seen as BMG Rights Management’s for the taking… Elsewhere, in related news, David Bowie is reportedly on the verge of leaving EMI, which would end a 15-year relationship that gave the label rights to a large part of his catalog of classic albums. Discussions are said to be taking place with both Universal and Sony… And South African hip-hop enigma Die Antwoord are leaving Interscope Records, seemingly as abruptly as they were signed to the label in early 2010. The group, who has a publishing deal with Sony/ATV, will soon be releasing their second album via their own new label ZEF RECORDZ.
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Quick Bytes: (Give It To Me Baby) Digital Royalties Lawsuit Against Universal Music to Proceed, Tunecore Launches Publishing Admin Service & More…
A federal judge is permitting a class-action lawsuit against Universal Music Group to move forward that involves a group led by Rob Zombie and the estate of Rick James. The issue at hand is digital royalties and the difference between treating downloads purchased at digital retailers like iTunes as a “sale” or a “license” as is relates to the artits’ split. This case follows similar litigation involving UMG and Eminem recordings, which was settled last year… Tunecore has launched a new songwriter publishing administration service that will register copyrights, collect royalties and issue licenses for users. The new service is among other recent entrants to the previously absent sector of expanded publishing admin for independent artists. More info can be found here… Spotify user numbers might be skyrocketing with the new Facebook integration, but it isn’t the only one – monthly users at MOG have quadrupled following the pairing up with the social network… Meanwhile, some are asking where the native Facebook music player app has gone, and what this means (if anything), for future music apps after it disappeared from the site this week… RIM will be launching its new BlackBerry Messenger music service this week… And Apple missed the ‘late October’ launch for its new iTunes Match service that was announced back in June, with no word from the company as to when it can be expected. [UPDATE: It appears that iTunes Match is still in the 'testing' phase.]
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Bits & Pieces: Live Nation + UMG, Facebook’s f8 Conference & more…
Monday afternoon saw the official news of a major deal that has been in the works for months that unites Live Nation Entertainment and Universal Music Group in a new pact joining UMG’s management properties, including Sanctuary, Twenty First Artist (and presumably the new producer management arm Twenty First Republic that was formed earlier this year with World’s End) and 5B Artist Management, all under LN’s Front Line Management… Apprehension by banks to finance private-equity firms in buyouts and mergers is growing, according to an WSJ article this week, and that might mean the stable of bidders for EMI is shrinking. It might also mean the likelihood of the music group being sold intact is also lessening… Tomorrow is Facebook’s big f8 conference, where they will announce many new features and major redesigns, and music fans are looking forward to the expected integration of new streaming services like Spotify, MOG and Rdio. Some are expecting Pandora to be added to that list as well, given the redesigned and relaunched player from the web radio service today, which includes among other things increased sharing capabilities and the removal of the cap on free-listening hours. Exactly how seamless the integration of media services into the social network is unclear, as MediaMemo points out, FB was originally planing on allowing users to access music and video services without ever leaving the site, however now that has changed. Announced speakers and panelists at the conference will include CEO’s from Spotify and Turntable.fm along with Clear Channel Chairman’s Bob Pittman who has been busy promoting iHeartRadio and manager Troy Carter among many others… Elsewhere, video site Vimeo has launched a Music Store in a new partnership with Audiosocket, that will help video creators easily find and license music… R.E.M. is calling it quits after three decades… Van Halen is reportedly ending their longtime relationship with Warner Bros. Records and heading to Columbia Records… And Jeremy Summers has been named EVP/Chief Marketing Officer at Interscope Geffen A&M.
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