More from Dive Into Media: Vevo, Spotify & Neil Young
Neil Young addresses labels, piracy & more
Vevo CEO Rio Caraeff, made the first public statements regarding the video site’s profitability at the digital media conference this week, putting it plainly, “We are making money, yes,” with a reported $150 million in revenue last year. In terms of the future, Caraeff predicted that the joint-venture, which includes Sony Music, Universal Music and EMI, could be a billion dollar business in a “short period of time”… Meanwhile, Edgar Bronfman Jr. lauded Spotify as being artist-friendly and not detrimental to download sales, during his interview, and called Google Music an oxymoron, explaining that there’s no “beef” between Warner Music and Google, but they need to decide if they want to be a content platform… And Neil Young addressed a number of topics including audio quality, record labels, piracy and how he and the late Steve Jobs has discussed how to reconcile the current issues facing the digital music era by combining all three.
01.19.12EMI Sale: Warner Music hires antitrust lobbying firm, UK indies take AIM at deal
The LegalTimes blog reported on Tuesday that Warner Music Group has hired the lobbyist team of Brownstein Hyatt Farber Schreck, who filed registration report paperwork with Congress last week indicating it would be lobbying on antitrust matters – presumably in an effort to block the completion of Citigroup’s sale of EMI. The Brownstein team lobbied against the acquisition of T-Mobile by AT&T last year, a merger bid which was ultimately dropped in December… Meanwhile, AIM the UK independent trade organization has launched an offensive to urge the government to review the break-up of EMI to the winning bidders in Universal Music and Sony Music (via Sony’s interest in the group which bid on EMI Music Publishing). The campaign includes reference to the extraordinary recent success of independent-label act Adele, given the current state of the industry, and that the increased size of Universal and Sony would make such a phenomenon even more difficult to achieve. It is also said to include quotes from Beggars Group chief Martin Mills calling the deal “breathtaking arrogance” and “bad news for almost everyone involved in the art and business of music”.
YouTube & record labels engaged in renewal talks
According to an article by Greg Sandoval on CNET this morning, Universal Music, Sony Music and EMI are all in the process of negotiating renewed licenses with YouTube, while Warner Music, whose relationship with the Google-owned video site has been particularly tenuous in previous years, is noticeably not mentioned. According to the piece, deals are close at hand, with the labels focused on increased anti-piracy measures by the site, as well of course, as larger licensing fees. It appears at least one of the three label groups may have already reached a new agreement with Youtube.
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Aaronson goes to Whalley World
It appears former President of Sire Records and longtime Warner Bros. Records A&R executive Craig Aaronson has joined his previous boss Tom Whalley at his new A&R-focused operation, which currently exists in uncertain terms under the Universal Music umbrella. Rumors have Whalley getting his own imprint label under Universal Republic, while reports last month have the former WBR chief as the new commander-in-waiting for a revived Capitol Records under UMG, though the regulatory process for Universal’s acquisition of EMI is far from being done… Stay tuned.
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Bits & Pieces: Citi Receives 10+ bids for EMI, KOL Cancel Tour to Tune of $15million, Turntable.fm & more…
Worth more than Warner Music?
The first round bids for EMI are in, with multiple reports pointing to more than 10 offers received for either the whole or individual recorded music and publishing arms of EMI Group, from interested parties including Sony, Universal, Warner Music, BMG Rights Management and a host of private equity groups. At least one analysis this week claimed that Citigroup could possibly fetch more than $4 billion for the company based on a similar multiple used in the recent Warner acquisition. An article in FT.com yesterday claims that the current tendered bids range from $3 – $4b, and that between four and six of the submitted offers were for the entire music group. Citi is expected to respond to the opening bidders this week… While less humorous than last summer’s Kings of Leon bird droppings incident, the band’s cancelation of the remainder of their current U.S. tour dates following an abrupt termination of a set in Dallas last week, may prove much more damaging. Rollingstone.com takes a look at other recent tour cancelations with somewhat dubious explanations, and according to reports, the KOL cancellation may cost policy holder, Loyds of London, as much as $15 million in payouts to promoters and others affected… The much talked about Turntable.fm has secured a $7.5 million financing round led by Union Square Ventures, which has some wondering if the startup will next seek licensing agreements with the record labels and music publishers. Lady Gaga and Kanye West are also reportedly among those who contributed to the funding… And The Shins are following fellow former Sub Pop label mates Band of Horse, in moving from the venerable indie to a new imprint-label deal with Columbia Records for their next release.
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Industry Round Up: Free Agency, New Signings, Blind Item & more…
Industry & fans come out in droves to catch one of WU LYF's first U.S. shows @ The Echo
It must be the heat… As summer rolls on it seems that temperatures are rising among a number of notable indie and major label acts, causing them to part ways with their management. One’s loss is another’s potential gain, as many of the newly available artists begin the courting process with prospective new managers. While the scuttlebutt varies, it’s no secret that as the music business continues to wrestle with a new and constantly changing landscape, it’s managers who often times, fairly or unfairly, take the hit over frustrations…The Warner Music – EMI merger storyline continues with the latter’s current auction process underway, and recent reports have the Bunny cutting headcount in anticipation of a possible uniting of the two companies. Though it appears the label is also busy beefing up its A&R department and looking to cherry-pick other senior executives. The term headhunter is not being taken lightly under new Russian owner Len Blavatnik. Some of the names that have been surfacing from the proverbial rumor mill have stirred up quite the reaction among their peers… Meanwhile more recruiting action continues at Sony Music and Universal Music labels, as the newly installed leaders at both groups continue to tap respective past confidants. Is a longtime label-head consigliere advising each side on their new executive placements? Many expect the shuffling going on at both groups to only increase come January, when the no-poaching clause between the two comes to an end, though word on the street is that back room dealings have already started… Expect an official announcement soon of the new Dr. Luke label deal that we recently tipped… Elsewhere, it was a regular A&R brouhaha at The Echo on L.A.’s east-side Tuesday night, as England’s mysterious WU LYF (pronounced “Woo Life”) played to a packed room. The quartet, who has already been the subject of heavy pursuit by labels across the pond as a result of their furtive persona and bizarre imagery, was well received by the mostly male-dominated crowd. At least one observer noted the singer was harder to understand than a drunken Scot… In more new artist updates, SoCal locals Milo Greene have signed with Atlantic Records-aligned Chop Shop Records. The relatively new group quickly garnered attention from both fans and tastemakers alike, including KCRW, who just featured the band on its third installment of this years Also I Like to Rock series, along with Grouplove, who are also under the Atlantic label domain… And Mom + Pop Records have added to their already burgeoning roster, by signing Hard 8-managed SLEEPER/AGENT and SXSW buzz-act alum Neon Indian – both artists have new albums set to be released in September… BLIND ITEM: Which high-level label executive is in hot water with the label’s head honcho for apparently taking too much credit for the company’s current artist success in a recent LA Times piece? Did said label exec’s shameless self-promotion write his own pink slip? Hmmm…
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Bits & Pieces: BMG Bids, Warner to Unload Weight & New Motown/Island Def Jam Takes Shape
Transitions to IDJ Group
The New York Post reported this week that KKR and Bertelsmann-backed BMG Rights Management, as expected, submitted their bid for EMI last Friday, while the other favorite Warner Music is believed to be submitting this week ahead of a July 28 deadline. The Post also reported that new Warner owner, Access Industries, is preparing for cutbacks in the WMG workforce up to 5%, primarily outside of the U.S. – reductions that are believed to be directly related to a possible EMI acquisition. Others are noting the dramatic uphill climb the new Warner Music owners face in an industry that reported growth of just 1.6% this year, the first time in 7 years, with album sales still in decline. Is a successful EMI merger the only way for Len Blavatnik to avoid ending up as the next Guy Hands?… Meanwhile, as first reported by The Wrap, Universal Music is preparing to install Universal Music Publishing Group executive Ethiopia Habtemariam as head of Motown, as the label transitions into the Island Def Jam Group. At least one veteran IDJ A&R executive is said to be heading back to Universal in the new Motown/IDJ group after previously departing under CEO L.A. Reid, who is now chairman of Epic Records.
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More Exec Shuffling at Sony Music; Gatfield Named Head of U.K. & Rhone Rumored to Revive Portrait
Sylvia Rhone reviving label at Sony?
A number of high-level executive moves at the changing Sony Music structure have shaken out this week, the first on the job for new CEO Doug Morris. We tipped the hotly pursued deal with hit producer/songwriter Dr. Luke for an expanded label mimicking Interscope last week, while this week began with the official naming of Antonio L.A. Reid as CEO and chairman of Epic Records, news that was widely reported in the previous weeks. Assigning of current acts on the Sony roster to Reid’s new domain has already begun, along with new signings underway – it’s also expected that contestants from the X-Factor series will be developed by Epic – Reid is serving as a judge on the American version of the show. On the international front, which is said to be a major focus for Morris, came the revelation yesterday that Nick Gatfield will be taking over Sony’s U.K. operations, replacing outgoing CEO Ged Doherty. Gatfield previously served as head of Universal’s Island Records U.K. from 2001 to 2008 and held an international A&R executive title at EMI until leaving last year. The move to replace Doherty is being deemed as sudden by some, however it seems more likely that Morris was pulling strings well before officially taking his new title. After departing EMI in 2010 toward the end of the troublesome Guy Hands era, Gatfield was believed to likely end up back in the Universal Music fold, under the incoming CEO Lucian Grainge, whom he worked closely with at Island, however it never came to pass. He was also said to have been in talks with Sony late last summer, but a deal was never reached. Then back in February of this year, Gatfield was hired on at Sony U.K. with the somewhat vague title of President/New Music, reporting to Doherty, who he has now replaced. Richard Sanders, the head of Sony Music Interational based in New York, is also out… According to reports, one of the main functions for Gatfield in his new role, will be to maintain relationships with Simon Cowell and his operations under Syco, which Sony owns a 50% stake in… An abutting storyline to the current UMG and Sony rivalry that has some observers intrigued, is the lawsuit filed this week involving a dispute between American Idol’s Simon Fuller and Simon Cowell over the new U.S. X-Factor series – the shows are aligned with Universal Music and Sony Music respectively… And the latest rumor according to a story in Page Six this morning, is that departed Universal Motown prexy Sylvia Rhone will be relaunching the Portrait Records label at Sony. According to the report, the label will work closely with L.A. Reid’s Epic, and Cyndi Lauper, who was on Portrait in the 80’s, will be the first artist signed to the revived imprint… Stay tuned.
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BMG Rights Management + EMI & the ‘Big Three’ Era… Pt. 2
EMI; another brick in the wall?
The sale of EMI Music Publishing to BMG Rights Management would be by far the largest investment for the Bertelsmann and KKR-backed venture, and would more than triple the current catalog of over 300,000 copyrights. It’s a catalog the JV has amassed in less than two years, through a series of acquisitions that include Cherry Lane Music, Adage IV, Stage Three Music, Evergreen Copyrights and Chrysalis Music, along with a handful of other international catalogs and pubcos. The speed in which BMG RM has climbed to the spot of fifth largest publisher in the world is striking, but only part of the story when looking at their catalog purchases. What’s more interesting to some insiders are the subplots and what they could signal for the future. Let’s step back and take a closer look… One of the most impressive and significant music publishing constructions in recent decades was that of Dreamworks Music Publishing, a catalog that was assembled under the guidance of veteran publisher Chuck Kaye. It included works from artists such as The Byrds, John Denver, Jimmy Eat World and Lifehouse among others, along with hit titles like “Disco Inferno” and “Take Me Home, Country Roads”. The catalog journeyed from one home to another throughout the 2000’s following the sale of the Dreamworks recorded music division to Universal Music in 2003. The catalog was first sold for $50 million to Dimensional Music Publishing in 2004, a newly created arm of JDS Capitol Management (who also owns eMusic and The Orchard), in a deal which is seen as seminal in the recent trend of venture capital investments in music publishing assets. However, Dimensional publishing’s run was short-lived, selling its assets less than three years later to First State Media Group, a new fund whose publishing entity operated as S1 Songs. Then again in under three years time, in early 2010 - after its own stint on the block almost being bought by then EMI owner Terra Firma – Chrysalis Music acquired First State Media and S1 Songs for $16.5 million, in a deal that included the Wind-Up catalog and of course the original 25,000 Dreamworks copyrights. And in November of last year, less than one year later, Chrysalis announced it was being bought by BMG RM, adding another 100,000 works to the JV’s catalog, in a deal valued at $169 million… So with a major addition like EMI’s publishing assets, what would the future hold? Particularly taking into account the consolidation happening within the ranks of the companies they’ve already acquired. On track to double their revenues by 2015, will the trend continue, with EMI (which has undergone significant cost-cutting of its own recently) as the final piece in a KKR and Bertelsmann plan to build the world’s largest publishing company and flip it? The common belief in many circles is that the industry is headed to a new era of the ‘Big Three’, and as such, none of the majors left will be able to afford leaving such valuable publishing assets outside of their control. It’s going to get interesting… Tune in tomorrow as we break a new big publishing deal currently in play.
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EMI Derby: Who Has the Inside Track… Pt. 1
Industry insiders have shared with us recently that they are putting Len Blavatnik’s Access Industries as the front-runner in the auction of EMI by Citigroup, which is expected to start in the coming weeks – and there’s plenty of good reason to bet that way. It’s been reported that Citi executives have already engaged in talks with the new Warner Music Group owner about a potential acquisition, Edgar Bronfman Jr. has long desired to merge Warner and EMI, and Citigroup chairman Dick Parsons ran Time Warner during a previous bid to merge the two companies. However, those in the know share that Warner isn’t the only suitor with ties to both Citi and EMI. More on that below… Many of the deep-pocketed bidders from the Warner Music auction are expected to enter the EMI derby, for either the recorded music unit, publishing or both, with regulatory issues as the most obvious concern for parties like Universal Music, Sony Music and now Access-owned WMG – all of them would have to shed assets in order to complete a deal. Meanwhile, private equity players would have an easier time making an acquisition, but the Terra Firma debacle may prove too cautionary for some who are interested… With all that, it’s BMG Rights Management that is on the tongues of insiders as one of the most well-positioned contenders, particularly with regard to EMI Music Publishing. The Bertelsmann and KKR-backed joint venture was deep in talks with Terra Firma to buy the publishing unit back in 2009, which would have relieved some of the debt that ultimately forced Guy Hands to turn the company over to Citigroup, and prior to that, KKR was in the running to acquire the entire EMI Music Group, before it ended up in the hands of Terra Firma… With relationships in place, and knowledge of the company before, during and after the Guy Hands era, it’s not hard to envision EMI publishing assets ending up in the already prodigious BMG Rights Management catalog, which would put the JV in position to rival Universal Music Publishing Group for the top spot in market share. This just five years after Bertelsmann sold BMG Music Publishing to Universal. But the story wouldn’t end there… Stay tuned.
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